Article summary: Many small businesses, including retail businesses, often use borrowed capital to fuel business growth or fund other growth initiatives. Loans for retail businesses, with the exception of the biggest and most established retail businesses, can be difficult to find through traditional channels like the local bank, but that does not mean there aren’t options available to you if  you have a good credit profile and a predictable cash flow—in other words, a healthy business.

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Financing Options for Retail Businesses

  1. A Business Line of Credit: A business line of credit or Business LOC has been a popular way for retail businesses to quickly access capital as needed, repay the amount borrowed, and access again. The flexibility of a line of credit, makes it possible for retailers to respond quickly to opportunities.
  2. A Short-Term Business Loan: Many online lenders offer short-term business loans for small businesses like local retailers. With terms that range from three months to three years, this type of financing makes it possible for a merchant to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan.
  3. Equipment Financing: Many people, when they think of business equipment think of construction or industrial equipment, but that would be an incomplete definition. The fixtures in your store, material handling equipment, and the other tools you use to do business could also be considered equipment. Many retailers turn to equipment financing to fuel growth or otherwise fund opportunities for their businesses.
  4. The SBA (Small Business Administration) Loan Guarantee Program: Although the SBA is not a lender and provides financing through participating banks and credit unions (among others), the SBA Loan Guarantee Program will sometimes qualify a borrower who might not otherwise meet the more rigid criteria required by the bank. If your store is an established business, with a few years under its belt, and your personal credit score is above 680, this could be an option for your business.

Retailers like Wild Women Winery recommend OnDeck

 

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right for your retail shop?

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Applying will not impact your personal credit score

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  1. Simple: Easy application & fast funding
  2. Tailored: Funds you need on your terms
  3. Human: Real, live loan advisors

A Business Line of Credit

Many merchants choose a business line of credit (LOC) to meet their short-term capital needs. The flexibility of a LOC makes it possible to access the credit line when needed, make repayment, and access the credit line again as needed over the term of the LOC. Unlike a term loan, interest is only paid on the funds drawn against the credit line.

Although different lenders have different criteria for how they evaluate whether or not they will offer a business a line of credit, OnDeck offers a business line of credit and looks beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral, when evaluating creditworthiness. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck business line of credit include:

  • A Personal Credit Score of 600+
  • One Year in Business
  • Annual Revenues of $100,000+

A business line of credit with OnDeck requires a personal guarantee to secure the credit line.

Terms for a Business Line of Credit

Depending upon the lender you choose, the terms may vary, but OnDeck offers the following terms:

  • A line of credit up to $100,000
  • Weekly periodic payments
  • A $20 monthly maintenance fee (waived for six months if you draw $5,000 or more in the first five days after opening your account)
  • Funding in as fast as 1-3 days upon approval
  • APRs3 as low as 13.99%2 for highly qualified borrowers

Apply Now for an OnDeck Business Line of Credit

Equipment Loans for Retail Businesses

When people think of business equipment, they often think of heavy construction equipment or industrial machinery—but there are other things that could be considered equipment. The fixtures in your store, the cash registers, the computers, and other tools you use to do business could also be considered equipment. A retail business  equipment loan could be a good fit if this describes the reason your business is looking to borrow.

Equipment financing could be a good solution to fund the purchase of expensive equipment with a long usable life. The equipment being purchased acts as the collateral for the loan, and typical repayment terms can be up to six years.

To qualify for an equipment loan, the typical minimum qualifications are:

  • A Personal Credit Score of 600+
  • A Down Payment of 10%
  • A Strong Business Credit Profile

An equipment loan with OnDeck will require the equipment being purchased to act as collateral as well as a personal guarantee.

Equipment Loan Terms

Depending upon the lender you choose, the terms may vary, but OnDeck offers the following terms:

Short-Term Business Loans and Terms

A short-term business loan could be a good fit for a retail business that needs to purchase inventory or meet other short-term business needs. Lenders, like OnDeck offer loan amounts up to $500,000, can often give you an answer on your loan application within 24 hours, and fund your loan within another day or two after that. Making it possible to quickly take advantage of opportunities to increase profits or otherwise fuel growth opportunities.

Short-term business lenders (like OnDeck) also look beyond a business owner’s personal credit score and whether or not the business has specific assets that could be used as collateral, when evaluating a potential loan for a retail business. Of course, personal credit score, business credit profile, and other data are part of the equation, but metrics that demonstrate the overall health of the business are also considered when evaluating a business’ creditworthiness. The minimum qualifications for an OnDeck loan include:

  • A Personal Credit Score of 600+
  • One Year in Business
  • Annual Revenues of $100,000+

A short-term loan with OnDeck does not require specific assets be identified as collateral, but a general lien on business assets and a personal guarantee will be required to secure the loan. This makes it possible for a healthy business without any specific asset to use as collateral to qualify for a loan.

Loan Terms

Depending upon the lender you choose, the terms for a retail business loan offered may vary, but OnDeck offers the following loan terms:

  • Loan Amounts from $5,000 to $500,000
  • Repayment terms from 3 months to 3 years (depending upon the loan)
  • Daily or Weekly periodic payments
  • Funding in as fast as 1-3 days upon approval
  • Rates as low as 9.99%2 AIR1 for highly qualified borrowers

Apply Now for an OnDeck Loan

SBA Guaranteed Loans and Terms

The SBA offers a number of loan guarantee programs that could be a potential fit for a retail business. The 7(a) loan program is a good place to start. You can read more about SBA loans HERE.

The 7(a) loan program is the most popular and probably the most flexible SBA loan. This loan is designed to fit a number of small business lending scenarios and could be a good fit if you meet the qualification criteria. It offers:

  • Long-term working capital (3+ years)
  • Short-term working capital (less than 3 years)
  • Loans for purchasing equipment
  • Loans for purchasing real estate, including property and buildings
  • Loans for new construction or renovation
  • Loans for establishing a new business or contributing to the purchase of an existing business

The interest rate you pay for an SBA loan is negotiated between you and the lender—subject to SBA minimums and caps[3]. Both fixed and variable rates are available and subject to an allowable spread based upon one of the following rates:

  • The prime rate published in a daily newspaper
  • The London InterBank one-month prime plus 3%
  • The SBA peg rate

Even though lenders are allowed to add a spread to the base rate, the maximum spread can be no more than 2.5% on loans with maturities shorter than seven years and no more than 2.75% on loans with maturities of seven years or longer.

SBA guaranteed loans typically have some of the lowest interest rates, but the qualification/application process can take weeks—or even months to complete.

OnDeck is not an SBA lender, but does offer small business loans to retailers as an alternative to an SBA loan and for those businesses where an SBA loan isn’t a good fit.

Apply Now for an OnDeck Small Business Loan

Much like other small businesses, merchants and other retailers can leverage financing to help their business’ grow and thrive. Retail business loans, or financing available for retail businesses, make working capital available to merchants to fuel expansion, growth, and meet other business needs.

[1] Rates Definitions:

Annual Interest Rate: The interest rate in annualized terms, excluding fees

Annual Percentage Rate: The interest rate in annualized terms, including the fees

[2] Eligibility for the lowest rates is very limited, available only to businesses with the strongest creditworthiness and cash flows, and typically businesses that have shown an excellent payment history on prior loan products with OnDeck. The weighted average rate for lines of credit is 32.6% APR. Weighted averages are based on loans originated in quarter ending June 30, 2018.

[3] https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans#section-header-0

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What type of loan makes sense for your business?

Financing options to help you grow your business

If you’ve ever heard the adage, “It takes money to make money,” you must be a small business owner. Fortunately, there are more small business loan options available today than ever before—you just need to know where to look and what to look for. You don’t need to be a financing expert to build a successful business, but you do need to consider all the business loan options available to determine which one is best to meet your business need.

 

Small Business Loans and Lines of Credit

With online lenders and lines of credit, there are more options available today than a traditional term loan from the bank when you need extra capital to fuel growth or fund other business initiatives.

Loans with a Purpose

Depending upon why you’re borrowing (your loan purpose), there could be an option custom fit to meet your business need. Here are some of the financing options available with specific use cases in mind.

Non-Traditional Financing Options

Sometimes it takes a different approach to meet a business’ financing needs. There are a number of options from micro-loans to funding sources that won’t even be described as a small business loan.

Industry Loans

Each industry has specific loan types that may be better suited for your business. Here are some of the most common industries we work with and the financing options available to them.