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Whether buying a slide-in tank or adding warehouse space, financing big purchases is challenging for portable restroom rental business owners. Banks and credit unions may help established business owners with a truck loan. However, not all institutions work with startups or handle equipment purchases. Economic uncertainty combined with high interest rates doesn’t help.
However, the portable sanitation industry has thrived and overcome barriers by relying on each other and finding unique ways to solve problems. And financing is no different. If you’re looking for solutions and coming up short, consider these short- and long-term options.
Where to Start: Finance Options for PROs
Capital purchase solutions range from a line of credit to an asset-based loan. Sometimes, you can head down to your local bank and request assistance. However, depending on your time in business, credit history, and sales volume, a conventional institution may not be suitable. Traditional loans require a downpayment and a decent credit score. They typically take longer to process than online lending platforms or equipment financing companies and require more paperwork.
If you have a working relationship with your community credit union, you’ll likely receive better rates than going through a national bank or equipment lending service. Therefore, don’t rule anything out until you’ve considered your options.
Here’s how these funding solutions differ:
- Banks are typically for-profit businesses that offer truck loans, lines of credit, and real estate funding
- Credit unions are non-profit, community-based organizations that provide the same services as banks but may offer lower interest rates
- Online lending platforms connect businesses and consumers to investors (lenders). It’s like a marketplace for loans
- Equipment financing companies specialize in equipment loans and leasing. Some partner with manufacturers or offer alternative options, like invoice factoring
- Small Business Administration 7(a) loans help companies buy machinery, equipment, and real estate
Equipment Financing: Working With Manufacturers
Equipment dealers may offer in-house financing or partner with third-party lenders. Many PROs recommend attending tradeshows. Manufacturers and equipment financing companies bring their best deals and it’s a great place to connect with potential lenders.
Another solution is to talk to your rental company. If you frequently rent the same equipment, the dealer may offer an incentive to purchase. It doesn’t hurt to ask if you could work out a deal for a used machine by applying your rental payments toward the downpayment. Networking with the right people can be helpful, especially when thinking outside the box for financing.
Planning for Future Financing Needs
The best thing you can do is to think about equipment purchases early. Don’t wait for something to break. Work on your cash flow to set aside funds for down payments. Network with PROs online and offline to learn about their financing experiences and get recommendations. And get your paperwork together. Update your business plan and revenue forecasts, and be ready to show how new equipment will increase your profit.
Funding and the Portable Restroom Industry
Starting a new business or expanding an existing one takes resources. Look to fellow PROs and industry experts for advice and remember to keep the three Cs in mind: Character, cash flow, and collateral. Meeting these underwriting standards can help you get the funds you need at a better interest rate.
Looking to Take Your Portable Restroom Business to the NEXT LEVEL? Download our FREE Guide: “Your Guide to Operating A Portable Restroom Business.”
Thinking About GETTING INTO the Portable Restroom Industry? Download our FREE Guide: “Your Guide to Starting A Portable Restroom Business.”