Top 5 Small Business Loans for Your Retail Business

Last Updated Jun 21, 2020 | Published on May 7, 2019 | Small Business

Are you planning on starting a retail business anytime soon? Starting a new retail business is exciting and potentially lucrative. However, even a mom and pop store can need thousands of dollars to kick start operations. Aspiring business owners usually apply for Tulsa business loans to fund their small business ventures.

According to Forbes, entrepreneurs need to spend at least $100,000 on store renovations, as well as the first round of inventory for your store. With that said, starting a retail business is pricey. The good news is that it’s very much possible because there are numerous small business loans you can qualify for.

1. Business Line of Credit

A business line of credit (LOC) is one of the most flexible financing options for small business owners. When approved for a LOC, lenders give you a predetermined credit limit where you can draw funds from whenever you need them. This means that the funds can sit in your bank account for months, untouched. One of the benefits of a business line of credit is that you only have to repay for the amount you’ve withdrawn, plus the interest.

Related: The Pros and Cons of Business Line of Credit

Lines of credit are the most popular way for business owners to get access to additional working capital. The quick availability of cash allows retailers to take advantage of an opportunity once it presents itself.

2. SBA 7(a) Loans

Among the number of loans offered by the Small Business Administration (SBA), 7(a) loans are the most popular. This type of SBA loan offers longer repayment terms, lower interest rates, and a higher borrowing limit. Business owners can use the funds for almost anything, including daily business expenses, payment for equipment, purchasing inventory, and more – as long as it’s for the benefit of your business.

Related: 6 Tips You Need to Know Before Applying for SBA Loans

But because it’s backed up by the federal government, retailers must have a proven track record of their credibility. This means, they should be in the business for at least a few years and must have a good credit standing. They must also avoid foreclosures, bankruptcy, and unpaid debts to qualify.

3. SBA 504/CDC Loans

The SBA 504/CDC loan is another loan created by the SBA and is the second most popular SBA loan. Unlike 7(a) loans, you can only use a 504 loan for investing in fixed assets, such as real estate. The interest rates go as low as 4%, and the repayment terms can stretch up to 25 years with a borrowing limit of up to $5 million.

However, start-up retail businesses may not be able to qualify for this type of loan. As mentioned, retailers need to have an adequate financial background. This lessens the risk for the government which will be guaranteeing the loan.

4. Short-Term Loans

Short-term loans are a great option if you need to cover emergency and unforeseen expenses. However, a short-term loan can be more expensive than long-term loans. However, it can greatly help small retail business owners if that need immediate funding.

To expedite the funding process, you can apply for short-term loans from online lenders.  They typically ask lesser requirements compared to other alternative lenders and banks. The repayment terms set by online lenders are usually less than a year and you can get the funds almost instantly (less than 24 hours). Approval, however, may depend on your financial standing and credit history.

5. Equipment Financing

Retail businesses often need furniture and fixtures, kitchen equipment, computers, tablets, POS systems, and delivery vans, among other items. Without these, their services would be slow and inefficient which can lead to missed opportunities. With the right equipment, the need to hire additional employees would also be lessened, thus, leading to much greater savings.

Equipment financing allows small business owners to purchase or lease the type of equipment you need for your business. Equipment loans are usually self-secured. This means that the equipment you’re looking to purchase serves as collateral for the loan. Once you default on payments, banks or lenders will seize the equipment and sell it to pay for the remaining loan balance.

Tulsa Business Loans – Small Business Loans for You

If you’re planning to open or expand your retail business, then you need additional working capital to cover the expenses. Whether you’re planning on buying equipment, adding inventory, or opening a new location, there’s no denying that all these could cost a lot. Financing this out of your pocket could create a huge gap in your cash flow, too. With that, you’re left without a choice but to apply for Tulsa business loans.

There are a lot of lending companies that offer different types of business loans that are specifically designed to address your company’s needs. Be sure to look around and find the one that offers the best terms.


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