Advantages of a Retail Business Loan

by | Dec 13, 2021 | Business Finance | 0 comments

For most retail business owners, this is the time of year when things get hectic. Everyone is gearing up for the holidays. Customers are ordering more, and new customers frequent your store (be it a brick-and-mortar location or online). And beyond just the holiday season, you still often face some challenges as you want your business to thrive and ultimately grow.

Did you know that around 3000 retail businesses closed in 2021? And since the beginning of 2020, hundreds more have declared bankruptcy. In large part, this was because they weren’t prepared. Some companies didn’t have the capital to handle the complex and more chaotic times. Getting a retail business loan could mean the difference between survival and shutting your doors. But what type of retail business loan should you apply for? And what’s more, where exactly should you allocate the funds? In this article, we look at a few different types of retail loans and what they could be used for to benefit your business.

Different Types of Retail Business Loans

The great thing about commercial funding now is that there is so much flexibility regarding loan type and overall structure. For example, you could apply for a merchant cash advance loan as a retail business. This type of loan lets you get an upfront sum of cash in exchange for a percentage of future sales. Mainly, if you do a great deal of volume about credit card sales, this could be a good financing solution for your business.

You could also apply for a line of credit. With a line of credit, you only draw from the line what you need when you need it, and the benefit here is that you only pay interest on what you borrow—not on the total line amount.

There are also SBA loans, short-term loans, and equipment loans, among other types of retail business financing. Finding the right lender and discussing your financial needs and what you intend to use the loan for will help you understand which type of retail business loan might work best for your company.

What Retail Business Loans Can Be Used For

When working with an alternative or online lender, retail business loans can be used for anything you need. Below are a few of the more popular uses for these types of loans.

Hiring more staff

This is an important one, particularly around the holidays. With the season’s rush, you may not have enough staff members currently to handle the extra orders, increased number of customers, and additional packaging and shipping that you might have to do. You can get a line of credit, SBA loan, or short-term loan and utilize the money received to hire more workers when needed.

Expanding your location

Whether you want to build out your current storefront/location, or you may even be thinking about getting into a bigger space to accommodate your retail store’s needs, a business loan is a perfect solution. Various retail business loan types are available that will allow you to either expand your current location, purchase something more significant, or even buy out a competitor. 

You can talk to a loan specialist and determine which might be the best financing option for your business.

Launching a new product

As your retail business grows, it may so happen that you are thinking about adding new products to your portfolio. After all, the goal is to expand and become a driving force in your market sector. Introducing a new product—from the development phase to manufacturing to marketing—can be an expensive endeavor. Numerous retail businesses look for loans to this end to help them with the overall cost of a new product launch.

Create a marketing campaign

Many companies will create new marketing campaigns around the holidays. Companies are all clamoring for attention this time of year. What is your retail business going to do to stand out? Suppose you are considering a new way to market your business, or perhaps you will hire a social media manager to assist with current marketing efforts. In that case, a retail business loan could be the optimal solution here.

Getting through a difficult period

Several retail businesses do experience slower financial periods. Perhaps sales are down; you’re not bringing in the same amount of revenue and thus have difficulty maintaining a positive cash flow. This is where a retail business loan can undoubtedly come into play.

First Union Lending Wants to Help

We offer several solutions for retail businesses to get the cash they need exactly when they need it, not weeks or months from now. Even if your credit score is less than ideal, we can likely still help with financing. Call today, and let’s get started together!