Editor's choice: OnDeck business lines of credit
- Business or practice ownership not required
- No hard annual revenue or time-in-business criteria
- Multiple loans OK
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Craft beer and mixology have shared their moments in the spotlight — but wine and whiskey are evergreen choices for some customers. Keeping on top of trends while still pleasing your old-school customers is a balancing act that can get expensive. We take you through your financing options for when you're ready to take your store to new levels — or need a little help getting through the month.
Knowing what type of financing you need is the first step to getting a loan for your store. These options can help your business cover common expenses.
First, figure out what expenses you need to cover and how much it'll cost. Chances are, you're looking for help covering your inventory expenses — you can't have a liquor or specialty alcohol store without the booze, after all. In that case, your best bet is either a line of credit or a merchant cash advance.
With a merchant cash advance, how much you can borrow typically depends on how much you make annually. For large expenses, try to get an accurate idea of how much you need to borrow ahead of time to narrow down lenders by loan amount and type. Make sure that your lender is willing to work with businesses dealing in alcohol — some aren't.
Next, compare the costs. Merchant cash advances come with a factor rate, or the number your lender uses to multiply your loan amount to figure out how much you'll pay back. With most other loans, the easiest way to compare costs is looking at the APR, which is an expression of your loan's interest and fees as a percentage.
You'll also want to look at the repayment schedule — some business loans come with weekly or even daily repayments — and your repayment amounts. Try to go for the highest repayment your business can afford to cut down on the overall cost of your loan.
And finally, check out what other customers have said. A few complaints here and there are normal, and lack of Internet presence is also not necessarily a red flag for a small or new lender. But several similar complaints can raise a red flag.
As with any business, what your lender asks for depends on your loan type and your specific business. Liquor store owners will likely need to provide the following documents and information.
Lenders generally consider liquor stores a high-risk industry, so you might have trouble qualifying for a conventional business loan from say, your local bank. Luckily, liquor stores aren't typically on online lenders' "restricted industries" list the same way other industries that cater to vices are. You might have more luck looking for providers who offer financing specifically for your type of business.
Another problem liquor stores might face is that they often have a mix of cash and credit card sales. You're going to need to pay careful attention to your bookkeeping to qualify for a loan. Consider using a software like Quicken or even hiring an accountant.
If you think you've found a good deal with a general business loans provider, reach out to its customer service team to make sure that your business is eligible.
Since not all lenders are willing to work with liquor, wine or beer stores, you might have to do a little more poking around than other industries. The good news is you work in an expanding industry, which means that there are more options out there now than ever before. To learn more about how business loans work or to start comparing lenders, check out our business loans guide.
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