Case Study · New Mexico · Laundromat · SBA 7(a)
Laundromat Feasibility Study, New Mexico — An SBA 7(a) Worked Case
This is how our independent feasibility study company and consultant team analyzed a new-build attended self-service laundromat underwritten to an SBA 7(a) credit, from trade-area renter demand and turns-per-day through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in a dense, renter-heavy submarket of a major New Mexico metro.
A large modern laundromat in a renter-dense New Mexico submarket.
A sponsor came to our feasibility study company with a ground-up self-service laundry project and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a new, roughly 4,500-square-foot attended laundromat — larger than the industry-median store of about 2,850 square feet — with a full card-and-app payment system and an attached wash-dry-fold and pickup-and-delivery service, in a dense, renter-heavy submarket of a major New Mexico metro.1
Because a laundromat is a going-concern operating business rather than a passive real-estate play, the lender's question is not “what is the space worth” but “can this specific store generate the turns, vend, and margin to service this specific loan.”1 Laundromats are a favored SBA 7(a) and 504 category (NAICS 812310) for their recession resistance and stable cash flow, but a ground-up store has no operating history to underwrite, which is precisely the condition that turns a discretionary feasibility study into an expected one.10 Our scope as feasibility consultant was the independent demand, utility, competition, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the store, submarket, and parties are composited, not a real named borrower, address, or completed transaction.
Trade-area renter demand and turns-per-day.
The demand read starts with the households that actually use a laundromat — renters without in-unit laundry — not a flat capture applied to a population count. The two-mile ring holds roughly 45,000 residents and about 8,300 renter households, a large share of which lack in-unit machines.
Turns-per-day is the headline productivity metric for a laundromat: the number of revenue-generating cycles per machine per day. It averages about five nationally, within a three-to-eight range, and must be read together with vend price and equipment mix rather than in isolation.4 Roughly 87 percent of a store's customers come from within one mile, so a laundromat lives or dies on the renter density of its immediate ring, not a wide trade area.2 For a new store we underwrite a ramp curve, not a stabilized number on day one: the model credits about 3.4 turns per day in Year 1, building to roughly 4.6 by Year 3 as the store seasons and the card-and-app data compounds through repeat usage. On approximately 50 washers at a blended vend near $4.25, plus dryer vend, a stabilized wash-and-dry line lands around $505,000 a year, with the wash-dry-fold and pickup-and-delivery book adding roughly $165,000 and ancillary income about $70,000.67
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area population (2-mi ring) | ~45,000 residents, ~18,000 households | Immediate captive base |
| Renter households without in-unit laundry | ~8,300 renter HH; majority lacking in-unit machines2 | Core recurring demand |
| Customer proximity | ~87% of laundromat customers within one mile2 | Ring density decisive |
| Stabilized turns-per-day | 3–8 range, ~5 average; ramped 3.4 → 4.64 | ≈ 4.6 turns/day |
| Stabilized annual revenue | Self-service vend + WDF/PUD + ancillary6 | ≈ $740k/yr |
Turns-per-day and proximity logic grounded in Coin Laundry Association and trade benchmarks; see sources 2, 4, and 6. Figures are illustrative of the engagement type.
An aging coin-op set against one new card store.
Five competing stores sit within about two and a half miles, but most are older, coin-only boxes running dated equipment with no wash-dry-fold. The submarket is well populated with renters and thinly served by modern, attended capacity.
| Competitor | Format | Scale | Distance | Read |
|---|---|---|---|---|
| Competitor A | Coin-only, unattended | ~40 machines | 0.7 mi | Nearest; dated equipment, no WDF |
| Competitor B | Card, attended | ~60 machines | 1.3 mi | Strongest rival; offers WDF |
| Competitor C | Coin-op in strip center | ~30 machines | 1.8 mi | Small, thin margins, no PUD |
| Competitor D | Coin/card hybrid | ~45 machines | 2.4 mi | Adjacent submarket, edge overlap |
| Competitor E | Newer multifamily in-unit | captured demand | ring | Trims addressable renters in new builds |
| Competitor F | On-premise / commercial | n/a | — | Not a direct retail competitor |
Competitive set surveyed for the engagement; anonymized. New in-unit laundry in recent multifamily was scanned as a demand offset, not just the standing retail set, consistent with institutional site-selection practice.
Only one competitor sits inside a mile, and it is a dated coin-only box with no wash-dry-fold — a weak defender against a new, fully card-and-app store with an attended WDF program and a renter-dense ring behind it. Coin-only stores also carry unverifiable revenue and cash-skim risk, the single most common reason laundromat deals collapse in diligence; a card-and-app system produces complete electronic records and is associated with a reported 17-to-22 percent revenue lift over coin-only operation.8 The nearest genuine modern rival (Competitor B) is more than a mile away. A rigorous study does not stop at the standing retail set: it scans the demand offset from new in-unit laundry in recent multifamily, so the capture forecast is not quietly overstated. Nationally the laundromat establishment count has drifted down roughly 0.5 percent a year even as renter demand persists, so modern capacity is not being added quickly.3 Here the read is a genuinely under-served corner for modern, attended capacity — renter density is outpacing new card stores, and the subject fills that gap rather than splitting a saturated trade area.
New Mexico macro: renter-heavy, water-constrained.
The state backdrop is a tailwind for a well-sited urban laundromat, tempered by the cost of water. New Mexico is not one market but six divergent ones, and the right laundromat setting is a dense metro submarket, not the oil-cycle southeast.
New Mexico held about 2.1 million residents as of July 2024, and its population is projected to peak near 2.14 million around 2035, so this is a demand story built on renter density and household formation within an established metro, not on statewide population growth.12 The subject sits in the Albuquerque-anchored metro economy — the federal-lab, defense, and tech base of Sandia National Laboratories, Kirtland Air Force Base, and Intel — where multifamily is comparatively balanced at about 94.7 percent occupancy and the renter base is deep. New Mexico is also a full non-Certificate-of-Need state, so retail supply, including laundromats, is set by the market rather than a permit gate.12
The offsetting reality is water. Utilities — water and sewer, gas for hot water, and electricity — are the largest and most volatile operating cost in any laundromat, and water scarcity is a defining New Mexico constraint, with sewer commonly billed as a percentage of metered water so a store pays both to bring water in and to send it out.5 The feasibility test therefore turns on whether stabilized cash flow covers a highly leveraged cost basis against a real utility line — not on an optimistic top line. On the capital side, New Mexico is served by a single SBA district office in Albuquerque, and the state's SBA 7(a) channel reaches from locally headquartered lenders such as Western Commerce Bank of Carlsbad to national leaders like Live Oak Bank, which also leads the country in laundromat-acquisition lending; USDA Business and Industry financing is available through New Mexico Rural Development for stores in towns of 50,000 or fewer.11
Why the site captures the ring.
Renter density, an older housing stock with less in-unit laundry, and everyday visibility all point the same direction, and the site's convenience converts that demand into turns.
The immediate one-mile ring is renter-heavy, with an older multifamily and single-family-rental stock in which in-unit laundry is the exception rather than the rule — the structural condition that creates durable, recession-resistant laundromat demand. Median customer household income in the segment runs modest, near the levels at which a clean, safe, attended store with reliable machines and a wash-dry-fold option wins repeat usage, and roughly 90 percent of laundromat patronage is repeat.5 Because about 87 percent of customers come from within a mile, embedding the store in that renter ring is the single most important site decision.2
Convenience does the rest. The subject occupies a high-visibility retail position co-tenanted with everyday-goods traffic — grocery and discount retail — with ample parking and strong evening and weekend flow, the daypart when laundry gets done. At roughly 4,500 square feet the store carries about 92 machines, enough to clear peak-weekend queues that would send a smaller store's customers to a rival; losing even one turn per day across a large washer bank measurably cuts annual revenue, so avoiding wait-driven walkaways is itself a revenue strategy.6 The attendant presence supports the wash-dry-fold line, security, and cleanliness that convert a renter-dense ring into a top-quartile store rather than an average one.
The SBA 7(a) structure.
Total project cost lands at $1.35 million. The 7(a) program can finance the equipment, the build-out, and working capital in a single loan, which is why an owner-operated, equipment-heavy laundromat routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Laundry equipment (washers, dryers, card & app system) | $0.62M |
| Water heating, mechanical, plumbing & gas | $0.22M |
| Leasehold improvements & build-out (4,500 sf) | $0.30M |
| Soft costs, permits & contingency | $0.11M |
| Working capital, deposits & fees | $0.10M |
| Total project cost | $1.35M |
| Item | Figure |
|---|---|
| SBA 7(a) loan (90%) | $1.215M |
| Borrower equity injection (10%) | $0.135M |
| Term / amortization | 10-year term / blended 10–25-year amortization |
| Illustrative rate | ~10.25% (Prime + ~2.75%) |
| Annual debt service | ≈ $159k |
Structure per SBA 7(a) conventions under SOP 50 10 8; 10% minimum equity injection; blended amortization reflects short-life equipment (~10-year) and longer-life build-out and improvements (toward 25-year), a ~15-year-equivalent schedule. See sources 10 and 11.
The equity injection sits at 10 percent, the SBA minimum, which the credit could support because the store is a fully card-and-app operation from day one: verified electronic revenue removes the cash-skim discount that pushes lenders to demand more equity on coin-only laundromats.8 A laundromat blends short-life equipment, which amortizes over roughly ten years, with longer-life leasehold improvements and build-out, which stretch toward twenty-five; the 7(a) facility carries these on a blended schedule of about fifteen years. On that basis, at an illustrative 10.25 percent (Prime plus roughly 2.75), annual debt service is about $159,000 — the number the projected coverage has to clear. Because the owner must be an active operator to avoid the SBA passive-business bar, the sponsor's documented management of maintenance, collections, cleaning, and the wash-dry-fold line is part of the eligibility file, not an afterthought.10 The study exists to support exactly that debt-service coverage, tested against an independent read of demand and a utility model built from actual rates rather than the sponsor's own projection.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds revenue from three engines — self-service vend, wash-dry-fold, and ancillary income — nets a utility-dominated operating expense, and carries the coverage to the SBA floor and beyond.
| Line | Basis | Amount |
|---|---|---|
| Self-service vend (washers) | ~50 washers × ~4.6 turns/day × ~$4.25 vend6 | ≈ $355k |
| Self-service vend (dryers) | Drying cycles, ~42% of washer vend6 | ≈ $150k |
| Wash-dry-fold & pickup/delivery | Drop-off + PUD orders (avg ~$79.81/order)7 | ≈ $165k |
| Ancillary (soap/vending, ATM, accounts) | Vending, card fees recovered, commercial accounts | ≈ $70k |
| Total gross revenue | Self-service + WDF + ancillary | ≈ $740k |
| Operating expenses | Utilities, labor, rent, R&M, insurance, card fees, G&A | ≈ ($502k) |
| Net operating income (NOI) | Revenue less operating expense (~32% margin) | ≈ $238k |
Within operating expense, utilities run about $118k (~16% of gross), labor about $140k, and rent about $104k — utilities and labor the two dominant lines, utilities the classic binding constraint. Newer, efficient equipment holds utilities near the ~15% target rather than the ~20%+ of older stores. See sources 1, 5, and 6.
| Year | Stage | NOI | Debt service | DSCR |
|---|---|---|---|---|
| Year 1 | Opening / ramp (~3.4 turns/day) | ~$167k | ~$159k | 1.05 |
| Year 2 | Building (~4.1 turns/day) | ~$203k | ~$159k | 1.28 |
| Year 3 | Stabilized (~4.6 turns/day) | ~$238k | ~$159k | 1.50 |
DSCR computed as NOI divided by the period debt-service obligation ($159k = $1.215M loan × the blended amortization constant). Revenue ramps ~$560k → ~$655k → ~$740k across the three years. See source 10 for the coverage convention.
The stabilized 1.50x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom — comfortably above the 1.20x-to-1.25x many banks set for an equipment-heavy going concern.10 By Year 2 the project already covers fully amortizing debt service at 1.28x. The Year 1 figure of 1.05x is intentionally thin — it is the ramp year, when a new store's turns-per-day are still seasoning — which is exactly why modeling mature-store turns or best-in-class wash-dry-fold capture on day one is one of the most common ways these pro formas fail review; the ramp here is deliberately graded from about 3.4 to 4.6 turns per day.4
On the equity side, the $0.135 million injection earns growing levered free cash flow — near breakeven in the ramp year, building to roughly $65,000 to $75,000 a year once stabilized and net of an equipment-replacement reserve, since commercial washers and dryers are a wasting asset with a ten-to-fifteen-year life that must be re-funded during a long hold. The exit is valued on a going-concern basis, not a leased-fee cap rate: a laundromat is an owner-operated business valued on verified cash flow, and capitalizing a stabilized cash flow at a conservative going-concern multiple — roughly three to four times EBITDA, or about 1.2 to 1.5 times revenue, discounted for aging equipment at exit — supports a modest enterprise value net of the outstanding SBA balance.9 Because verified card-and-app revenue removes the cash-skim discount and supports a cleaner sale, the blended result is an illustrative levered equity IRR of about 22 percent over a 10-year hold.8
Verdict: financially feasible and bankable. On independently derived renter demand, a stabilized 1.50x DSCR, and a ~22% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, a utility model, a turns ramp, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived demand from the renter density of the one-mile ring and households without in-unit laundry, then placed the store within a defensible turns-per-day band rather than applying a flat capture to a population count. The utility line — the number that most often breaks a laundromat — was built from actual local water, sewer, gas, and electric rates and carried as a percentage of gross, not lifted from a generic template.
The coverage analysis was then stress-tested. We ran the debt-service coverage against turns and utility-cost downside — the two variables a laundromat is most exposed to — to confirm the credit still holds when turns compress or water and gas rates rise. One scope boundary is worth stating plainly: as the feasibility consultant, we reference, but do not perform, the Phase I environmental site assessment. A pure wash-and-dry store is low environmental risk, but any current or former on-site dry cleaning creates perchloroethylene (PERC) liability, so the environmental assessment is a separate professional's engagement that runs in parallel to the study.13 That combination — independent demand, a real utility model, a graded turns ramp, and a stressed DSCR — is what lets the lender rely on the file.
Underwriting a New Mexico laundromat for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent laundromat and self-service laundry feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the renter demand, utility model, turns-per-day ramp, and DSCR analysis behind a case like this one, calibrated to your submarket and store format.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing New Mexico, Laundromat, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- Coin Laundry Association, 2024 Laundry Industry Survey (fielded April–June 2024; self-reported 2023 data), via PlanetLaundry: median store gross revenue ~$335,000; ~2,850 sq ft; ~67 machines (36.5 washers, 30.4 dryers); median operating net profit 27%; median rent 18% (~$4,000/month); median utilities 20% (mean 21%), with 53% of operators naming utilities their single biggest problem; ~$15.34 median attendant wage. As compiled in the firm's Laundromat asset-class analysis.
- Coin Laundry Association industry overview and Martin Ray citing IBISWorld (2024–2025): approximately 29,500 coin laundries generating nearly $5 billion in annual gross revenue; 1,000–5,000 sq ft on 10–25-year leases; recession-resistant necessity demand; trade-sourced customer profile of roughly 60% renters, ~87% of customers within one mile, and ~90% repeat usage.
- IBISWorld, Laundromats in the US (NAICS 812310), 2025–2026: ~$7.1 billion (2025) rising to ~$7.2 billion (2026); ~18,375 establishments; establishment count declining ~0.5% per year; the industry primarily composed of individual owner/operators.
- Wash Weekly and American Coin-Op (2023–2024): turns-per-day of 3–8 (average ~5), also the IRS audit range; the caution that turns-per-day must be read together with vend price and equipment mix, not in isolation, and that a new or repositioned store should be underwritten on a ramp curve.
- Cents / trycents.com (2024–2025) and HK Laundry: utilities at 15–40% of revenue by equipment efficiency; the utilities-as-a-percentage-of-gross discipline (~15% newer equipment, ~20% older); sewer commonly billed as a percentage of metered water, so a store pays both to bring water in and to send it out.
- presscleaners / The Laundry Bag (2025), dojobusiness (2024–2026), and KMF (2026): revenue-per-machine benchmarks (washers ~$1,000–2,000/month, dryers ~$600–1,200/month; trade-sourced); losing one turn per day in a 40-washer store cutting annual revenue by roughly $64,800.
- Cents, “Into the Fold 2025,” and PlanetLaundry (2023–2024): pickup-and-delivery orders averaging $79.81 versus $44.19 for drop-off; a wash-dry-fold operator grossing $125,000/month with 75% from pickup-and-delivery; WDF shrinkage, refunds, and re-dos targeted under 5% of WDF revenue.
- Turnsapp (2025), CT Acquisitions (2026), and NorthOne (2025): card/app conversion associated with a reported 17–22% revenue lift and complete electronic transaction records; conversion cost roughly $400–2,100 per machine; unverifiable coin-only cash revenue the #1 reason coin-store deals fail diligence.
- Peak Business Valuation (2024–2025) and CT Acquisitions (2026): laundromat SDE multiples of ~3.16–4.23x and revenue multiples of ~1.19–1.78x; institutional buyers requiring 5–7+ years of remaining lease plus options; going-concern income-approach valuation on verified cash flow rather than a passive real-estate cap rate.
- U.S. Small Business Administration, SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.110(c) and 120.160(b): laundromats a favored 7(a)/504 category (NAICS 812310); a feasibility study is discretionary but expected for startup and ground-up projects with no operating history; 10% minimum equity injection for a change of ownership; independent business appraisal when financed intangibles exceed $250,000; the passive-business bar requiring an active operator.
- ProjectionHub analysis of SBA loan data and the firm's New Mexico market analysis: Live Oak Banking Company leading laundromat-acquisition lending nationally; New Mexico served by a single SBA district office in Albuquerque, with Western Commerce Bank of Carlsbad the leading New Mexico-headquartered 7(a) lender; USDA Rural Development Business & Industry financing for towns of 50,000 or fewer.
- U.S. Census Bureau, Vintage 2024 Population Estimates, and New Mexico state data as compiled in the firm's New Mexico market analysis: ~2.1 million residents (July 2024), projected to peak near 2.14 million around 2035; Albuquerque multifamily comparatively balanced at ~94.7% occupancy; New Mexico a full non-Certificate-of-Need state, so retail supply is market-set rather than permit-gated.
- U.S. Environmental Protection Agency, TSCA perchloroethylene (PERC) risk-management rule (effective January 17, 2025): PERC banned in dry cleaning and phased out through December 19, 2034; only about 14% of surveyed stores offer dry cleaning, so a pure wash-and-dry store is low-risk, but the tail liability is severe; a lender requires a Phase I ESA (and a Phase II where any dry-clean history exists), which the feasibility author references but does not perform.