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As part of the Lang Trailers podcast mini-series on launching and expanding a restroom trailer rental business, Co-Owner at Lang Specialty Trailers, Steve Ghrist brings insightful discussions, focused on helping both newcomers and seasoned operators looking to grow their fleets and market presence. In this discussion, Steve is joined by Ethan Keeler from Sage Creek Capital to explore the pivotal role of equipment financing in the restroom trailer industry. Here are the key takeaways from their conversation, offering valuable insights for those contemplating entering the business or seeking to scale their existing operations.

Understanding Equipment Financing

Ethan Keeler, with a robust background in corporate lending, now works at Sage Creek Capital, specializing in equipment financing tailored to specific industries, including restroom trailer rentals. He emphasizes the importance of tailored financing solutions that align with the unique needs of this niche market.

"We want to be more than just a lender," Ethan explains. "We want to help bring in expertise and develop an entire portfolio around the restroom trailer business to support our clients, especially startups."

Overcoming Initial Hurdles

One of the primary challenges for new entrants in the restroom trailer rental industry is securing financing, especially for those who have not been in business for two years. Banks typically view startup restroom trailer businesses as speculative investments, making it difficult to obtain traditional loans.

"You're not going to find yourself getting funds from a bank in the first two years of business," Ethan notes. "You'll have to lean towards an equipment finance company."

Equipment finance companies, like Sage Creek Capital, can take on riskier investments, providing opportunities for startups that banks might reject. This flexibility is crucial for businesses in their early stages.

Optimizing Your Financing Strategy

Ethan advises against using personal loans, home equity lines, or 401(k) withdrawals to finance your first trailer. While these options are available, they can have long-term repercussions, including negatively impacting your credit score.

"If you're looking to scale this into a business, borrowing against a home equity line or drawing against a 401(k) can ding your FICO score," Ethan warns. "For a startup company, that's all that lenders have to look at."

Instead, he stresses the importance of structuring your first loan properly, which involves:

Loan to Business Entity: Ensure the loan is to the newly established business, not a personal loan. This helps build business credit.

Credit Reporting: Make sure the lender reports payments to credit agencies regularly.

Healthy Down Payment: A substantial down payment can reduce monthly payments and provide a financial cushion for unexpected challenges.

Qualifying for Financing

Ethan explains that for startups, the qualification process focuses heavily on the individual, given the lack of business history. Maintaining a strong FICO score by managing credit card debt and avoiding missed payments is crucial.

"Your FICO score plays a big factor," Ethan explains. "Anything you can do leading up to the application, like paying down credit card debt and making timely payments, is beneficial."

Simplified Application Process

With Sage Creek Capital specifically, the process involves a simple three-part application: information about the company, the individual, and the purchase. At Sage Creek Capital, applying for an equipment finance agreement (EFA) is designed to be straightforward, unlike more traditional bank loans.

"The process from start to finish can be very quick," Ethan says. "We've had applications and funding completed the same day."

Ethan explains that EFAs are structured to be user-friendly, with minimal paperwork and no annual reporting requirements. This simplicity allows business owners to focus on running their operations without being bogged down by complex financial processes.

Importance of Building a Strong Foundation

Ethan underscores the critical role of the first loan in establishing a solid foundation for future growth. He advises entrepreneurs to consider their long-term goals and choose a financing partner that supports their vision.

"Building that foundation with the first loan is crucial for success throughout the life of the business," Ethan explains. "It helps ensure that future financing needs are met more easily."

Contacting Sage Creek Capital

If you are interested in exploring equipment financing for your restroom trailer rental business, Sage Creek Capital offers a no-obligation application process. Even if you're in the early stages of planning, it may be worth initiating a conversation to understand your options and prepare for future growth.

To apply for financing, visit the Lang Trailers website and click on the "Apply for Financing" link, which will direct you to the Sage Creek Capital application. Once submitted, a team member will follow up to discuss your needs and guide you through the process.

Conclusion

Starting and growing a restroom trailer rental business involves navigating financial challenges, especially in the early stages. By understanding the role of equipment financing and following the advice of experts like Ethan, entrepreneurs can set a strong foundation for their business. Properly structured loans, maintaining a healthy credit profile, and choosing the right financing partner are essential steps toward building a successful restroom trailer rental operation.