How do landscaping companies refinance merchant cash advances?

The landscaping year, in cash

In most of the country a landscaping company earns its year in about three seasons and pays its fixed costs in all four. The cash calendar looks roughly like this; in warmer markets the curve is flatter, but the spring start-up still comes before the spring revenue.

That last column is the whole problem. An advance taken in March is sized to the cash the business shows in a strong month and repaid by a debit that does not know what month it is. By January the company is paying the funder out of nothing, and the only way to reach spring is the next advance. What that cycle costs over a year is set out on the true cost of an advance.

A seasonal business needs seasonal credit. An advance is the opposite: a fixed daily payment against revenue that is not daily.

Why the advance gets taken in March

Owners who take the spring advance usually have a profitable business and no line of credit. The reasons are specific:

• Payroll before revenue. Crews are hired and trained before the first maintenance visit is billed, and recruiting costs for seasonal workers, including any guest-worker program costs, are paid up front.
• Materials before installs. Hardscape and planting jobs need stone, plants and soil bought ahead, while homeowners pay on completion.
• Commercial customers on terms. Property managers and associations pay on their own schedules, often slowly at the start of a season.
• The equipment has to be ready. Mowers, trucks and machines are serviced and replaced over the winter, when the account is at its lowest.
• A warm winter. A company that bought salt and staffed for snow on per-event contracts may earn little; one on seasonal fixed-fee snow contracts is paid either way.

Many of these companies never had a bank line because nobody asked for one in the fall, when the year's results made the case. By March the account looks thin and the only one who says yes is an advance funder. A refinance is the chance to put both pieces of credit in place at once: a term loan to retire the stack and a line to fund the next start-up. See lines of credit for landscaping companies.

How a lender reads a landscaper's numbers

The lender underwrites the full year. It takes the last full-year P&L, and compares year-to-date results with the same point last year, because a landscaper's year-to-date figures mean nothing on their own: a file sent in April shows a loss and one sent in September shows the year's profit. Then it breaks revenue down by kind of work:

• Maintenance contracts, the recurring base. Lenders ask how many renew each year and how long the largest customers have been on the books.
• Enhancements and installs, project work that depends on sales each season.
• Snow, which a lender will usually count only on a history of several winters, and discounts after a single good one.
• Customer concentration. A property management firm that controls many of the company's sites is one relationship, however many addresses it covers.

In plain numbers: a company earns 800 a year before advance costs. Its advances take 900 a year and its equipment notes 250, so it pays 1,150 against 800 and falls further behind every winter. Retire the advances with a term loan costing 300 a year, keep the equipment notes, and 800 of earnings covers 550 of payments with 250 to spare, almost one and a half times. Conventional bank lenders commonly look for debt service coverage of at least 1.25x; some private credit lenders that refinance advances accept less headroom and price for it. See refinancing advances into term debt.

Coverage across the year is not the same as cash in January. Lenders also ask whether the business can make the payment in its worst month. Some will shape the schedule to the season, with smaller or interest-only payments in winter; others want level payments and rely on the line to carry the off-season. How that works is on interest-only periods and reamortization.

The fleet: collateral already spoken for

Landscaping companies own a lot of equipment and have usually borrowed against most of it. Equipment lenders take a purchase-money lien on each unit they finance; advance funders commonly file a UCC-1 over everything else. A lien search, matched against an equipment list, shows what is left to lend against.

Paid-off trucks and machines can be refinanced by an equipment lender, and the proceeds retire part of the stack at a lower cost than an unsecured loan. 244 lenders in Transparent's book write equipment. Existing notes that are cheap should usually be left alone; notes that are expensive, or short enough to squeeze the monthly payment, can be refinanced with the rest. See refinancing equipment loans and equipment loans alongside senior debt.

A term loan and a line that cleans up

The structure that usually fits a landscaper has two parts. A term loan, sized to full-year earnings, retires the advances at close. A seasonal line then funds the next spring start-up and is paid down as the season's cash comes in, with a clean-up period each year when the balance must be at or near zero. Without the line, the company will need another advance next March, and a lender reading the file knows it. The line is often what makes the refinance credible.

A company with a meaningful book of commercial receivables may fund that line from a borrowing base. Asset-based lenders typically advance 80% to 90% of eligible receivables; receivables more than 90 days past invoice are typically ineligible, and any single customer is commonly capped at 20% to 25% of the base, which bites where one property manager dominates. A smaller or mostly residential company is more likely to get a line sized to its seasonal need and its history. See seasonal lines of credit.

SBA money is a later step. SBA will not refinance an active merchant cash advance. From 1 October 2026, under SOP 50 10 8.1, an advance becomes eligible only once it has been converted to a term loan that has amortized for at least 24 months with no new advance since, and any 7(a) refinance requires the new payment to be at least 10% lower than the old one. Once the advances are behind the company, SBA's seasonal working-capital lines are worth a look; see SBA CAPLines.

Preparing the file

• P&L and balance sheet for the last full year, and a year-to-date P&L through last month-end, set beside the same months last year.
• Business tax returns for two to three years.
• A debt schedule with every advance and every equipment note, and the lien each one filed.
• An AR aging by customer, with days outstanding, for commercial accounts, and an AP aging.
• An equipment list: year, make, model, hours or mileage, and lien holder for each unit.
• A contract list: customer type, scope, term and renewal date, with the history of renewals.
• Each advance agreement, a current payoff letter for each, and bank statements covering a full year of debits.
• A short account of why the advances were taken and how next spring will be funded instead.

The last line of that account is the one a lender reads twice. It should name the line of credit, or the reserve, that replaces the spring advance.

Transparent's lender package presents the company as a full year: revenue by kind of work, contract renewals, the fleet and its liens, and coverage on one monthly payment in the worst month as well as across the year, with every advance disclosed and retired at close. Once the documents are in, it is built in a day. Buyers will find the acquisition side on financing a landscaping company acquisition.