How Landscape Contractors Can Get Business Financing (And Why)

Updated on:
July 31, 2023

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Owning a landscaping company means operating in an industry that generates over $100 billion per year in the United States. In fact, the average American household spends about $500 per year on landscaping services, according to Statista.

The lawn care business requires its companies to design new landscaping, maintain and mow lawns, plant and care for trees and other plants, understand and implement irrigation, and coordinate with existing structures on a property to create beautiful spaces for homeowners, residential and commercial alike. With such a wide variety of jobs, success in the landscaping business means owning specialized tools, building a wide array of skills, and, often, using business financing to support all that work.

Why You Need Loans as a Landscape Contractor

As much as it’d be nice to simply jump right into the work, operating a landscape company has a few capital expenses (large dollar-amount purchases) that are unavoidable for its owner.

Landscaping Equipment

First and foremost, you’re going to need some machinery. There are mowers, of course. But you’re also going to need a vehicle capable of moving the heavy rocks and other decorative centerpieces found in landscaping projects. You’ll need hedge trimmers, edgers, and sprayers. You’ll need ladders and leaf blowers, and the list goes on and on. On top of all of that, you’re going to need to get that equipment from point A to point B, and that most likely means a truck.

Landscaping is a remarkably equipment-centric industry, and that means finding business funding that can help get a new business ready to take on serious projects. It means helping established landscaping business owners upgrade and improve their arsenal of tools to improve their ability to expand.

Buying An Existing Company

Lawn care companies and landscaping companies often are built around repeat customers. Many small business owners in the industry opt to purchase other companies to bring on their clientele and take advantage of existing relationships. Loans can help finance such a purchase.


The landscape industry is unique in that the product – a beautiful outdoor space – can often act as advertising in and of itself. But it’s not the only avenue landscape contractors take for marketing. Loans can help pay for pricy print advertising, billboards, social media campaigns, and even hiring an external firm to assist with getting your company’s name out there.

Working Capital

There are all sorts of expenses required for a landscaping company, and the fact of the matter is that for most of the country landscaping is a seasonal business. You don’t need a lawn mower in December in Cleveland. A loan used for working capital can help keep things afloat when your business faces slow seasons. It can be used to pay your employees, fill vehicles with gas, and generally keep your company’s bank account away from a dangerous low.

Forms of Landscaping Business Financing

The bottom line is that operating a landscaping business requires cash to start-up, grow, and operate throughout the year. Depending on your skills, your local ecosystem, and your goals, you can determine what purchases your business needs and use any of the following types of loans and alternative funding as the basis of your financing.

Traditional Lending

Traditional lending is the simplest of loan options out there. In a traditional loan agreement, a financial institution examines a possible borrower’s credit, including financial statements, credit history, and more. Depending on creditworthiness, the lender then doles out a loan, which business owners repay with interest using monthly payments.

The rate of interest (and the size of the monthly payments) is dependent on the size of the loan, the agreed-upon timeframe for repayment, and the borrower’s credit. These loans, also known as term loans, are flexible because they can be used to finance a wide variety of business expenses. You can use them to pay your team, buy a vehicle, stock up on mulch, or generally supplement your cash flow.

Remember, getting a loan is effectively asking a lender to make a bet. They’re betting on whether you’ll be able to repay the loan at the interest rate you’ve agreed upon. If you take the appropriate steps to prove that your company will be able to repay the loan, the lender will give more favorable loan terms. That means you have good credit, high annual revenue, excellent bookkeeping and accounting, and a strong business plan. If you’ve got bad credit, lenders might saddle you with higher interest rates, smaller loans, and shorter terms.

SBA Loans (Particularly Microloans)

The United States Small Business Administration (SBA) uses taxpayer dollars to guarantee a certain number of loans each year, and these loans are typically one of the best financing options a small business owner can use (if they’re able to qualify). While traditional loans put lenders at risk of losing money upon a borrower’s default, SBA loans are guaranteed by the SBA. That means that if the borrower is unable to pay the loan back, a large portion of the loan is repaid by the SBA. The risk of taxpayer dollars means that these loans are complicated to apply for and the loan application process can take weeks.

The SBA doesn’t want to repay those loans, so they’re very stringent about which businesses receive them. You’ll need excellent credit, typically a few years of revenue, and a robust business plan. In return, they tend to have extremely favorable repayment terms for borrowers.

There are two main forms of SBA loans to be aware of. SBA 7(a) loans can be for up to $5 million and have a repayment term of 10 years or 25 years, depending on the purpose of the loan (most likely 10 years for landscaping companies, as 25 years is reserved for larger real estate purchases). 7(a) loans are also variable rate loans. In addition to your interest rate being based on your credit history, the current US prime interest rate will also determine the interest you’ll pay on a 7(a) loan.

SBA 504 loans are fixed-rate loans of up to $5 million. The difference is that 504 loans must be used to finance assets that are intended to grow a business or create jobs. While 7(a) loans can be used in many different ways, 504 loans must be used for very specific projects – projects like landscaping, building new facilities, or modernizing roads. They’ve also typically got longer repayment terms.

Most helpfully in the landscaping business, the SBA also offers a microloan program. These are loans you’ll receive through local nonprofit groups. SBA microloans can be up to $50,000 and, like 7(a) loans, can be used for a variety of purchases. There’s certainly much to purchase when you’re first starting in the landscape business, but the expenses won’t be as high as they are for starting up a restaurant, for example. For that reason, microloans can be a great option.

Business Credit Cards

If you’ve got a personal credit card, you’ll know how a business credit card works. Depending on your credit score and other factors, a card issuer will determine a credit limit and interest rate. You can make purchases for your landscaping company, then make monthly payments based on what you’ve spent.

Also, like personal credit cards, one of the biggest benefits to the business credit card is its rewards. If you qualify for a business credit card that offers 3% cash back on gas purchases, and your company travels hundreds of miles to do jobs, that means that you can use that card to not only build credit but earn a little extra back on a purchase you were going to have to make anyway.

Equipment Loans

Equipment loans are meant specifically to help finance business equipment. As discussed earlier, the landscaping industry is strongly built around equipment: lawn mowers and tractors and trucks, and beyond. That dependence on equipment makes this form of financing a fantastic fit.

In equipment financing, the borrower and the lender agree upon a specific new piece of equipment, repair, or upgrade. The borrower makes a down payment, and then the financial institution pays for the remainder of the cost of whatever is being financed. The catch is that thereafter, the financial institution holds the equipment as collateral. If the borrower can’t repay the loan, the lender will swoop in to repossess and sell the equipment, minimizing loss.

While equipment loans don’t come with the ability to spend money however you’d like, the use of the purchased equipment as collateral means that interest rates are often comparatively low.

Business Lines of Credit

In a business line of credit, a borrower receives approval for a particular credit limit from a bank or other financial institution. After that, it works a lot like a credit card: the borrowing business only makes payments on money they’ve spent under that limit.

Lines of credit are helpful at those times when unexpected expenses pop up if you’re a lawn-care company and your lawn mower is irreparably damaged, you might be able to generate any money at all. Having a line of credit available means you can easily finance an emergency purchase and keep the cash flowing.

Alternative Financing

While many loan options are available, some forms of financing can work for landscape contractors outside of loans.

Merchant Cash Advances

Merchant cash advances are, by definition, not loans. Instead, the lender in a merchant cash advance buys a percentage of all future debit or credit card sales. In exchange, the company receiving the advance repays it with a factor rate multiplier, which is typically a number between 1 and 2.

Let’s say you receive a cash advance of $20,000 which you need to continue business operations. The cash advance provider gives you a factor rate of 1.1. That means that you’re going to repay the principal multiplied by the factor rate. In this case, 20,000 multiplied by 1.1, or 22,000. Payments are typically made daily, using an agreed-upon portion of card sales.

Cash advances are helpful because the payments vary with your transactions. Because of the seasonal nature of the landscaping business, there will inevitably be slow times and fast times. A cash advance during the slow times will require smaller payments, while a traditional bank loan might keep payments the same size, handicapping working capital.

Landscape Company Financing Can Be Complicated

Small business loans can feel very intimidating when you’re getting started with any company, from a trucking business to a pizzeria. So do your best to have a firm grasp of the purpose of your loan money and you’ll be able to use loans to build a profitable future for your growing landscaping business.

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