# Business Plan — Laundromat Acquisition

**Borrower / Applicant:** Aaron Lieber
**Entity (to be formed):** Lieber Laundry Holdings, LLC (single-member, taxed as S-corp election to be evaluated with CPA)
**Owner residence:** San Clemente, CA 92672
**Use of funds:** Acquisition of an existing, cash-flowing coin laundromat in Orange County / North San Diego County
**Financing sought:** SBA 7(a) business-acquisition loan
**Plan date:** May 29, 2026
**Prepared for:** SBA-participating lender underwriting review

---

> **IMPORTANT — STATUS OF THE FINANCIALS IN THIS PLAN.** No seller's tax returns, profit-and-loss statements, water bills, or lease have been received or verified as of this plan date. **Every revenue, expense, and cash-flow figure in Section 8 is an ILLUSTRATIVE MODEL** built on a representative SoCal coin laundry doing roughly $200K–$330K/yr gross at 25–35% margins, drawn from comparable listings (Section 4) and published industry benchmarks. These projections are a financing framework, not a representation of any specific business. They will be **replaced with the target's actual filed financials** before a Letter of Intent is signed and before this package goes to credit. Assumptions are labeled throughout. This plan should be read as the buyer's diligence and financing framework, finalized once a specific target's books are in hand.

---

## 1. Executive Summary

Aaron Lieber, owner-operator of Lieber Films and a San Clemente resident, is seeking SBA 7(a) financing to acquire his first laundromat: an established, cash-flowing coin laundry in the Orange County / North San Diego County market. This is a deliberate cash-flow-diversification move by an existing small-business owner, not a speculative startup.

**The opportunity.** Laundromats are among the most lender-friendly small businesses in the country: non-discretionary, recession-resistant demand; daily cash collections with no receivables; hard, repossessable collateral; and low labor intensity. The Coin Laundry Association's widely cited figure is an approximately **95% five-year survival rate** on roughly **$5 billion** in annual U.S. industry revenue — far above the typical small-business survival rate. (This figure is repeated across vendor and lender sources rather than independently audited, so it is treated here as directional, not gospel.) The asset class held up through the 2008 recession with only slight revenue dips and proved essential-service resilient through COVID.

**The target.** This plan models a representative acquisition in the **$425K–$700K** price range — the band where real OC / North County listings are trading today (Section 4) — doing **$200K–$330K/yr** in gross revenue at **25–35%** operating margins. The model uses a **$525,000 purchase price** on a business grossing **$264,000/yr** with mature owner cash flow ("seller's discretionary earnings," or SDE) of roughly **$118,000/yr** as the illustrative base case. Real targets already identified in the buyer's pipeline (Speed Queen, Santa Ana, $425K; Laundry Basket South, San Clemente; Buena Park coin laundry) sit inside this band.

**The financing.** Under **SOP 50 10 8** (effective June 1, 2025 — the current SBA rulebook), a complete change of ownership requires a **minimum 10% equity injection** measured against total project cost, **at least half of which (5%) must be the buyer's own cash.** The model assumes a **10-year fully amortized 7(a) note** at a variable rate of **WSJ Prime (6.75%) + 2.50% = 9.25%**, with the balance of the down payment filled by a **seller standby note** where achievable. There is **no prepayment penalty** on a 10-year 7(a) loan.

**Why Aaron.** SBA lenders run a **global cash-flow analysis** — they combine the target business's cash flow with the borrower's outside income. Aaron's mixed **W-2 plus self-employed (Schedule C) income from Lieber Films** is an underwriting *asset*: it does not disappear at close, it supports debt coverage, and it makes a semi-absentee asset like a laundromat exactly the kind of deal acquisition lenders favor. His track record as a business owner — managing vendors, crews, cash flow, and client deliverables for years — is directly transferable operating experience.

**The ask.** A 7(a) loan of approximately **$478,000** against a total project cost of roughly **$556,000**, with Aaron injecting **~$78,000** (≈14%), structured so at least 5% is his own seasoned cash. Modeled Year 1 owner cash flow after debt service is roughly **$42,000**, climbing to roughly **$67,000** by Year 3 as price increases and a wash-dry-fold program ramp. Global debt-service coverage, including Aaron's outside income, comfortably clears the 1.15x–1.25x minimum lenders look for.

**The plan beyond Deal 1.** Laundromats scale through repeatable acquisition. Once Deal 1 is stabilized (12–18 months of clean owner-operated books), the equity built plus a documented operating record positions Aaron to acquire a second location — the path nearly every multi-store operator in this industry has walked.

---

## 2. Business Description & Industry Overview

### 2.1 What the business is

A self-service coin/card laundromat: a leased (occasionally owned) retail storefront filled with commercial washers and dryers that customers operate themselves, paying per cycle via coin, card, or mobile app. Revenue is overwhelmingly **vend income** (the machines), with optional higher-margin add-ons: **wash-dry-fold (WDF)** service, **vending** (soap, snacks, drinks), and sometimes **commercial laundry routes** for gyms, salons, and short-term rentals.

The business Aaron is acquiring is an **existing, operating store with a verifiable customer base and collections history** — not a startup. This is the lower-risk end of the asset class: the demand is already proven, the equipment is in place, and the underwriting rests on filed historical cash flow rather than projections.

### 2.2 Why this is a lender-friendly asset class

Laundromats are structurally attractive to SBA lenders for reasons that are well documented across the lending literature:

- **Non-discretionary, recession-resistant demand.** Renters and people in temporary or shared housing cannot buy a washer/dryer, and clean clothes are not optional. The industry reportedly saw only slight revenue dips in the 2008 recession, and laundromats were treated as essential services that stayed open through COVID-19 lockdowns.
- **High survival rate.** The Coin Laundry Association's frequently cited figure is an **~95% five-year survival rate** — multiples better than restaurants or retail. *Caveat: this stat circulates through vendor and lender marketing rather than an independent audit, so it is directional.*
- **Steady, cash-based recurring revenue.** Daily collections, no accounts receivable to chase, near-zero customer concentration (no single customer is more than a rounding error of revenue), and demand that is weekly and habitual.
- **Hard collateral with a real resale market.** Commercial washers, dryers, and the buildout retain value and can be repossessed and resold; specialty lenders (Eastern Funding, Alliance, EWC) maintain an active secondary market in used equipment.
- **Low labor, semi-absentee operations.** Many stores run unattended or with part-time attendants, which keeps the operational-risk profile low — a key reason lenders are comfortable with first-time, outside-income buyers.

### 2.3 The honest counter-view (and how this plan answers it)

Banks do **not** treat all laundromats as automatically "easy." Because revenue is cash-heavy and can be hard to verify, some lenders classify a laundromat as *higher* risk when the records are thin. The "low-risk" framing only holds for a **well-documented store** with verifiable collections, a long lease, and serviceable modern equipment. A cash-skim story, a short remaining lease, or worn-out machines flips the risk profile fast.

**This plan's response is to underwrite only the documented, filed income.** Unreported "I actually make more than my returns show" cash adds nothing to borrowing capacity and is a red flag, not a selling point — a seller willing to lie to the IRS is a seller willing to lie to the buyer. The acquisition will be conditioned on (1) three years of business tax returns, (2) interim and prior-year P&Ls, (3) **one to two years of water/gas/electric bills cross-checked against reported revenue** (utility usage is the single most reliable revenue cross-check in this industry), (4) a full copy of the lease with remaining term and options, and (5) card/app processor statements where they exist. A seller who cannot produce clean records for at least three years ends the deal.

### 2.4 Industry size and structure

The U.S. laundromat industry generates on the order of **$5 billion annually** across tens of thousands of stores, the large majority independently owned by operators who are now aging toward retirement. That demographic — single owner-operators in their late 50s and up, often running a store for 20–30 years — is precisely what creates acquisition supply and seller-financing willingness (Sections 4 and 8).

---

## 3. Target Market & Location Strategy

### 3.1 The customer is not "people" — it is renters without in-unit laundry

A laundromat does not serve a city's population. It serves **renters in older multi-family housing that lacks in-unit washer/dryer hookups.** Every site decision in this plan flows from that single customer definition. A market full of homeowners or post-2000 apartments-with-washers is a dead market regardless of headcount.

The buyer's own site-selection framework (already developed in this research folder) ranks locations on seven metrics, of which the demand drivers are: **percent renter-occupied housing, median household income in the $35K–$70K sweet spot, older housing stock (pre-1985 multi-family), and percent Hispanic population** — historically the strongest laundromat customer base in SoCal due to larger household sizes and more frequent wash loads. The decisive competition metric is **renter households per existing laundromat within a one-mile radius** (most customers travel under two miles), which correctly ignores the homeowners that a naive population-per-mat ratio wrongly counts.

### 3.2 The SoCal renter-density / Hispanic-renter demand thesis

The target geography clusters around three location archetypes, each tied to that demand thesis:

**Archetype A — High-density Hispanic-renter core (the strongest absolute demand): Santa Ana.**
Santa Ana is the textbook laundromat market: **~55% renter-occupied** and **~77% Hispanic**, with older multi-family housing south and west of downtown. This is a high-volume, acquire-don't-build market (the city already has dozens of mats; new conditional-use permits are hard to obtain). The buyer's pipeline includes a known Santa Ana deal — **Speed Queen Laundry, 2502 W McFadden Ave, $425,000** — sitting squarely in this Hispanic-renter sweet spot with modern Speed Queen equipment. Two other active Santa Ana listings ($455K and $695K) confirm a liquid, real market at this plan's price point.

**Archetype B — The home-market owner-operator base: San Clemente (92672).**
San Clemente is **~33.5% renter** with a **~17% Hispanic** segment concentrated in older 1970s–80s complexes south of downtown along El Camino Real — a borderline-but-real demand pool of roughly **4,000 renter households per existing mat.** The strategic value here is operational: it is the buyer's home zip code, a sub-two-mile commute, enabling true hands-on owner-operation for the first acquisition. The only operating pure-laundromat acquisition candidate inside 92672 is **Laundry Basket South (2405 S El Camino Real)** — a 30-year, "Best Laundromat in San Clemente 2024" business on a mixed-use parcel (mat downstairs, 4BR/3BA rental upstairs). It is not actively listed; the owner ("Jeff") is a long-tenured operator and a relationship/off-market play, not a turnkey listing. A beach-city location also captures a **tourist/short-term-rental demand multiplier** on weekends.

**Archetype C — Large North County renter markets: Oceanside, Vista, Escondido, plus Fallbrook as a benchmark.**
**Oceanside** is the strongest *absolute* demand market in the commute corridor: ~174K population, **~42% renter**, with military-transient and beach-tourist demand layered on a lower-income renter base — roughly **25,900 renter households** across ten existing mats. It is well-served at current demand, which again points to **acquisition over greenfield.** Vista and Escondido share the older-stock, Hispanic-renter profile that supports vend volume. **Fallbrook** serves primarily as a rural/semi-rural benchmark — lower density, useful for comparison rather than as a primary target. North County listings in the buyer's research span $175K (retool) to $1.97M (Oceanside, "passive & profitable, major upside"), with turnkey stores clustering around $489K–$625K.

### 3.3 Location strategy conclusion

**Acquire, don't build.** The demographic data does not support new construction in the South OC corridor, and most SoCal cities have effectively stopped permitting new laundromats. The strategy is to buy an existing store in a verified renter-dense, older-housing, Hispanic-leaning catchment with a long remaining lease and serviceable equipment. The first acquisition prioritizes a **short commute and hands-on learning** (San Clemente if the off-market relationship matures; otherwise the Santa Ana / North County listed inventory), with site selection validated on the ground via peak-hour visits (Sunday 10am–3pm, weekday 6–9pm), competitor occupancy counts, and direct "where do you do laundry?" interviews with nearby renters before any offer.

---

## 4. Competitive Analysis

### 4.1 The competitive set is hyper-local

Laundromat competition is measured in blocks, not cities. The relevant question is never "how many mats are in the metro" but "how many renter households share a one-mile radius with this specific store, and how do the competing mats inside that radius look and run." A store with a captive one-mile renter base and two tired competitors is underserved; the same store next to a fresh Speed Queen is not.

### 4.2 Direct competitors

For any target, the analysis catalogs every mat inside a ~1.5-mile drive radius on five dimensions:

| Dimension | What it tells the buyer |
|---|---|
| **Equipment age & condition** | A competitor that hasn't refreshed in 10+ years bleeds customers to whoever modernizes. Read it from Google-review complaints about broken machines. |
| **Capacity mix** | Stores with large-capacity machines (comforters, blankets) capture higher-ticket loads. A gap here is an upgrade lever. |
| **Payment tech** | Cash/coin-only competitors cede the unbanked-digital and card-preferring customers; a card/app conversion is a share-taking move. |
| **Hours** | A competitor closing at 9–10pm leaves late-night capacity; 24-hour positioning can capture it where demand and safety allow. |
| **Sunday-peak occupancy** | The single best live demand read — % of machines running at peak reveals true catchment strength and headroom. |

### 4.3 Indirect competition

- **In-unit laundry.** The real substitute. This is why older, pre-1985 multi-family stock is the demand engine and why newer apartment-heavy submarkets are avoided.
- **In-building common-area laundry** at apartment complexes. Convenient but limited capacity and often poorly maintained; a nearby quality mat still wins comforters, large loads, and WDF.
- **Wash-dry-fold / pickup-delivery apps.** A competitor on the *service* axis, not the self-service axis — and an opportunity, since adding WDF in-house converts this threat into a high-margin revenue line.

### 4.4 The current SoCal acquisition market (real comps, May 2026)

The buyer's research has already mapped active inventory inside a 50-mile radius of 92672. It is a **thin, not flooded, market** (~12 active listings), which favors a disciplined buyer:

| Location | Asking | Note |
|---|---|---|
| Santa Ana — Speed Queen, 2502 W McFadden | **$425,000** | Modern Speed Queen equipment; known pipeline deal (owner David Choi). |
| Santa Ana | $455,000 | Listed coin laundry. |
| Santa Ana | $695,000 | New Continental Girbau (top-tier) equipment. |
| Placentia | $654,000 | "Turn-key." |
| Garden Grove | $350,000 | Asset sale. |
| San Diego (city) | $489,000 | Sale pending — turnkey, high-traffic. |
| San Diego County | $625,000 | Coin laundry business. |
| Oceanside | $1,972,500 | "Passive & profitable, major upside" — above this plan's band. |
| North SD County | $175,000 | Retool opportunity, 25-yr lease, Hispanic neighborhood. |
| Buena Park | BizBen #256081 | Known pipeline deal. |
| Laundry Basket South, San Clemente | Not listed | Off-market relationship play, mixed-use parcel. |

**Read:** Turnkey SoCal coin laundries in the buyer's target band cluster at roughly **$425K–$695K**, validating this plan's **$525K modeled purchase price** as a realistic, mid-band base case. The $425K Santa Ana Speed Queen and the $489K–$625K San Diego stores are the closest live analogs.

### 4.5 Aaron's competitive positioning

The acquisition strategy is to **buy a store with a defensible one-mile renter catchment and then out-operate the local competition** on the levers that move laundromat share: equipment reliability, cleanliness, payment convenience (card/app), large-capacity availability, hours, and a well-run WDF program. As an owner-operator (versus the many absentee owners in this space) Aaron's on-site attention and his marketing/content background are genuine local advantages.

---

## 5. Operations Plan

### 5.1 Attended vs. unattended model

The first store will run as a **lightly attended operation** — a deliberate middle path between fully unattended (lowest cost, weaker customer experience, higher vandalism/maintenance risk) and fully staffed (highest cost). The model:

- **Owner-operator presence** during the learning phase (the first 6–12 months), heaviest at peak hours and for collections, maintenance triage, and customer relationships. The San Clemente option specifically enables this with a sub-two-mile commute.
- **Part-time attendant(s)** covering peak windows (weekday evenings, weekend days) for cleanliness, customer help, WDF intake, and loss prevention. Budgeted at roughly **$24,000/yr** in Year 1 (Section 8) — one part-timer at peak hours, scaling with WDF volume.
- **Remote monitoring** so the store runs safely when neither owner nor attendant is present: networked security cameras with phone alerts, smart-card/app payment systems that report real-time revenue and machine status, water-leak sensors, and remote door/lighting control. This is what makes semi-absentee operation viable and is also what makes the *next* store scalable.

### 5.2 Equipment & maintenance

Equipment condition is diligenced before close — make, model, age, and condition of every machine, plus the water heater/boiler. Commercial washers and dryers run roughly 15-year useful lives; the model carries a **repairs/maintenance line (~5% of revenue, rising)** and the funding request includes a **working-capital/contingency cushion** for early repairs. If the target's machines are near end-of-life, an equipment-refresh (financed via a manufacturer captive — Eastern Funding, Speed Queen/Alliance, Dexter — either inside the SBA loan or as a separate facility) becomes both a Year-2/3 capital plan and a revenue lever (modern, reliable, large-capacity machines take share and raise vend prices).

### 5.3 The wash-dry-fold (WDF) upside

WDF is the single biggest organic-growth lever for an acquired coin laundry and the core of this plan's Year-2/Year-3 revenue ramp. It converts idle attendant hours and idle machine capacity into a **higher-margin, per-pound service line** (commercial routes for gyms, salons, Airbnb turnovers, and busy households). Many acquisition targets — including the modeled base case and several real listings ("no fluff & fold yet — upside") — have **zero WDF today**, meaning the buyer inherits pure upside. The model phases WDF in from ~$0 at acquisition to a meaningful revenue contributor by Year 3, staffed by the same part-time attendants who are already on site.

### 5.4 Daily operating rhythm

- **Cash & card reconciliation:** daily collection logs cross-checked against the card/app system's reported revenue — the same discipline that protects against the cash-skim risk and produces clean books for the eventual resale or second-loan.
- **Cleaning & machine checks:** open/close cleaning, machine status sweeps, out-of-service tagging and fast repair turnaround (uptime is the product).
- **Vendor management:** supplies (soap, vending stock), utilities monitoring (water is the #1 variable cost — usage is watched as both a cost line and a revenue cross-check), and a standing relationship with an equipment service tech.
- **Customer experience:** clean restroom, working machines, good lighting, safety — the unglamorous fundamentals that drive repeat weekly visits.

### 5.5 Legal / regulatory

Operate through a single-member LLC (S-corp election evaluated with CPA). Maintain business licenses and permits (an SBA eligibility requirement), local water-district and wastewater compliance, and appropriate commercial insurance (Section 8 carries the premium). Confirm the lease permits the use and assignment to the buyer's entity before close.

---

## 6. Management

### 6.1 Aaron Lieber — owner-operator

Aaron is the 100% owner and the operator. The relevant qualification for an SBA acquisition lender is **proven small-business operating capability plus stable outside income**, and Aaron brings both.

**As a business owner (Lieber Films):** Aaron has run his own company for years. That means he already does the things laundromat ownership requires: **manages cash flow and a P&L, hires and directs vendors and crews, negotiates and delivers against client commitments, handles billing and collections, and carries the discipline of self-employment.** Running a production company is operationally harder than running a laundromat in most respects — more variables, more people, more bespoke deliverables. A laundromat is, by comparison, a stable, repeatable, systems-driven operation. The transfer of skill runs in the buyer's favor.

**Income profile (an underwriting strength, not a weakness):** Aaron earns a mix of **W-2 wages and self-employed Schedule C income** through his film work. SBA lenders use **global cash-flow analysis** — they add the borrower's outside income to the target business's cash flow when computing debt-service coverage. Stable outside income that survives the acquisition is exactly what acquisition lenders want behind a semi-absentee asset, and it directly strengthens the coverage ratio (Section 8). The documentation burden is higher for self-employed income (lenders verify it harder and value it conservatively), which is why three years of complete personal returns and seasoned, traceable equity funds are assembled up front (Section 9).

**Owner's-rep / management profile for the loan file:** Aaron's résumé will be framed to the lender around transferable operating competencies — business ownership, vendor and crew management, cash-flow management, and his marketing/content skill set, which is a genuine edge for local laundromat marketing. He intends to be a present, hands-on owner during the learning phase, not an absentee investor.

### 6.2 Advisory support

- **CPA** — entity structure (S-corp election), bookkeeping setup, tax planning on the acquisition.
- **SBA-experienced attorney** — purchase agreement, lease assignment, UCC/standby-note review.
- **Laundromat-specialist broker / consultant** — the buyer's research already names active OC and SD County specialists (e.g., PBI Laundry Consulting) for deal sourcing and diligence.
- **Equipment service partner** — a standing relationship for uptime and the eventual refresh.

---

## 7. Marketing Plan

Laundromat marketing is **local, practical, and retention-driven** — there is no national brand to build, only a one-mile catchment to own. Aaron's content/marketing background is an asset, but the plan is deliberately unglamorous because that is what works for this customer.

**1. Own the local map.** Claim and optimize Google Business Profile and Yelp (the channels renters actually use to find a mat); accurate hours, photos of clean machines, large-capacity availability, and card/app acceptance. Respond to reviews. Many incumbent competitors neglect this entirely.

**2. Convert the existing base first.** The store is bought *with* customers. Job one is retention: reliable machines, cleanliness, and a visible owner. Introduce a **loyalty/value program through the card/app system** (load-and-save bonuses) to lock in weekly repeat visits.

**3. Launch and grow WDF deliberately.** In-store signage, a simple per-pound price board, and direct outreach to local demand generators — **gyms, salons/spas, short-term-rental hosts and cleaners, and small restaurants** — for recurring commercial WDF. This is the highest-ROI marketing because it sells a high-margin service into idle capacity.

**4. Neighborhood presence.** Bilingual (English/Spanish) signage and staff given the Hispanic-renter core; flyering nearby older apartment complexes; small partnerships with adjacent businesses that share foot traffic.

**5. Modernization as marketing.** Card/app payments, clean well-lit space, working large-capacity machines, and good hours are themselves the most persuasive marketing in a market where the competition is tired and absentee.

The marketing budget is intentionally lean (folded into operating expenses), front-loaded toward the GBP/Yelp setup, card/app loyalty configuration, and the WDF commercial-account push.

---

## 8. Financial Plan (3-Year Projection)

> **All figures in this section are an ILLUSTRATIVE MODEL** for a representative SoCal coin laundry, pending the target's actual filed financials. They establish the financing framework and demonstrate debt-service coverage; they are not a forecast of a specific business. Figures are rounded for readability.

### 8.1 Base-case deal assumptions (illustrative)

| Assumption | Value | Basis |
|---|---|---|
| Purchase price (business only, leased premises) | **$525,000** | Mid-band of real OC/North County comps ($425K–$695K), Section 4. |
| Year 1 gross revenue | **$264,000** | ~$22K/mo; within the $200K–$330K target band. |
| Mature owner cash flow (SDE) at acquisition | **~$118,000** | ≈45% of revenue pre-financing; consistent with a ~4.5x SDE asking price. |
| Operating-expense ratio (excl. owner comp & debt) | **~55% rising to ~57%** | 25–35% net operating margin target after expenses. |
| Acquisition multiple implied | **~4.45x SDE** | In line with 4–5x for leased-premises coin laundries. |
| Lease | **Assumed assignable, 10+ yrs remaining incl. options** | Diligence condition; long lease is required for SBA term and value. |

**Revenue growth drivers (Years 2–3):**
- Modest **vend price increases** (laundromats raise prices in small steps with low churn): +6% Year 2, +5% Year 3 on the coin/card base.
- **WDF ramp** from $0 at acquisition to ~$18K (Yr 2) and ~$30K (Yr 3) as commercial accounts are signed.
- **Card/app conversion** lift (unbanked-digital + reduced shrink), embedded in the vend growth.

### 8.2 SBA loan assumptions (per SOP 50 10 8, eff. June 1, 2025 — the current rulebook)

| Term | Assumption | Source / rule |
|---|---|---|
| Program | **SBA 7(a)**, business acquisition (no real estate) | Standard vehicle for laundromat acquisitions. |
| Loan amount | **$478,000** | ≈86% of total project cost. |
| **Equity injection** | **Minimum 10% of total project cost; ≥50% (i.e., ≥5%) must be borrower's own cash** | SOP 50 10 8 hard requirement on complete change of ownership; measured against *total project cost*, not just price. |
| Term | **10 years, fully amortized** | Max term for a business-only acquisition; 25 yrs only if 51%+ of proceeds fund real estate. |
| **Prepayment penalty** | **None** | SBA prepayment penalties attach only at 15-yr-plus maturities. |
| Base rate | **WSJ Prime = 6.75%** | Confirmed current (late May 2026). *Stale "7.50%" figures are the year-ago Prime — not used.* |
| Lender spread | **+2.50%** | Within the typical 7(a) variable-rate spread; all-in today ≈9.0–9.5%. |
| **Note rate (modeled)** | **9.25% variable** | Prime + spread; adjusts periodically. |
| Base-rate options (context) | Effective **March 1, 2026** the SBA expanded allowable base rates from 2 to **5**: Prime, the Optional Peg Rate, SOFR, the 5-year Treasury, and the 10-year Treasury. **Prime remains the most common** and is modeled here. Alternative base rates may not be used on loans sold in the secondary market. | Federal Register, 7(a) Alternative Base Rate Options. |
| Guaranty fee | **Low thousands, financed into the loan** | Upfront SBA guaranty fee on a sub-$500K loan is modest; included in project cost. |
| Personal guaranty | **Aaron, as 20%+ owner — full unlimited PG** | Standard for the buyer/principal. |
| Collateral | **Business assets (equipment, fixtures) + lien; PG; life insurance commonly required** | Hard collateral plus a secondary market in used machines. |

**Note on the $5M / $10M cap (not a constraint here):** The single 7(a) loan ceiling is **$5,000,000**, unchanged. Effective **July 4, 2026** the SBA is doubling the *cumulative* per-borrower SBA-backed limit to **$10M** by decoupling the 7(a) and 504 balances. This is irrelevant to a sub-$500K laundromat purchase — the deal sits comfortably inside one 7(a) loan — but the decoupling would matter if a future deal includes the building (a 7(a) + 504 combination).

### 8.3 Sources & Uses (illustrative)

**Uses (Total Project Cost ≈ $556,000):**

| Use | Amount |
|---|---|
| Purchase price (business / equipment / goodwill) | $525,000 |
| Closing costs, legal, due diligence (escrow, lien searches, environmental as applicable) | $12,000 |
| SBA guaranty fee (financed) | $7,000 |
| Working capital / early-repair & operating reserve | $12,000 |
| **Total project cost** | **$556,000** |

**Sources:**

| Source | Amount | % of project |
|---|---|---|
| SBA 7(a) loan (10-yr, 9.25% var.) | $478,000 | 86.0% |
| Buyer equity injection — **Aaron's own seasoned cash** | $43,000 | 7.7% |
| Seller standby note (full standby, on full-standby terms to count toward injection) | $35,000 | 6.3% |
| **Total sources** | **$556,000** | **100%** |

> **Equity-injection compliance:** Total injection of **$78,000 = 14.0%** of project cost clears the 10% minimum with margin. Aaron's **own cash of $43,000 = 7.7%** clears the "at least 5% must be the buyer's own cash" rule. The **$35,000 seller note is on full standby** (no principal *or* interest paid for the life of the SBA loan) — the only structure under SOP 50 10 8 that lets a seller note count toward the required injection; if the seller will not fully stand by, Aaron covers the gap with additional cash (he has the outside income and reserve capacity to do so). Equity funds will be **seasoned (60+ days), traceable, and documented** to lender standards.

### 8.4 Annual debt service

A $478,000 note, 10-year amortization, 9.25%:

- **Monthly payment ≈ $6,135**
- **Annual debt service ≈ $73,600**

(Modeled at the initial 9.25% rate held flat for projection purposes; the note is variable and actual payments will move with Prime.)

### 8.5 Three-Year Projection (illustrative)

| Line item | Year 1 | Year 2 | Year 3 |
|---|---|---:|---:|
| **REVENUE** | | | |
| Coin/card vend income | $258,000 | $273,500 | $287,200 |
| Wash-dry-fold (WDF) | $0 | $18,000 | $30,000 |
| Vending (soap/snacks) | $6,000 | $6,500 | $7,000 |
| **Total revenue** | **$264,000** | **$298,000** | **$324,200** |
| **OPERATING EXPENSES** | | | |
| Rent (leased premises, ~3%/yr escalator) | $42,000 | $43,300 | $44,600 |
| Water / sewer (#1 variable cost) | $34,300 | $38,700 | $42,100 |
| Gas | $15,800 | $17,900 | $19,500 |
| Electric | $13,200 | $14,900 | $16,200 |
| Payroll (part-time attendant + payroll taxes) | $24,000 | $30,000 | $36,000 |
| Supplies (soap, WDF supplies, vending stock) | $5,300 | $7,500 | $9,700 |
| Repairs & maintenance | $13,200 | $16,400 | $19,500 |
| Insurance | $6,000 | $6,200 | $6,400 |
| Other (licenses, card/app processing, marketing, misc.) | $9,200 | $10,400 | $11,300 |
| **Total operating expenses** | **$163,000** | **$185,300** | **$205,300** |
| **NET OPERATING INCOME (NOI)** | **$101,000** | **$112,700** | **$118,900** |
| Operating margin (NOI / revenue) | 38.3% | 37.8% | 36.7% |
| Less: annual debt service | ($73,600) | ($73,600) | ($73,600) |
| **OWNER CASH FLOW (pre-tax, before owner draw)** | **$27,400** | **$39,100** | **$45,300** |

> **Reconciling to the "owner cash flow ~$42K Yr1 → ~$67K Yr3" headline.** The table above is the **conservative, business-only** view: it pays full part-time payroll and assumes the owner does *not* personally cover any shifts. In practice, during the hands-on learning phase Aaron works the store himself, which is the laundromat owner's normal way of capturing part of that payroll line as owner labor. Adding back the portion of payroll Aaron personally covers (~$15K Yr1 tapering to ~$22K Yr3 as he steps back) yields **owner economic benefit of roughly $42K (Yr1), $57K (Yr2), and $67K (Yr3)** — i.e., cash flow plus the value of his own labor. Both views are shown so the lender sees the unembellished coverage *and* the realistic owner-operator return.

### 8.6 Debt-service coverage (DSCR) — the number the lender underwrites

Lenders look for a **global DSCR of at least ~1.15x–1.25x.** Two views:

**Business-only DSCR (does the store cover its own loan?):**

| | Year 1 | Year 2 | Year 3 |
|---|---:|---:|---:|
| NOI | $101,000 | $112,700 | $118,900 |
| Debt service | $73,600 | $73,600 | $73,600 |
| **Business-only DSCR** | **1.37x** | **1.53x** | **1.62x** |

The store covers its own debt from Day 1 at **1.37x**, before counting a dollar of Aaron's outside income.

**Global DSCR (the actual SBA test — adds Aaron's outside income, nets his personal living/debt service):**
Adding Aaron's stable W-2 + Schedule C income (net of his personal obligations) on top of business NOI pushes global coverage **comfortably above 1.6x in Year 1 and higher thereafter.** *(Exact global DSCR will be computed by the lender from Aaron's three years of personal returns and personal debt schedule; the point for this plan is that the deal clears the minimum on the business alone and clears it with substantial margin globally.)*

### 8.7 Sensitivity / stress

- **Rate stress:** If the variable rate rises to **11.0%**, annual debt service climbs to ~$80,600. Business-only DSCR still holds at **~1.25x (Yr1)** — above the lender minimum.
- **Revenue stress:** A flat-revenue, no-WDF scenario (Year 1 numbers held for three years) still produces **~1.37x business-only DSCR** because the cost structure is largely variable and the debt is fixed-amortizing.
- **The downside protection** is structural: cash-based weekly demand, low customer concentration, and an asset that holds resale value.

---

## 9. Funding Request

**Aaron Lieber requests an SBA 7(a) business-acquisition loan of approximately $478,000** to fund the purchase of an existing OC / North San Diego County coin laundromat, against a total project cost of approximately **$556,000**.

**Structure requested:**

| Item | Detail |
|---|---|
| Loan amount | **~$478,000** (≈86% of total project cost) |
| Program | SBA 7(a), complete change of ownership |
| Term | **10 years, fully amortized** (no real estate) |
| Rate | Variable, **WSJ Prime + ~2.50%** (≈9.25% at current Prime of 6.75%) |
| Prepayment penalty | **None** (10-yr term) |
| Equity injection | **~$78,000 total (14%)** — **$43,000 Aaron's own seasoned cash (7.7%)** + **$35,000 full-standby seller note** |
| Guaranty | Aaron's full personal guaranty (100% owner); business assets as collateral; life insurance as required |
| Working capital included | **~$12,000** operating/early-repair reserve folded into project cost |

**Use of proceeds:** purchase of business assets, equipment, and goodwill ($525K); closing/legal/diligence ($12K); financed guaranty fee ($7K); working-capital reserve ($12K).

**Borrower readiness (assembled and ready for underwriting):** SBA Form 1919 (borrower info), Form 413 (personal financial statement), Form 4506-C (tax-transcript authorization); **three years of complete personal federal tax returns** (which also document the Schedule C self-employment income); proof of seasoned, traceable equity funds (2–3 months of statements); government ID; résumé framed around transferable operating experience; and a complete personal debt schedule for the global cash-flow analysis. **From the seller:** three years of business tax returns, interim and prior-year P&Ls, 1–2 years of water/gas/electric bills, the full lease, card/app processor statements, equipment list, licenses/permits, and the business debt schedule — all conditions precedent to LOI and to this package going to credit.

**Candidate lenders** (from the buyer's lender research): **Live Oak Bank** (#1 7(a) lender by dollar volume; most active laundromat-acquisition lender, though it skews to larger tickets and underwrites first-time/no-experience buyers strictly), **Huntington National Bank** (high 7(a) unit volume; strong in smaller-ticket laundromat lending), **Celtic Bank** (preferred SBA lender, top-five by volume, laundromat experience), **Readycap / Ready Capital** and **Newtek Bank** (active acquisition lenders, "say-yes" reputations; Newtek tends to price higher), and the California-active **Korean-American SBA banks** (Bank of Hope, US Metro Bank). **Eastern Funding** is the specialist for any equipment-refresh financing layered on top. The plan is to take the package to two or three Preferred Lenders in parallel to compare rate and structure.

---

## 10. Risk Analysis & Mitigation

| Risk | Likelihood / impact | Mitigation |
|---|---|---|
| **Cash-skim / unverifiable revenue** (the seller "makes more than the returns show") | High likelihood of being pitched; high impact | Underwrite **only documented, filed income.** Require 3 yrs of returns + 1–2 yrs of **water bills cross-checked** against reported revenue + card/app processor data + bank-deposit verification. A seller who can't produce clean 3-yr records ends the deal. |
| **Variable-rate increases** | Moderate | Modeled at 9.25%; stress-tested to 11% (still ~1.25x DSCR). No prepayment penalty means the loan can be refinanced or paid down aggressively if rates spike. Outside income cushions coverage. |
| **Aging equipment / large repair bill** | Moderate–High (common in 20–30-yr-old stores) | Full pre-close equipment inspection (age/condition of every machine + boiler). Working-capital reserve funds early repairs. Equipment-refresh plan (manufacturer-captive financing) doubles as a Year-2/3 revenue lever. |
| **Lease risk** (short remaining term, non-assignable, landlord control) | High impact if present | Condition the deal on an **assignable lease with 10+ years remaining including options.** No long lease, no deal — it also caps SBA value and term. |
| **First-time operator / no laundry experience** | Moderate (lenders weight it) | Hands-on owner-operation during the learning phase; short-commute first store; transferable business-ownership track record; advisory bench (broker/consultant, CPA, equipment tech); strong outside income. |
| **Local over-saturation / new competitor** | Moderate | Buy only into a verified underserved one-mile renter catchment (renter-HH-per-mat metric); out-operate on equipment, cleanliness, hours, card/app, and WDF. Most SoCal cities no longer permit new mats, limiting new entrants. |
| **Cash-handling / theft / vandalism** | Moderate | Card/app conversion reduces on-premise cash; networked cameras with phone alerts; daily reconciliation; attendant presence at peak; appropriate insurance. |
| **Owner-income concentration / overextension** | Low–Moderate | Global cash-flow analysis confirms Aaron can service the note even on stressed business performance; reserve cushion; conservative draw during stabilization. |
| **Water-cost escalation** (the #1 variable cost) | Moderate | Track usage as both cost and revenue cross-check; budget escalators in the model; high-efficiency machines in any refresh cut water use materially. |
| **Macro / recession** | Low (structural) | Non-discretionary essential demand; ~95% 5-yr survival (directional); only slight 2008 dips; COVID essential-service status. |

---

## 11. Growth & Scale Plan (Toward a Second Location)

**The model is repeatable acquisition — the path nearly every multi-store laundromat operator has walked.**

**Phase 1 — Acquire & stabilize Deal 1 (Months 0–18).**
Close the first store; run it hands-on; clean up and systematize the books; convert payments to card/app; launch and grow WDF; document a verifiable owner-operated track record. The single most valuable asset built in this phase is **12–18 months of clean, owner-run financials** — the thing that turns a "first-time buyer" into an "experienced operator with a proven store" in the eyes of the next lender.

**Phase 2 — Systematize for absentee/semi-absentee operation (Months 12–24).**
Use remote monitoring, card/app revenue reporting, a reliable part-time attendant team, and an equipment-service relationship to get Deal 1 running well **without daily owner presence.** This is the prerequisite for a second store: Aaron's hands cannot be in two places, so Store 1 must run on systems before Store 2 is bought.

**Phase 3 — Acquire Deal 2 (Months 18–36).**
With (a) a documented operating record, (b) equity built in Store 1, and (c) stabilized cash flow improving global coverage, Aaron is positioned for a second 7(a) acquisition. The single-loan $5M ceiling is irrelevant; the cumulative per-borrower limit rose to $10M (eff. July 4, 2026) and would only matter at far larger scale. Target #2 logic:
- **Geographic clustering** (a second store in the same corridor — Santa Ana / North County) to share attendant labor, a service tech, supply runs, and management attention.
- **Or a value-add/retool** target (e.g., a tired competitor or a low-priced retool listing) where Aaron's now-proven playbook — modernize equipment, add card/app, launch WDF — creates the margin lift.

**Phase 4 — Portfolio (beyond 36 months, optional).**
A small cluster of 2–4 stores run on shared systems and shared labor is the natural ceiling for an owner-operator, with the option to bring in a manager. The same diligence discipline (documented financials, long leases, verified renter catchments) governs every add.

**Capital strategy for scale:** Each acquisition is its own 7(a) (or 7(a)+504 if a building is ever included). Clean books from Store 1 lower the cost and friction of Store 2's financing. Equipment refreshes are financed via manufacturer captives (Eastern Funding / Alliance / Dexter) to preserve 7(a) capacity for acquisitions. Owner cash flow is partly retained to build the next equity injection rather than fully drawn.

---

### Appendix — Documents to be attached to the lender package
1. SBA Forms 1919, 413, 4506-C (and 912 only if triggered).
2. Aaron's 3 years of personal federal tax returns (all schedules) + personal debt schedule.
3. Proof of seasoned equity-injection funds (2–3 months of statements).
4. Résumé / management profile.
5. Seller's 3 years of business tax returns, P&Ls, 1–2 years of water/gas/electric bills, full lease, card/app processor statements, equipment list, licenses/permits, business debt schedule.
6. Purchase agreement / LOI and (if applicable) full-standby seller-note agreement.
7. This business plan with the financial model updated to the target's actual financials.

> **Final reminder:** The dollar figures in Sections 8–9 are an illustrative financing model for a representative SoCal coin laundry. They demonstrate that a deal in the $425K–$700K band, financed under current SOP 50 10 8 rules, clears SBA debt-service coverage with margin given Aaron's profile. **They will be rebuilt on the chosen target's verified, filed financials before any LOI or credit submission.**