Financing Options When Starting a Liquor Store

Woman selling wine to a manLiquor stores are one of the few recession-resistant industries out there. It is, however, seen as a high-risk business, and this may keep you from accessing financing from traditional lenders. When starting a venture, you will need help to finance your business operations, staff, and inventory.

Fortunately, there are many ways to secure funds to set up a liquor store. Here are some of your options:

Conventional Loan

Some banks and lenders offer liquor store business loans to would-be proprietors. These loans allow you to start operating and earning as soon as possible. The rates are often 5-10% with a 1-25 year repayment term.  It is important to note that the bank or lender assumes full risk in financing your venture, so it is important to have a good credit score when applying for these loans.

Small Business Administration (SBA) Loan

The SBA program offers a guarantee to your lender on the loan you take. The loan has two programs; 7a and 504. The 7a can be used to buy or refinance a business with or without a building. The 504 can refinance, purchase or build a business. The 7a is ideal when financing a business without buying the building. Interest rates are 6-10% with repayment terms of 3-7 years.

Merchant and Unsecured Cash Advances

Cash advances are when liquor store’s expected income is exchanged for immediate money. With a merchant cash advance; the lender takes 7-35% of the daily credit card proceeds. In unsecured cash advances, a creditor takes a portion of the previous day income from the debtor’s bank account. The factor rates are 1.16-1.50% with repayment terms of 4 months-2 years. Be careful when using this method as it is riskier compared to other financing options and come with exorbitant interest rates.

A liquor store can be a lucrative venture for those who know what they’re doing. Make sure you get a loan from a reputable lender to help you get started on your way to success.

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