As a retail business owner, there are times in your business that you would have to seek for external funding to keep your business going. If you’re low on capital, there are a lot of funding options that you can approach to help your retail business.
1. Merchant Cash Advances
Merchant Cash Advance uses credit cards as their means of funding, which makes it perfect of retail business, since most of retail businesses accept credit cards as payments. Cash advances can be a great fit for retail business owners with consistent credit card sales in medium to big volumes.
Once you got approval for a merchant cash advance, you will receive funding that is remitted based on your retail business’s future credit card sales.
2. Business Loans
You can apply for a business loan for your retail business through a bank or alternative lender. The bank or alternative lender will give you the funds that you will need to repay in a set term. You have to ensure your ability to repay your loan within the set term to avoid the risk of having significant debt in addition to interest payments.
3. Lines of Credit
Lines of Credit is another alternative for retail business owners to consider. However, before applying for one, there are a few aspects to consider, such as your credit score. If you have a poor credit score, you may be required to secure the line by submitting collateral like real estate, equipment, or vehicles.
With a revolving business line of credit, you’ll be given a limit that you can’t exceed. Your limit will decrease whenever you use money from the line until you repay the amount that you borrowed. Some providers might also offer non revolving lines of credit, which also have a limit, but when it has been met, it can’t be used again. You’ll need to apply for another line if you need more financing.
4. Business Credit Cards
Many retail business owners own at least one credit card account for an emergency use in case they don’t have cash on-hand in the moment. If you’re considering to apply for a business credit card, you must look for cards that have rewards that will benefit your business, such as cash back rewards or travel points. You also have to make sure that the card doesn’t come with hidden fees that you won’t be able to afford.
5. Equipment Financing
If you are having trouble being able to afford inventory, you might consider applying for equipment financing. This funding option come with set terms and must be used only to purchase business inventory. You can use equipment financing to purchase items to sell at your retail business, or to purchase items that are needed to run your business.
6. Small Business Administration Loans
The Small Business Administration (SBA) provides numerous financing options available to business owners. To be able to qualify for an SBA loan, you must have proof that you have applied for traditional forms of financing and did not get the approval. Aside from that, SBA loan also need information about your credit score, financial history, and potential collateral requirements.
After reading this, we hope you have a better understanding of the available funding options for your retail business. If you are equipped with adequate funding, you can better serve your customers, and improve the performance of your retail business. Best of luck!