Small Business Loans: ACE Hardware

With over 4,600 stores, Ace Hardware is one of America’s most successful retailers’ cooperatives employing over 86,000 employees.

Key Takeaways:

• 🔩 Ace Hardware is a massive retail co-op with 5,800+ stores and a strong community-driven model, not a traditional franchise.

• 💰 Financing is crucial due to high upfront inventory costs; United Capital Source offers funding up to 200% of business turnover.

• 📈 Franchise stats impress: 99% success rate for new builds, $3M+ average annual turnover, and 11% sales lift for store conversions.

• 🏗️ Ownership requires capital: $250K liquid cash, $400K net worth, and a $5K franchise fee to get started.

• 🧰 Flexible loan options include working capital loans, lines of credit, merchant cash advances, SBA loans, term loans, and equipment financing.

• 🧾 Bad credit? Still options. UCS works with lenders offering high-approval-rate loans even with lower credit scores.

• 🧮 Loan use cases span payroll, inventory, marketing, equipment upgrades, and smoothing out seasonal cash flow fluctuations.

• 🛠️ Ace’s unique model lets owners tailor stores to their local communities while benefiting from national buying power.

As Ace Hardware is a co-op and not a franchise, each Ace Hardware store looks different yet has core product lines. With significant upfront costs for inventory and large stock replenishment requiring larger cash flows than other local businesses need, United Capital Source has specific expertise in providing small business loans for Ace Hardware store owners.

Our many years of experience working with Ace Hardware store owners have given our lending professionals unique insights into the hardware business. United Capital Source understands that new Ace Hardware store owners must possess deep technical knowledge of hardware products and their working applications.

These high standards set by the Ace Hardware Corporation have allowed wholesale lenders working with United Capital Source to lower the risk profile of these stores.

Becoming an Ace Hardware Store Owner

Ace Hardware is the world’s largest retailer-owned hardware cooperative. It was launched in 1924 in Oak Brook, Illinois, and has offered franchise opportunities since 1976.

Ace Hardware has over 5,800 locally owned and operated hardware stores in approximately 60 countries. Prospective owners must have $250,000 in liquid capital and a minimum net worth of $400,000 to become an Ace Hardware franchisee. The initial franchise fee is $5,000. Ace Hardware provides comprehensive support to its franchisees, including training, marketing assistance, and access to a vast inventory of high-quality products.

Franchisees can receive a percentage of the overall profits instead of paying ongoing royalty fees. The average Ace Hardware location has an annual turnover of over $3,000,000. New ground-up Ace Hardware stores have a nearly 99% success rate. Converted hardware stores turning into Ace franchises typically see an 11% lift in retail sales.

Ace Hardware encourages franchisees to operate with a degree of uniqueness that caters to their local communities. Ace Hardware’s commitment to community service distinguishes it from larger competitors.

The Ace Hardware Business Model

The cooperative model allows franchisees to leverage the buying power of a large organization while maintaining autonomy. By prioritizing customer satisfaction, Ace Hardware franchisees can differentiate themselves from larger competitors.

New ground-up stores typically receive support for marketing and other needs. The average store can see revenue between $1 and $2 million, but it depends on factors like your location, existing foot traffic, and marketing demand in the area.

Ace Hardware financing options

Obtaining financing for a hardware store requires careful planning and preparation. There are several options to consider to help your Ace Hardware store grow and prosper. Each financing option is designed to meet a specific need. Carefully review your options when considering hardware store business loans to ensure you get a loan that works for you. Understanding the type of loan you need can help speed up the lending process.

Many hardware store owners rely on working capital loans to meet daily expenses such as payroll and inventory purchases. Working capital loans are typically short-term financing to meet operational costs. For example, a working capital loan can help meet needs during a slow period, and your business can repay the loan once business picks up during the busy season.

A merchant cash advance is one of the fastest and most accessible small business funding options. It is popular with businesses that process credit cards and allows for higher approval rates than traditional financing.

Consider a business line of credit if you’re looking for a flexible program to use funds as needed. A business line of credit is a revolving credit facility that allows businesses to access funds on demand up to a predetermined credit limit. With a business line of credit, you only pay interest on the funds you use.

Established Ace Hardware store owners with good credit may qualify for SBA loans. The Small Business Administration partially guarantees these loans, allowing lenders to offer large loan amounts with low rates and long repayment terms. Due to their attractive rates and terms, SBA loans are popular with hardware store business owners.

Business term loans provide a more conventional option where your business receives a lump sum payment, typically repaid with fixed monthly payments at a fixed interest rate. These can be short-term or long-term loans. Short-term business loans normally provide faster funding with minimal documentation, but have higher interest rates. Long-term business loans for hardware stores will require additional documentation, tougher financing qualifications, and face more stringent underwriting.

Equipment financing can help cover costs to upgrade in-store equipment, such as point-of-sale or security systems. With equipment financing, the asset is collateral, often making these loans more accessible to Ace Hardware small business owners with fair credit.

Many Ace Hardware store owners might think they don’t have business financing options if they have bad credit. While a lower credit score can limit financing options, bad credit business loans are available. Business loans for bad credit typically provide fast funding with easy applications. However, they also tend to have higher interest rates and shorter repayment terms.

There are other alternative business funding options to consider as well. Business credit cards are commonly used by hardware store owners for everyday purchases and to pay expenses. If your hardware store has unpaid invoices, you could also consider accounts receivable factoring.

What are the advantages of business loans for Ace Hardware store owners?

Running an Ace Hardware store comes with unique financial challenges, especially given the high upfront costs for inventory and the need for regular stock replenishment. Business loans tailored to Ace Hardware store owners can provide the necessary working capital to support operations, growth, and long-term success. Here are the key advantages:

Business loans offer quick access to working capital, helping store owners cover day-to-day operational expenses like payroll, inventory purchases, marketing, and utilities, especially during slower sales periods.

With significant costs associated with stocking and restocking hardware inventory, business loans provide the cash flow needed to maintain optimal stock levels. This ensures you’re always ready to meet customer demand and avoid supply shortages.

From merchant cash advances and business lines of credit to SBA loans and equipment financing, Ace Hardware store owners have access to multiple loan structures designed for different needs. This flexibility lets you choose financing that best aligns with your goals and cash flow cycle.

Whether opening a new business, converting an existing hardware store, or renovating your current one, business loans give you the funds to grow strategically. New ground-up Ace Hardware stores have a nearly 99% success rate, and conversions typically see an 11% increase in sales. Financing can help make this growth possible.

Do you need to upgrade your POS system, improve store security, or invest in more efficient tools? Equipment financing makes acquiring or upgrading essential business assets easier without depleting cash reserves.

Even if you have less-than-perfect credit, financing may still be available. United Capital Source partners with alternative lenders specializing in hardware store business loans, offering fast approvals, even for bad credit borrowers.

United Capital Source has years of experience working with Ace Hardware store owners. Our lending partners understand the hardware business, allowing us to secure larger loans, sometimes up to 200% of your business’s turnover.

What are the disadvantages of business loans for Ace Hardware store owners?

While business loans offer valuable benefits for Ace Hardware store owners, they’re not without potential drawbacks. Understanding the risks and limitations of small business financing can help you make an informed decision.

Specific financing options—like merchant cash advances or bad credit business loans—come with higher interest rates and shorter repayment terms. While these provide fast access to cash, they can also increase your long-term borrowing costs.

SBA and traditional long-term business loans typically require excellent credit, detailed documentation, and thorough underwriting. These stringent requirements can make approval more difficult for newer store owners or those with less-than-perfect credit.

Although some options offer quick funding, others (such as SBA or equipment loans) may involve a lengthy application process, including providing financial statements, tax returns, and a detailed business plan.

Securing multiple loans or borrowing more than you can comfortably repay can strain your cash flow. Ace Hardware stores may face slower periods or unexpected repair and inventory costs, so it’s important to ensure your loan fits your revenue cycle.

Some financing products, such as equipment or long-term loans, may require collateral. While this can improve your approval odds, it also means risking valuable business assets if you default.

Pros and Cons of Business Loans for Ace Hardware Stores

Pros:

• Access to working capital for inventory, payroll, and daily expenses

• Funds for store renovations, expansions, or new builds

• Flexible loan types to suit various credit profiles and business needs

• Equipment financing options for upgrading tech and store tools

• Proven ROI potential: 99% success rate for new stores, 11% sales boost for conversions

• Industry-specific support from lenders familiar with Ace Hardware operations

• Bad credit loans are available for owners with lower scores

Cons:

• High interest rates for bad credit or fast-cash loan products

• Complex requirements for SBA and long-term loans

• Time-consuming applications for certain financing types

• Potential risk of overleveraging or cash flow strain

• Some loans may require collateral, increasing personal/business risk

How To Apply for Ace Hardware Business:

The amount of paperwork required depends on the product you choose. Funds can be approved and distributed for most products within 1-3 business days. Here’s how to apply:

Step 1: Choose the Right Product

The first step is choosing the most sensible solution to the problem at hand. This should require some research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term expense? Is demand expected to increase or decrease in the coming months?

Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.

Step 2: Gather Your Documents

Here are the documents and information required for Franchise Financing Loans:

• Driver’s license

• Voided business check

• Bank statements from the past three months

• Invoice for equipment (for Equipment Financing)

• Credit card processing statements from the past three months (for Merchant Cash Advance)

SBA loans require additional documents and information, such as financial statements. To learn what’s needed for the SBA-backed loans, visit our SBA loan page.

Step 3: Fill Out Application

You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.

Step 4: Speak to a Representative

Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.

Step 5: Receive Approval

If you’re approved, we’ll contact you within 24 hours. After closing, funds for most business financing products should appear in your bank account within 24 hours to one week.

Your Ace Hardware Business Loan Gets Set Up – Now What?

Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.

Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.

Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.

What If I’m Declined For a Small Business Loan?

If your application is declined, it’s possible that you applied for the wrong product to meet your cash flow needs. We would likely recommend a different product with a less hazardous repayment structure in this case.

Your application might also be declined if it is determined that you cannot afford to take on more debt at this time.

If your credit score is holding you back from accessing financing, consider working with a reputable credit repair service to raise your scores.