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Intro To Wholesaler Business Loans
For wholesalers, the key to success is continually looking for new ways to improve efficiency and productivity. Possible options include purchasing better equipment, implementing advanced technology, or recruiting more salespeople. However, obtaining these resources becomes very difficult when your customers take several weeks (or even months) to pay. Wholesalers also habitually buy too much inventory, which leaves precious working capital sitting on their shelves. Then there’s the host of circumstances beyond their control, like seasonality or shifts in demand. United Capital Source has access to Wholesaler Business Loans so wholesalers can take advantage of opportunities to stay relevant, save money, and fill increasingly larger orders.
In this guide, we’ll answer the following questions and more:
What Are Wholesaler Business Loans?
Wholesaler Business Loans are business loans specifically geared towards the cash flow cycles and capital expenditures of wholesalers. In addition to covering short-term needs and larger purchases, Wholesaler Business Loans can bridge revenue gaps until customers send payments or demand picks back up.
Business loans for wholesalers can come in the form of:
- Business Term Loans
- SBA Loans
- Business Line of Credit
- Equipment Financing
- Working Capital Loans
- Merchant Cash Advance
- Revenue-Based Business Loan
- Accounts Receivable Factoring
How Do Wholesaler Business Loans Work?
Each of the products listed above can suit a different type of expense or cash flow issue. For example, let’s say a hot new item has emerged, and you know your customers will be interested. If most of your working capital is compromised, you could secure the order with a Business Line of Credit. This is the ideal option for moderately-sized, short-term expenses. Your interest rate is lower when you pay off the balance as quickly as possible. And as long as you continuously pay back what you owe, that money becomes available again. In other words, you won’t have to apply for funding every time you need to order extra inventory.
This makes a Business Line of Credit similarly appropriate for bridging gaps in revenue since you know your customers will pay you shortly. Another suitable solution for long payment cycles is Accounts Receivable Factoring. You would sell the unpaid receivables for a discount price (at least 85%). Instead of waiting weeks or months for compensation, you’d get cash in just a few business days. It is now the responsibility of the factoring company to collect the payment from your customer. When the payment is collected, you get paid the remainder from the first sale, minus fees.
For larger purchases like new delivery trucks or real estate, consider Business Term Loans, SBA Loans, or Equipment Financing. We can customize your terms to suit the time frame of your investment, as well as the time it will take for your new asset to increase revenue.
Wholesaler Business Loan Options Compared
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advance||$7.5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$10k to $250k||Starting at 8%||1-3 business days|
|Receivables/Invoice Factoring||$50k-$10m||Starting at 5.8%||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
What Are The Advantages of Business Loans For Wholesalers?
Wholesaler Business Loans allow you to take on increasing larger orders, despite your elongated payment cycle and seasonal shifts in demand. Not only can you obtain critical resources like warehouse equipment, but you can also attract larger customers by hiring more salespeople and agreeing to longer payment terms. The sizes or frequencies of orders don’t have to stop you from capitalizing on opportunities to expand your offerings or sign larger customers.
Many wholesalers have said that technology has played a significant role in forecasting demand and ordering the right quantities of items. Wholesaler Business Loans can provide the means to purchase expensive software tools while staying current on your other bills.
Another significant advantage of Wholesaler Business Loans is the likelihood of increasing profitability. The longer it takes you to sell your items, the less profitable they become. But with Wholesaler Business Loans, you can place orders when it makes sense for demand instead of only when you can afford it. And when you can sell items faster, you won’t have unsold inventory eating up working capital.
Lastly, it’s important to note that you don’t need perfect cash flow to be approved. Occasional dips in revenue won’t prevent you from accessing the most logical solution to your current dilemma. After all, you can’t always predict when you’ll find yourself in a cash flow squeeze or when massive expenses will arise.
What Are The Disadvantages of Business Loans For Wholesalers?
Wholesalers might avoid business loans altogether solely because they can’t figure out how to use the funds. There are so many options: hiring more salespeople, implementing new technology, buying more delivery trucks, leasing more space for larger orders, etc. Choosing the wrong investment could come back to haunt you.
Major expenses also tend to create other costs. For example, let’s say you take out a loan to hire a new sales team. But then you remember that salespeople are paid by commission. The same problem could arise when you order additional inventory to expand your offerings. Do you have the workforce or equipment to handle and deliver this new inventory on top of your current inventory?
This makes it very difficult to figure out how much to borrow. If you borrow too little, you won’t be able to cover those additional expenses. But if you borrow too much, you’ll have debt that you can’t afford to pay back.
Couple these uncertainties with new demands from manufacturers and retailers, and you’ve got at least a few scenarios where additional debt could do more harm than good.
Who Qualifies For Wholesaler Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Wholesaler Business Loans:
The amount of paperwork required for the application depends on your chosen product. For most products, funds can be approved and distributed in up to three 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 a decent amount of 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 cost? 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 all Dental Practice Business 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)
- Accounts Receivable Aging Report (for Accounts Receivable Factoring)
- Accounts Receivable (for Accounts Receivable Factoring)
- Debt Schedule (for Accounts Receivable Factoring)
SBA Loans require additional documents and information. To learn what’s needed for the SBA Loan application, 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 reach out to 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 and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Business Financing 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 of 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 Wholesaler Business Loan?
If we decline your application, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
We might also decline your application after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider our credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
People Also Ask:
How Long Does It Take To Get a Wholesaler Business Loan?
If you have your documents in order, the entire application can be completed in a matter of minutes. Upon approval, funds for most products can be distributed in 1-3 business days. Equipment Financing and Accounts Receivable Factoring may take 1-2 weeks. SBA Loans have the most prolonged period, often taking 3-5 weeks to be approved and distributed. This is because SBA Loans usually feature more significant amounts (i.e., more than $350,000) and longer terms. For this reason, substantial paperwork is involved, including:
- Personal Tax Returns
- Business Tax Returns
- Personal Financial Statement
- Statement of Personal Credit History
- Credit Card Processing Statements
- Debt Schedule
- Rental/Lease Documentation
What Expenses Can Wholesalers Cover With Business Loans?
Wholesaler Business Loans can be used for a myriad of purposes, including (but not limited to):
- Leasing or purchasing real estate
- Purchasing inventory
- Purchasing equipment
- Prepaying items for discounts
- Purchasing technology
- Staying current on bills
- Paying off other existing debts
- Covering operational expenses during slow periods
- Hiring salespeople or warehouse workers
Can I Get a Wholesaler Business Loan With Bad Credit?
Yes, six of the eight products mentioned above are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.
For some products, your credit score is irrelevant. Approval for a Merchant Cash Advance is based on your debit and credit card sales volume. With Accounts Receivable Factoring, approval depends on your customer’s creditworthiness, not your own.
The only product that is not accessible with bad credit is SBA Loans. Compared to the other products, SBA Loans carry higher borrowing limits, lower rates, and longer terms. If you have bad credit, you’ll be assigned shorter terms to ensure you repay the loan in full.