Retail stores are known for their rocky cash flow, which stems from many circumstances. It’s common for stores to order too much inventory and leave precious working capital sitting on their shelves. And since retail items tend to carry low profit margins, making more sales won’t necessarily balance cash flow.
Once you finally gain momentum, an online competitor can suddenly halt your success. United Capital Source has access to Retail Store Business Loans for stores looking to revolutionize the in-store experience, coordinate their inventory with demand, and prove that brick-and-mortar can compete with eCommerce.
Retail Store Business Loans are business loans geared towards the cash flow cycles and periodic expenses of retail stores. In addition to covering short-term needs and large-scale investments, these business loans can bridge temporary revenue gaps until demand picks back up.
Retail Store Business Loans can come in the form of:
Each of the six products listed above can suit a different cash flow-related dilemma. For example, many retail stores are highly seasonal. Demand might fall or drop significantly during the winter or summer, depending on the items you sell. However, since the busy season comes right after the slow season, stores must use this period to prepare for the surge in demand. This might include stocking up on inventory, hiring more sales associates, or ramping up your advertising.
Some funding products, like merchant cash advances and invoice factoring, are less credit dependent because these financing products are based on sales instead of a credit report. A merchant cash advance is often appropriate for these initiatives because retail stores tend to perform high debit and credit card sales volumes. The higher your monthly debit and credit card sales volume, the more you can borrow. And since payments are directly tied to sales, you’d make smaller payments during the slow season.
Thus, you could make the investments mentioned above during the slow season to maximize the busy season’s performance. A Merchant Cash Advance is even cheaper when your payments are more spread out, so you’d save money by applying well before the busy season begins.
On the other hand, if you’re looking to cover short-term expenses, a Business Line of Credit might be more cost-effective. This is arguably the most sensible product for managing inventory since the goal is to order items shortly before you plan to sell them. A business line of credit allows borrowing only up to the amount drawn.
A Business Line of Credit allows you to place orders in response to shifts in demand and pay your vendors up front. This often ensures that orders are received promptly and at discount prices. You’ll pay less interest since you’ll soon have the revenue to pay off your full balance.
Retail businesses could consider equipment financing to upgrade point-of-sale systems, display cases, and other assets. Equipment financing is used to purchase or lease equipment and can be secured against the equipment itself.
Many retail businesses use working capital loans to overcome cash flow issues for essential operations. Working capital loans provide funding to help manage day-to-day expenses.
Well-established businesses with good credit could qualify for SBA funding, although the process takes longer. SBA loans can be used to purchase equipment, maintain regular supplies, or buy a building to house the store. You’ll have to work with an SBA-approved lender, which includes several online lenders.
The U.S. Small Business Administration (SBA) helps small businesses get funding by setting loan guidelines and reducing lender risk. The SBA 7(a) loan program is the most popular SBA loan program, offering up to $5 million in financing for various business expenses.
The maximum loan amount you’ll qualify for largely depends on your revenue and cash flow. SBA loans are only available to for-profit businesses. The SBA guarantees up to 85% for loans of up to $150,000, and 75% for loans greater than $150,000. Most SBA loans have a minimum loan amount of $50,000, except for the Microloan program.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Many retail stores might struggle to obtain financing from traditional business lenders because of their rocky cash flow. Conventional business lenders carry traditional products that require fixed, monthly payments. However, companies like United Capital Source offer various products with very different repayment structures. This allows us to regularly approve retailers prone to occasional revenue dips or extreme seasonality. In other words, rocky cash flow won’t stop you from accessing most of the six products mentioned above.
Furthermore, Retail Store Business Loans can give you more inventory control, directly impacting profitability. The longer you take to sell an item, the less profitable it becomes. Business loans provide the means to order by demand and capitalize on discounts on high-margin items. Improving cash flow in retail means focusing on your most profitable items instead of selling more items in general.
Lastly, brick-and-mortar retailers must emphasize the in-store experience to compete with eCommerce. This might involve renovating your interior or buying new furniture. While UCS is not the only company that offers Business Term Loans and SBA Loans, we can approve these products much quicker than traditional business lenders. Our requirements are also not as strict, especially regarding credit score and the need for collateral. After all, the best time for making interior changes is your slow season, when you’re less likely to obtain approval from traditional business lenders. We can even customize your terms to match the exact time frame of your initiative.
Since demand in the retail industry is so unpredictable, choosing the right business loan for your current needs can be challenging. Choosing the wrong product can pressure cash flow and further inhibit profitability.
Significant expenses also tend to create other costs naturally. For this reason, many businesses unknowingly end up borrowing too little. Suppose you’ve just used a business loan to purchase additional inventory for the busy season. But this new inventory won’t do you any good if you don’t have enough sales associates to sell it.
Lastly, the dominance of eCommerce makes the future seem increasingly intimidating. To clarify, retailers might not know precisely how far they’ll have to go to stay competitive. Should they ramp up their advertising? Should they start selling new products? It’s hard to tell which strategy will achieve the desired result and which will be a waste of money. Trying to implement multiple competitive strategies can cause retailers to borrow too much. Paying back this much debt isn’t easy when demand can rise or fall at any moment.
The amount of paperwork required for the application depends on your chosen product. Funds can be approved and distributed for most products in up to three business days. Here’s how to apply:
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.
Here are the documents and information required for Retail Store Business Loans:
SBA Loans require additional documents and information. Visit our SBA Loan page to learn what’s needed for the 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.
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.
If and when you’re approved and funded, funds should appear in your bank account within 24 hours to one week. It usually takes 3-5 weeks for SBA Loans to receive approval, and a bit longer for funding.
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.
If your application is declined, you might have applied for the wrong product for your cash flow. We would likely recommend a different product with a less hazardous repayment structure in this case.
Your application might also be denied after determining that you cannot afford more debt. Your needs and financial circumstances might be better suited for another financing tool, like a business credit card or personal loan.
If your credit score is your chief obstacle to accessing financing, you should consider looking for some reputable credit repair services.
No, collateral is not required for Retail Store Business Loans. However, if you can provide collateral, you may be able to offset credit or cash flow issues that would have otherwise resulted in higher rates or lower borrowing amounts. Before assuming you can provide collateral, contact the business loan provider to ensure your type of collateral is accepted. And the value of collateral might not directly reflect your permitted borrowing limit. For example, $10,000 worth of collateral might get you a $6,000 loan with a competitive interest rate.
This depends on where you apply and the product you have in mind. If you’re looking for a bank loan, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
Many lenders require detailed financial documentation during the application process. Generally, businesses must provide documentation showing they can repay the loan. Small businesses should research the eligibility requirements before applying for loans.
Products from companies like United Capital Source are much more accessible. Your ability to meet the abovementioned requirements will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying for multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance is based entirely on the size and volume of your debit and credit card sales.
Banks sometimes offer SBA 7(a) loans for new businesses, including those in the preferred lenders program. However, you’ll have to meet several requirements for SBA-guaranteed loans. For example, eligible borrowers must have reasonable equity to invest. Many SBA loans require business assets for collateral. Ideally, this means that you’re currently operating another profitable retail store. But this could also mean investing your own personal equity, like real estate.
Also, you must prove to the bank that you have no other viable sources of financing. In other words, the bank will likely ask why you didn’t just use your savings account to fund the business or apply for a personal loan.
Retail businesses can consider term loans, a business line of credit, and alternative types of financing. A small business loan often refers to an installment loan for a small business, with fixed payments over a defined period. These loan options can help fuel business growth.
Deciding on the best loan option often depends on your retail business’s operation. Small business owners should consider various lenders and loan options.
A small business line of credit provides flexible access to funds when needed. You’ll only pay interest on the funds you use from the credit line.
Inventory loans are a special type of loan for businesses that need to buy and store inventory. Short-term business loans can be easier to qualify for but may charge higher rates and fees than long-term loans.
Business loans are available for all sorts of retail stores, including (but not limited to):
Yes, four of the six products mentioned above are accessible for borrowers with bad credit. Because bad credit makes you more likely to default, your rates may be higher, and your terms may be shorter. However, if you have strong cash flow or can provide collateral, your bad credit may impact your rates and terms less.
The only two products not accessible with bad credit are business term loans and SBA-backed loans. These products carry high borrowing limits, low rates, and long terms. The other five products usually have shorter terms and are much easier to repay. We can customize your terms and payment frequency to ensure you can make payments while staying current on other bills.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
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