store loans

Store Loans: The Professional Guide to Financing for Retailers

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Starting and maintaining a business comes with a plethora of costs. Equipment, licenses and permits, a physical space, utilities, supplies and inventory, and staffing all come to mind. These costs don’t even scratch the surface though. Any small business owner will tell you that the list of store expenses they have is inexhaustible and the new cost that they’d never thought of will come up from time to time.

As such, understanding the retail funding options you have for your small business is key. A retailer loan is a good way of getting your business started, as well as a good way to keep it running. Read more to learn about retail business loans for your store.

Retail Store Financing: What You Need to Know

If you’re shopping around for a new business loan for a retail store it can be quite the process, knowing what you need from the loan is the first step in picking the right loan for your business. Picking the right loan can make or break your store, so be sure to pay close attention to your needs based on the following items.

What are you using the funding for?

Knowing what the funding is going to be used for can help you narrow down the options available to you. Consider the following reasons that you may consider a business loan for retail store:

Purchasing Inventory – Retail business inventory financing is available to help stock your retail store. This can be a great way to use a loan, especially if you take into account the length of time inventory takes to turn around.

Equipment and Fixtures – All retail businesses need equipment and fixtures of some sort, and equipment financing can be utilized to fill your storefront with them.

Capital for Expansion – If you’re looking to start a new additional location, a loan can be taken out to make that happen. It can also assist retail stores like restaurants add new seating areas for customers, outdoor patio, or offer growth anywhere else the capital can be of use.

Making Up for the Slow Season – If a store is experiencing a slow season, a loan is a fast way to bridge the financial gap to the next busy season. The business will still be required to make payments during the slow season while the loan is being used.

Online Marketing – One of the best ways to utilize retail financing is through an online marketing campaign to your website. For example, a good email campaign can help increase online traffic to your website. As a result, it may generate new customers, bringing in cash which would help the business pay the loan back faster. 

The Must Knows About Financing For Retailers

Know How Much Is Needed For Your Store

It’s crucial to take out a funding for exactly what your small retail business needs, rather than a higher cost. This is the best way to make sure that the loan can be paid back timely, and that you won’t be stuck with paying it back for too long.

Know Your Current Credit & Financial Health

If you don’t know your current credit and financial health, you can get yourself into trouble by applying for a loan for retail business, since you won’t qualify without the right credit score. If you’ve had problems with your credit in the past, it can limit your lending options.  Know where your credit stands before you begin applying.

Also, your business and it’s financial health is important as well. A bank of lender will start by analyzing your cash flow and looking at your bank statements. Factors such as your average daily balance and monthly deposits, will determine the capital offer you business will qualify for.

Know Your Plans if Things Don’t Go Well

If your intended purpose for funding doesn’t go as planned, then you’ll want to know that you can afford to keep making your payments. The lender or bank will expect a payment, regardless of whether or not the inventory stocking, marketing plan, or business growth goes well. 

Know the Terms

Making sure you understand the terms of the loan before applying for it is highly important. Loans are subject to interest rates, of course, which are what most people focus on. As the owner of a small business, you’ll also want to pay attention to the length of the loan, and the payment schedule. Some loans come with daily or weekly payments attached, as well. Knowing all of the details is your key to success and growth.

financing for retailers - store loans

5 Different Types of Retailer Loans

Here are 5 different types of loans that we have access to and you can apply for as the owner of a small retail business, and a little bit about each.

1. Business Term Loans

Business term loans are decades-old loan solutions for retail businesses that work quite well. For one, they move quickly and can be used to access large amounts of money (normally for up to about $2 million). Secondly, interest rates normally start around 6%, and the life of the loan is normally about 5 years in length. These are some of the most common funding options for retailers. The capital may also be used for most cash flow and expense type purchases.

Learn more about Business Term Loans

2. Short Term Loans

Short-term loans are a great alternative to business term loans when your business is not as established. They have a similar process to business term loans, and they are approved quickly as well. They also only allow for repayment to happen within 1 to 2 years, hence the title “short term.” If you want fast cash with an easy online application process, for almost any business use, short-term funding gives you that flexibility.

Learn more about Short-Term Loans.

3. Business Line of Credit

This funding option resembles that of a credit card and functions more or less the same. Money or capital through a line of credit can be used as needed and has to be paid back. Once the money is paid back it is available for use again. A business line of credit is easy to obtain in comparison to a loan in most cases, but sometimes the cost of capital comes with higher interest rates.

Learn more about the Business Line of credit.

4. Equipment Financing

Equipment financing is specifically used when taking out a loan to purchase a large, expensive piece of equipment. The equipment being purchased with the loan is normally used as collateral. This can be used for a number of things that can benefit your business. In retail, new display fixtures or a new sign can drive in new customers and increase foot traffic.

Learn more about equipment financing

5. SBA Loans

SBA loans are the most beneficial financing solutions available to small business owners looking for funds. SBA loans are government-backed, a form of lending that comes with the lowest possible interest rate.

Similar to a bank loan, they are regarded as the gold standard of funding for small business owners wishing to expand in a variety of ways.  To qualify for an SBA 7 a loan or SBA 504 loan, you must have good personal credit scores. All owners of the business will need to be on the application, and pass credit committee.

Learn more about SBA loans.

Key Takeaways - Store Loans for Retail

Key Takeaways

There are many different options when it comes to financing a retail store. You can secure large loans that extend up to 5 years or get smaller ones for cash or equipment specifically. No matter what you’re using the funding for, it’s important to understand all of the terms of the funding you’re applying for, as well as what you’ll do should the retail loan process not work out. It’s important to look at retail business funding from every perspective!

Start your application today online. Simply fill out our Funding Application Form right now on our website. Or please call us on the phone at 646-837-5522 or email us at [email protected] to get access to financing for retailers within 24 hours. We will let you know what documents will be required at the time of your application.

So…What do you think? 

We want to hear from you. What do you think of this article and was it helpful in your search for a Small Business Store loan? Did it help you better understand the Subject?

Let us know by leaving a reply below.  Feel free to share this article on your social media. 

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One Comment

  1. The Finance guy

    This blog was very detailed and informative explaining the ins and outs of Retail business loans. I am currently in search of a small business loan and will definitely use some advice from this blog to determine the loan that works for my small business.

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