What are the Best Types of Business Loans for Grocery Stores?
Canada Small Business Financing Program Loans
The Canada Small Business Financing Program (CSBFP) partners with lenders to provide superior loans. The CSBFP shares the risk with the lenders they work with, enabling these lenders to offer you lower rates. If you qualify for a CSBFP loan, you can expect better rates.
Term Loans
Grocery store loans usually don’t need to be complicated. A business term loan can be used for any business purpose.
If you just need a little more money at any given moment, a grocery store term loan can provide you with the extra cash you need to get you through a major purchase or an unprofitable month.
Revolving Line of Credit
Revolving lines of credit are a great option for grocery store financing. They can be used for a wide variety of purposes. They carry higher interest rates than term loans on average. However, their terms last longer and offer you more control over your grocery store financing.
Equipment Loans
Equipment loans are a lot like term loans. The main difference is that they use the purchased equipment as collateral.
Merchant Cash Advance
Grocery stores typically receive many payments via credit cards. If your grocery store is credit-card friendly and you don’t want a normal business loan with regular repayments, an MCA might be the option you’re looking for. An MCA is just an advance that you pay for through portions of future credit card sales.
What are the main purposes for Grocery Store Loans?
Working Capital
Grocery stores have many day-to-day expenses that often require business financing.
Business Expansion
Expanding a grocery store is expensive. Grocery store loans can make the expansions your business needs possible.
Advertising & Marketing
Advertising expenses can provide a high return on investment. This is why many grocery store chains will use loans to pay for more publicity.
Purchase Produce & Inventory
Grocery store loans are often used to cover the consistent expenses of purchasing more groceries and other products.
Purchase / Upgrade Equipment
Equipment that is used at a grocery store may often need upgrades or replacements. These expenses are not always small, so grocery store loans are often taken for them.
Workforce & Payroll
Grocery store businesses are some of the largest employers. Making payroll and hiring new workers are critical expenses that can’t be neglected. So, business loans can be used to fill the financial gaps that workforce expenses leave.
Pay taxes
Taxes can bite into a grocery business’s cash flow. When this happens, it’s often necessary to take a loan to avoid the CRA’s punitive measures.
How do you Apply for a Small Business Loan for a Grocery Store?
The first step to getting any kind of loan is finding the right lender. Shop around and compare the rates offered on loans you qualify for. Then, send an application to the lender that best suits your needs.
After you send an application, the lender will assess your credit score and business financials. This assessment will be the basis of any offer they send you. Once they send a full offer, it’s up to you to accept or reject it. If you accept, they will send you the funds and the terms of the loan will be applied.
Frequently Asked Questions about Grocery Store Loans
How long does it take to get a loan for a grocery store?
The time it takes to get a grocery store loan will vary by lender. Banks may take one week to a few months to approve a loan. Online lenders will often be much faster. You can get a business loan in one day from some alternative lenders.
Can I get a business loan for a grocery store with bad credit?
Yes, you can get a grocery store loan with almost any credit score. Bad credit business lenders offer bad credit loans to a wide variety of borrowers.
How big a business loan can I get for a grocery store?
Lenders will offer you between $15,000 and $300,000 for a grocery store loan. The amount of money you get from a business lender will depend on:
The lender you go to
Your credit score
Your business financial information
How do you start a grocery store business in Canada?
The best way to start a grocery store in Canada is to jump aboard with a big franchise. This makes the many intricacies of running a grocery store so much easier.
If you want to start a new grocery store yourself, the application process is the same as it is with many other businesses.
What are Canada’s top grocery stores?
Some of the most popular grocery businesses in Canada are Loblaw, Sobeys, and Metro.
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