Some retailers may find it challenging to rebuild their business’ cash flow after the holidays. If you’re struggling to keep up with your inventory and fluctuating cash levels, there are several solutions available to help you cover your losses.
One of the ways you can get additional resources to get your business back in order is by applying for a retail store business loan. For those who are struggling, this might be the best option for you.
How Can a Small Business Loan Benefit Your Retail Store?
Loans for retailers work similarly to how other business owners use them for their businesses. You can use a small business loan to pay for several aspects of operation. With access to extra funds, small retail business loans can help your brand grow.
Using business loans for retailers can give you the funds to acquire equipment and technology to run your business efficiently. These items might include cash registers, bookkeeping software, security systems, signs, and inventory tools.
Some people also use loans to pay for different marketing campaigns and renovating the facility.
Another benefit of using a small business loan for your retail store is hiring new employees to create a more reliable experience for your customers and tackle the busier seasons. The more satisfied your clients are, the more likely they’ll continue doing business with you and help you gain capital.
A business owner may also use a retail store loan for purchasing more inventory to accommodate for special promotions or holidays. The amount you take out could also depend on what your retail store sells, whether food, clothing, or beauty products.
What It Takes to Qualify for a Business Loan
Before deciding on applying for a retail business loan, there are several qualifications you must meet to make the application process run smoothly.
When applying for a small business loan, you’ll need a few crucial paperwork items. Although certain lenders have different policies for what documentation they require, some of the most common ones include:
- Personal and business tax returns
- Personal and business bank statements
- Personal identification, such as your driver’s license
- Balance sheets
- Commercial leases
Another component you’ll need to qualify for small retail business loans is a record of your credit score. By knowing your credit score, lenders are more likely to trust you in repaying your loan, especially for startup businesses.
Several lenders may also ask about your time in business. While most of them may qualify you for a loan if you’ve been in business for at least two years, some may offer alternatives for new business owners. A loan for a small retail shop can cover its finances for about a year.
When Hiccups Happen, What to Do
Sometimes, you’ll run into obstacles that may affect your retail store’s cash flow. Circumstances outside of your control, such as recessions or pandemics, may prompt you to find new ways to stabilize your income.
Typically, it would be best for you to take out a retail store business loan before a recession hits. While it may be impossible to predict if one can occur, it’s a good idea to have a loan on hand to gain greater access to the cash you can use.
Another solution that would be wise for you is setting aside finances to backup your business. By having these funds on hand, you can provide additional financial support for your company.
If you create a backup plan for emergencies, you can set resources aside to start up your business.
Retail Loan Options
When it comes to navigating how to get a loan for a retail store, there are several options available. Some may offer more flexibility than others. Make sure to compare and contrast to determine which one will best fit your brand's needs.
If you’re interested in expanding your existing retail store, you may want to consider SBA 7(a) loans. You’ll typically need your store to operate on profit and have reasonable equity for investing.
Unsecured business loans could be an ideal option for retail owners who prefer having their stores stocked up with the products they want to sell.
Retail inventory financing is a strategy best suited for experienced retail owners. This line of credit gives small business owners access to buy their inventory. You can use the inventory as collateral against the loan and surrender it if for some reason you're unable to repay the loan.
Line of credit works similarly to how people use personal credit cards. You can use and pay these funds multiple times if you stay within your credit limit. If you pay on time, you can build credit and earn a higher limit.
How to Apply for a Retail Loan
If you’re wondering how to get a loan for a retail shop, several application processes have similar steps to follow.
One of the essential things you’ll need to consider before applying is determining how much to take out your retail store business loan. Regardless of how much you qualify for, think about what's reasonable for repayment.
Also consider what you want to spend your loan funds on, whether inventory, equipment, improvements, or employee salaries. This will determine what types of loans are available to you, as well as what the limits and repayment terms are.
To apply for a retail loan, you'll need to provide financial documents for yourself and your business. Contacting a trusted lender to initiate the application process is easy, and your lender can answer any questions you may have while processing your information.
Ready to Apply for a Retail Loan?
Whether it's post-holidays or your company is recovering from another financially challenging scenario, a business loan could be the perfect solution to your needs. If you're ready to apply for a retail store business loan, contact ROK Financial today to learn what you may qualify for and how our team can help!
About the Author, Madison Taylor
Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates!Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.