$680K to buy the neighbor's shop: How a laundromat operator used an SBA 7(a) to double locations

Six years of running one laundromat had built a healthy $340K in annual net operating income. When the owner of the shop next door — a family friend, three doors down — decided to retire, our client had 30 days to sign an LOI or lose the deal to a franchise buyer.

Asking price: $820K for the business, equipment, and remaining 7-year lease at below-market rent. Our client had $140K in cash and the discipline of six years of clean books. What they didn't have was time — or a bank that would look past "laundromat" as an industry tag.

Two banks passed on the phone. One asked for a full appraisal and 45-day exclusivity we didn't have. That's when the call came to us.

Why SBA 7(a), not conventional. Small-business acquisition is exactly the deal type the SBA program was written for. The 10-year amortization drops the monthly payment to something the combined cash flow could comfortably service, and the 90% government guarantee gets lenders past the fact that laundromats don't have real estate collateral — the equipment is the asset.

We routed the file to a Preferred Lender Program (PLP) SBA lender we work with regularly. PLP status matters here: it lets the lender make the credit decision in-house without kicking the file back to the SBA for review. That's the difference between 51 days and 90+ days.

The file structure:

• $680K SBA 7(a) at Prime + 2.75% (variable), 10-year fully amortizing
• $140K borrower equity injection (the SBA requires 10% minimum on acquisitions; we contributed 17% to earn a lower rate)
• Personal guarantee required by SBA statute — cannot be waived
• Life insurance policy assigned to the lender ($680K face value) — a common SBA condition, cheaper than the borrower expected (~$85/mo for a 45-year-old)

Documents we drove:

1. Three years of business tax returns (both locations — we got them from the seller's CPA under an NDA)
2. Trailing 12 months of P&L for the target location, tied to bank statements line by line
3. Business plan showing the combined operating model, staffing, and 3-year projections
4. Purchase agreement with a satisfactory-financing contingency in the borrower's favor

What we intentionally didn't do: we didn't try to finance the entire $820K with debt. Overleveraging an acquisition to skip the equity injection is how a great deal turns into a stress-tested one. The 17% equity kept debt service coverage above 1.4x on day one, which every SBA underwriter wants to see.

LOI signed on day 3. SBA package submitted on day 11. Lender credit committee approved conditionally on day 27. Final funding wire hit on day 51.

By month 6 post-close:

• Combined net operating income up 22% vs. the seller's trailing 12 months — cost savings from shared payroll and one bulk-detergent contract
• Debt service coverage at 1.72x, comfortably above the 1.25x SBA minimum
• Both locations retained 100% of key staff through the transition
• Owner is already scouting a third location — with two years of combined operating history, they'll qualify for a second SBA loan or a larger conventional refinance in 2027

The lesson: SBA acquisitions reward preparation, not speed. If you're going after a business, start the SBA conversation the day you get serious about the LOI — not after signing. The 51 days from LOI to close only works if the lender is warm before day one.