Retailers form a vital element of our economy. That shouldn’t really come as a surprise considering how often everyday people rely on retailers to buy essential goods and products. As such, retailers should know that they have a variety of funding options available to them –– not only to assist during difficult times, but also to help boost their company’s growth. Indeed, business loans for retailers aren’t “Hail Mary passes;” instead, they can form an integral part of a responsible business owner’s financial plan. To that end, today we’re going to outline four types of business loans for retailers, and the many benefits they offer:
1) Equipment Financing
Wholesale distributors can obviously benefit from a service like equipment financing, but retailers can do so as well. A store looking to increase its stock, or move some of its distribution in-house can apply for equipment-based loans that offer both low prices and grants you greater control of your retail locations stocking capabilities.
An upgraded point-of-sale (POS) system is one of the most important investments you can make with funds from an equipment loan. Today’s consumers want fast, easy payment options, and you need a straightforward way to manage inventory, employee scheduling and customer service from a single platform. If you’re pushing into e-commerce or introducing a “buy online, pick up in store” option, equipment financing can provide new forklifts, pallet jacks, dollies, hand trucks and safety gear to improve warehouse operations. If you’re looking to up your game, equipment financing is a great place to start.
2) Merchant Cash Advances
A merchant cash advance doesn’t function like a loan –– because it isn’t one. So rather than dealing with fixed rates and a concrete monthly payment, you can instead pursue a financing option with flexibility. You’ll only pay back a percentage relative to your monthly credit card sales. This makes a merchant cash advance (MCA) an advantageous option for retail locations that experience peaks and valleys in their sales. With this method you can navigate seasonal fluctuations and rejuvenate your cash flow during lean months.
Using an MCA to bridge the gap between peak and slow seasons allows you to keep operating even when sales are few and far between and ensures you have the working capital you need to prepare for an upcoming influx of customers. You’re free to top up your inventory, hire seasonal employees and launch robust marketing campaigns without worrying about how you’re going to afford it all, and the sales you make as a result can help pay off the advance faster.
What if you do brisk business all year long but deal mostly in big-ticket items paid off in installments? You still have to replenish inventory when these items sell out, but since the money doesn’t come in all at once, you could find yourself in a bind. An MCA may be a viable option to maintain consistent cash flow so that you can cover everyday expenses while still allowing customers to spread out payments for their purchases.
3) SBA Loan
An SBA loan is one of the most sought-after loans across industries. That’s because –– in addition boasting low-rates and long terms –– SBA loans provide small businesses the chance to focus on big projects they need to grow. So if you’re looking to expand on your current location, or even open up a second store, then an SBA loan can help you secure the capital you need to complete the project. SBA funding may be used to cover the cost of construction or renovation, hire new employees, increase inventory levels or reach out to new groups of customers through targeted advertising campaigns.
Adding more products is a potentially lucrative alternative or addition to expansion as a growth tactic. You can:
- Introduce additional sizes or colors of existing products
- Develop items to complement current lines
- Push into relevant new markets
- Broaden offerings within your current niche
With up to $5 million in funding available, an SBA loan gives you the freedom to explore the possibilities most likely to benefit your business.
4) Business Line of Credit
Much like a merchant cash advance, a business line of credit will enable a retail owner greater flexibility than a more traditional loan. That’s because you’ll only have to pay back what you actually use. Plus, you can land a business line of credit fast –– so that you can address issues as they arise. Having a credit line gives you a buffer you can draw on for working capital when things get tough or sales slow down. Instead of scrambling to get financing, you can simply take what you need up to the total amount of your credit limit and breathe easy during slow seasons knowing you have enough resources to get you through until business starts booming again.
Using Business Loans to Improve Your Customer Experience Strategy
Customer retention is critical to business growth. Did you know increasing retention by just 5% can lead to a 75% increase in profitability? But the secret to retention is no longer about lower prices or better products; it’s all in the shopping experience.
By 2020, experience is expected to surpass product as a “key brand differentiator,” which isn’t surprising, since 86% of buyers prefer a great experience even if they have to pay more for their purchases. Experience is an “important factor” in the purchasing decisions of 73% of consumers, so if you want first-time buyers to become lifetime devotees of your brand, you should focus on developing a better experience on all your sales channels.
How do business loans help? Financing provides the cash for making smart investments in equipment, expansion, product development and marketing that transform the way you serve customers by:
- Reducing the size of checkout lines
- Maintaining a consistent stock of inventory
- Ensuring you have enough resources to engage across all touchpoints
- Meeting specific consumer needs with new products, services or locations
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Business loans for retailers can be as varied as retailers themselves. After all, no two retail locations are alike, and different retail owners need different solutions within their financial packages. At National Business Capital, we understand the challenges retailers face, and can help you get through a tough time –– or help your business reach new heights.