Getting funding for a cleaning company can be tough. Business owners do have several financing options to help them grow.
Cleaning businesses can secure funding through traditional bank loans, SBA loans, equipment financing, lines of credit, and alternative lending options. Each option works for different business needs and situations.
The trick is figuring out which funding type fits your goals—maybe you need to buy equipment, hire more staff, or just keep cash flow steady.
Lenders usually look at your cleaning company’s credit score, revenue, years in business, and financial statements. They want to see steady income, manageable debt, and a clear plan for the money.
You’ll need to pull together documents like tax returns, bank statements, profit and loss statements, and a business plan that shows how you’ll grow.
Modern accounting software makes it much easier to prepare these documents. You can generate financial statements, track expenses, and pull the data lenders want.
If you understand what lenders want and prep your paperwork, you’ll have a better shot at approval—and maybe even better rates.
Key Takeaways
- Cleaning businesses can choose from traditional loans, SBA loans, equipment financing, and lines of credit based on their specific funding needs
- Lenders evaluate applications based on credit scores, revenue history, financial statements, and clear business plans
- Accounting software helps generate professional financial documents that improve loan approval chances and terms
Types of Funding for Cleaning Service Businesses
Cleaning service businesses have several funding options. These loans can help you start up, buy equipment, or expand.
Each loan type comes with different terms, requirements, and repayment structures. Not every option will fit your business.
Traditional Bank Loans for Cleaning Companies
Conventional bank loans usually offer the lowest interest rates out there. But banks want to see strong credit, detailed financials, and a proven business history.
Banks like working with cleaning businesses that show steady revenue and current client contracts. Loan amounts can range from $25,000 up to several million, depending on your needs.
Requirements for bank loans include:
- Credit score of 680 or higher
- Two years of business tax returns
- Personal financial statements
- Business plan with financial projections
Bank loan approval can take anywhere from 30 to 90 days. It’s a slow process, but it lets the bank dig in before lending.
Repayment terms usually run 5 to 25 years for equipment purchases or real estate. Working capital loans are shorter—think 1 to 5 years.
SBA Loans and Government-Backed Financing
Small Business Administration loans bring government backing that helps reduce the lender’s risk. That means cleaning companies can often get better terms than with regular loans.
SBA loans usually require less money down and let you pay back over a longer period. The government guarantees 70% to 85% of the loan.
Popular SBA loan programs include:
- SBA 7(a) loans for general business purposes
- SBA 504 loans for real estate and equipment
- SBA microloans up to $50,000 for smaller needs
Interest rates stay competitive because of the government guarantee. You can borrow up to $5 million with most SBA programs.
The application process takes a while—longer than traditional loans—but it’s more flexible. Even with lower credit, you might still qualify.
Lines of Credit: Flexible Cash Flow Solutions
A line of credit gives cleaning businesses flexibility. You only pay interest on what you use, not the whole approved amount.
This option works especially well for seasonal businesses or those with uneven cash flow. You can borrow during slow times and pay it down when work picks up.
Line of credit features:
- Access to $10,000 to $250,000
- Interest rates from 7% to 25%
- Revolving credit that replenishes as you pay it down
Both banks and online lenders offer lines of credit. Requirements aren’t as strict as for traditional loans.
Monthly payments usually cover just the interest during draw periods. Some lenders want you to pay down the principal now and then to keep the line open.
Merchant Cash Advances and Short-Term Loans
Merchant cash advances give you quick funding based on future credit card sales. You get a lump sum and pay it back through a percentage of your card transactions.
Short-term loans also move fast—approval and funding can happen in a day or two. These are good if you need cash right now and can’t wait for a bank.
Key characteristics include:
- Approval based on revenue, not just credit scores
- Loan amounts from $5,000 to $500,000
- Repayment in 3 to 18 months
- Higher costs than traditional loans
Factor rates for merchant cash advances run 1.1 to 1.5 times the advance. Short-term loans often have interest rates above 20%.
These are best for cleaning companies with urgent needs—maybe you need equipment or want to jump on a growth opportunity.
Understanding Equipment Financing and Alternative Options
Cleaning companies can use specialized financing to buy equipment or keep cash flow steady. Equipment financing usually offers lower rates, while revenue-based funding and factoring give you flexibility.
Equipment Financing for Cleaning Equipment
Equipment financing lets you buy what you need without a huge upfront payment. The equipment itself serves as collateral.
Loan amounts usually range from $5,000 to $500,000. Some lenders will finance the entire equipment price.
Cleaning companies can finance things like:
- Industrial vacuums and carpet cleaning machines
- Floor scrubbers and polishers
- Pressure washers and window cleaning tools
- Vehicles for mobile services
Interest rates start around 6% if you qualify. Loan terms usually match how long the equipment will last—anywhere from 2 to 7 years.
Most lenders want to see:
- Credit score of 650 or higher
- 6 months to 2 years in business
- At least $50,000 in annual revenue
If you stop paying, the lender can take the equipment back.
Alternative Financing: Pros and Cons
Invoice factoring turns unpaid invoices into fast cash. Factoring companies buy your invoices at a discount, usually 70-90% of their value.
This works for cleaning companies that have:
- Commercial clients who pay in 30-60 days
- A solid payment history from customers
- A need for quick working capital
Revenue-based funding gives you upfront money in exchange for a slice of future sales. You repay through automatic daily or weekly withdrawals.
Advantages:
- Fast approval (often in 24-48 hours)
- No collateral needed
- Repayment scales with your revenue
Drawbacks:
- More expensive than traditional loans
- Daily payments can squeeze cash flow
- Factor rates can hit 20-40% per year
Factoring and Revenue-Based Funding
Invoice factoring works well for cleaning companies with reliable commercial accounts. You’ll get 80-95% of the invoice value right away, minus a 1-5% monthly fee.
The factoring company collects payment straight from your customers. Sometimes, this even helps smooth out customer relationships.
Revenue-based funding is a bit different. Lenders advance $10,000 to $500,000 based on your monthly revenue. You repay with a fixed percentage of daily card sales or bank deposits.
Typical terms:
- 3-18 month repayment periods
- 10-30% of daily revenue goes to repayment
- Factor rates run 1.1-1.5 times the advance
This can help cleaning companies ride out slow seasons. When revenue dips, payments drop too.
These alternatives move faster than traditional loans but cost more in fees and interest.
What Lenders Look For: Key Qualification Criteria
Lenders size up cleaning companies based on steady cash flow, available collateral, and credit history. These factors shape your loan eligibility and the terms you’ll get.
Evaluating Cash Flow and Financial Health
Cash flow is what lenders care about most. They check your monthly revenue to see if you can handle loan payments from service contracts.
You’ll usually need to provide 12-24 months of bank statements. Lenders want to see stable or growing revenue, not wild swings.
Key financial metrics:
- Monthly recurring revenue from contracts
- Income seasonality
- Average payment time from clients
- Debt-to-income ratio
Service businesses like cleaning companies often have predictable cash flow from recurring contracts. That’s a plus when you apply for a loan.
Lenders also look at your profit margins and operating expenses. They want to know you’ll have enough left over to pay the loan and keep the lights on.
If you can show you manage cash flow well—keeping reserves and tracking receivables—you’ll look even better to lenders.
The Importance of Collateral and Personal Guarantees
Collateral gives lenders something to claim if you can’t pay. Cleaning companies can use equipment, vehicles, or real estate as collateral.
Common collateral options:
- Cleaning equipment and machinery
- Service vehicles and trailers
- Business property
- Accounts receivable
Most small business loans require a personal guarantee from the owner. If your business can’t pay, you’re on the hook.
Personal guarantees can help you get approved, but they do raise your personal risk. Make sure you’re clear on what you’re signing.
Some lenders offer limited guarantees that cap your liability. That’s a bit of a safety net, but you’re still responsible up to a point.
Secured loans (with collateral) usually come with lower interest rates than unsecured ones. Lenders feel safer when they have something to back the loan.
Business Credit Score and Creditworthiness
Business credit scores run from 0-100 and show how you pay suppliers and creditors. A score above 75 usually gets you better loan terms.
Lenders also check your personal credit. Most want to see a score of 650 or higher for traditional loans.
To build business credit:
- Open trade accounts with suppliers
- Always pay on time
- Keep your credit use low
- Check your credit reports regularly
Loan eligibility improves with a solid credit history. If your business is brand new, you might face tougher requirements.
Lenders look at both your current scores and your payment history. They want to see consistent, on-time payments.
Bad credit doesn’t close all doors. Some lenders work with businesses that have credit issues, though you’ll pay more for the money.
Documents to Prepare for Your Loan Application
Getting a business loan means putting together documents that show your cleaning company’s financial health and potential. Lenders want to see proof that you can pay them back and that your business is legit.
Financial Statements and Reports
Income statements lay out your company’s revenue and expenses over time. Lenders use these to check profitability and cash flow. Most want at least two years of income statements.
Balance sheets list your assets, debts, and equity. Lenders use these to see your business’s financial position.
Bank statements from the last 6-12 months show how money moves in and out of your accounts. They reveal patterns and consistency that income statements might miss.
Tax returns back up your reported income and expenses. You’ll need to provide business and personal returns for the past two or three years.
Accounts receivable reports show expected income from contracts you already have. If you work with commercial clients, these reports highlight steady revenue that can make your application stronger.
Business Plan and Marketing Strategies
A solid business plan lays out your cleaning company’s goals and how you plan to grow. Spell out your market analysis, what sets you apart, and your financial projections for the next few years.
The executive summary is your shot at making a good first impression with lenders. Make sure it explains your services, your target market, and how the loan will help you move forward.
Marketing strategies show how you plan to bring in and keep clients. Share your customer acquisition costs, retention rates, and the promotional methods you use in the cleaning industry.
Financial projections should cover expected revenue growth and how you’ll manage expenses. Build these numbers on real market conditions and what your company’s done so far.
Talk about your service offerings and pricing. Let lenders know how your cleaning services stand out and why clients keep coming back.
Legal and Company Documentation
Business licenses prove you’re operating above board. Include general business licenses and any special permits needed for cleaning in your area.
Insurance certificates show you’re covered. Most cleaning companies need general liability, workers’ comp, and bonding insurance.
Articles of incorporation or LLC documents show your business structure. These confirm who owns the company and how it’s set up.
Commercial contracts with clients prove you have steady income. Add copies of your most important contracts to show you have ongoing work.
Equipment lists and proof of ownership show your business assets. For cleaning companies, this means vehicles, cleaning machines, and supplies that might be used as collateral.
Using Your Software’s Financial Statements
Most cleaning company management software can crank out financial statements you’ll need for loan applications. Getting these reports right is a big deal if you want funding.
Best Practices for Generating Reports
Run your financial statements straight from your business software every month. Lenders usually want to see profit and loss statements, balance sheets, and cash flow reports from the last 12-24 months.
Set up the software to generate reports automatically at the end of each month. This keeps your data consistent and helps show your financial health over time.
Banks like seeing a regular reporting pattern, not just statements thrown together for a loan application.
Use year-to-date comparisons in your reports. Show the current year next to last year’s numbers to highlight growth and seasonal trends.
Export reports in PDF format for your loan application. PDFs keep everything looking right and lock the data in place. Keep digital and printed copies organized by month and year.
Always run reports after you’ve finished your monthly bookkeeping. Make sure invoices are logged, expenses are sorted, and bank accounts are reconciled before you generate anything.
Common Mistakes to Avoid with Financial Data
Don’t submit statements with missing months or gaps. Lenders see incomplete records as a sign of weak cash flow management. Fill in any blanks before you apply.
Keep personal and business expenses separate in your reports. Clean books make you look professional and trustworthy.
Never submit unreconciled statements. Your software’s bank balance should match your real bank account. If it doesn’t, lenders will notice.
Don’t edit financial statements after you export them. If you need to fix something, do it in the software and export a fresh report.
Always check for obvious mistakes before you send anything in. Watch out for negative revenue, crazy-high expenses, or zero balances in accounts that should be active.
Using Funding to Grow Your Cleaning Business
Smart funding can help you expand, work more efficiently, and actually build something sustainable. The right investment usually means better equipment, more people, and a handle on cash flow.
Investing in Staff and Equipment
You need good equipment and well-trained staff to run a cleaning business that lasts. With funding, you can buy industrial machines that get the job done faster and better.
Essential equipment investments include:
- Commercial vacuum cleaners and floor polishers
- Pressure washers for outdoor work
- Carpet cleaning machines for specialty jobs
- Work vehicles for your teams and supplies
Professional equipment lets you finish jobs quicker. That means you can serve more clients and make more money per contract.
With enough funding, you can hire more people. That’s how you land bigger commercial clients or expand into residential work without losing focus on your current customers.
Training costs money upfront, but it’s worth it. Well-trained staff work safer and deliver reliable results. Happy customers tend to refer new business and stick around.
Expanding Services and Target Markets
Funding gives you a shot at new revenue streams. You can add services like carpet cleaning, window washing, or post-construction cleanup.
Each new service needs its own tools and training. Equipment financing can help you spread out the costs instead of paying everything at once.
Popular expansion opportunities:
- Medical facility cleaning (pays better, steady contracts)
- Restaurant and kitchen deep cleaning
- Move-in/move-out residential services
- Emergency cleanup jobs
With enough funding, you can branch out geographically. Opening a second location or serving nearby towns can really grow your customer base.
A bigger marketing budget helps, too. A pro website, local ads, and digital marketing can attract higher-paying clients.
Maintaining Strong Cash Flow
Cash flow is a headache for most cleaning businesses. Clients often take 30-60 days to pay. A line of credit can help you cover the gap.
Seasonal swings are common. Summer might mean more outdoor jobs, while winter is all about deep cleaning inside. Flexible funding helps you smooth out the ups and downs.
Cash flow management strategies:
- Use credit lines to buy supplies in bulk and save money
- Pay your staff on time, even if customers are slow to pay
- Cover maintenance and fuel costs between client payments
Stuff breaks. Emergency repairs and equipment failures can happen anytime. Quick access to funds keeps you from missing jobs or losing clients.
Working capital loans let you stock up on supplies during sales or gear up for busy seasons. You don’t want to run out of what you need when demand spikes.
Frequently Asked Questions
Cleaning business owners always have a few big questions about getting funding. From what types of financing are out there to what documents you need, it’s a lot to take in.
What types of financing options are available to cleaning companies looking to expand?
You’ve got a few options. Traditional term loans give you a lump sum for big expenses like vehicles or equipment.
Business lines of credit are flexible. You pull what you need for things like supplies or payroll and only pay interest on what you use.
SBA loans usually come with lower rates and longer terms. They’re a good fit if you’ve been around for a while and have solid financials.
Equipment financing is pretty straightforward. You buy the machines or trucks you need, and the equipment itself acts as collateral.
Invoice factoring lets you get cash for unpaid invoices. This works well if your clients take a while to pay.
Which key financial documents are lenders most interested in when evaluating a business loan application?
Lenders want to see bank statements from the last 6-12 months. They use these to check your cash flow and balances.
Profit and loss statements show your revenue and expenses. Lenders look for steady profits and growth.
You’ll need to provide tax returns—both business and personal. These back up your reported income.
Balance sheets matter too. They show your assets, debts, and equity so lenders can see your financial health.
Accounts receivable aging reports prove you’ve got outstanding invoices. This is especially important if you’re looking for invoice factoring or asset-based loans.
What criteria do lenders generally consider when determining eligibility for a line of credit for a service business?
Lenders look at several things. You’ll usually need a personal credit score of at least 600.
How long you’ve been in business matters. Most lenders want to see at least six months to two years of operations.
Annual revenue requirements are pretty standard. Many lenders expect at least $50,000 to $100,000 a year.
Stable cash flow is a big deal. Lenders like to see regular monthly income, not just the occasional big payment.
Your debt-to-income ratio also counts. Less existing debt means better chances and higher limits.
How can using updated financial statements from accounting software improve chances of loan approval?
Accounting software makes your financial statements look professional. That alone builds credibility with lenders.
Real-time data shows how your business is actually doing now. Lenders want the latest numbers, not old info.
Automated calculations mean fewer mistakes. Accurate reports give loan officers more confidence.
When your software connects to your bank, you get detailed transaction records. Lenders can double-check your numbers easily.
Standard formats make it easier for lenders to review your documents. Familiar layouts help speed things up.
What are some tips for preparing a compelling loan application for a cleaning company?
Show off your recurring revenue. List monthly contracts and regular clients to prove your income is steady.
Highlight your experience and any certifications. Lenders feel safer with trained staff and proper licenses.
Prepare a detailed business plan with clear growth projections. Explain exactly how you’ll use the loan to make more money or cut costs.
Get all your financial documents organized before you apply. Complete applications with all the paperwork move faster.
If you can, work with lenders who know the service industry. They’ll understand your cash flow cycles and seasonal swings better than most.
Are there alternative financing methods, such as equipment financing, suitable for a cleaning service business?
Equipment financing can really help cleaning companies that need vehicles or machinery. Think carpet cleaners, floor buffers, pressure washers—you get the idea.
Lenders use the equipment as collateral. That usually means you’ll see lower interest rates than with unsecured loans.
Merchant cash advances give you quick funding based on credit card sales. If your cleaning company pulls in a lot from cards, this could be a solid option.
Revenue-based financing lets you tie payments to your monthly income. That kind of flexibility can be a lifesaver for seasonal cleaning businesses during slow months.
Peer-to-peer lending platforms are out there too. They come with their own qualification quirks, but sometimes they’re easier to work with than a traditional bank.
