August 18, 2021
Grocery Store Financing: How to Apply and Use Funding
In fact, Statista reported that there were more than 38,000 grocery stores in the United States in 2017. Due to this, it’s crucial that you hire working employees, frequently replenish inventory, and focus on financial planning, among other aspects.
If you’ve recently reviewed your grocery store business plan and noticed that you’re having trouble paying for certain costs, it might be time to consider applying for additional working capital. Although it can be intimidating to pursue business lending, it might be necessary if you want to improve your store.
How to Select Grocery Store Financing
There are numerous types of financing to consider. Common types of business funding for convenience store business owners include:- Term loans: If you'd like a funding option with a set repayment schedule and amount, a term loan will be the most viable option for you.
- Merchant cash advances: Does your grocery store accept frequent credit card payments in small amounts? If so, you will likely benefit from merchant funding. Often, business owners appreciate this type of financing because the provider will primarily be focused on your business's credit card sales, instead of your credit history or other factors.
- SBA loans: If you can prove that you don't qualify for traditional funding sources, you may be able to receive a business loan from the SBA.
- Business lines of credit: In some cases, business owners seek a credit line so that they can borrow against it as needed. A notable benefit is that most line of credit lenders will only charge you an interest rate based on the money that you use.
- Business credit cards: Often, business owners appreciate having access to a credit card so that they can charge expenses as needed. However, if you are prone to overspending, this may not be the best financing option for you.
- The amount of money you require for your business
- Your business and personal credit scores
- The amount of monthly sales that your business earns
- How long your grocery store has been operational
- If you have existing debt or outstanding loans
6 Ways That Grocery Store Owners Can Utilize a Loan
1. Purchase Inventory
A well-stocked store will bring in flocks of customers, but bare shelves lacking in updated products will send them out the door. As a small business owner in this industry, ensuring that your store’s inventory is regularly restocked should be a top priority. In addition, offering a wide range of products is also crucial, since your customers will want options. Many shoppers will want healthy items as well. These products might be more expensive, but you’ll attract a wider range of customers. Although purchasing inventory can be a financial stress, with the help of working capital, it’ll enhance the quality of your grocery store!2. Hire More Employees
To successfully master grocery store management, you must hire the right employees. It’s important to have enough staff members working at your grocery store each day, in addition to having employees on-call for busy times, or if another employee calls out sick. If your business is under-staffed, or needs new, hard-working employees, this is a good way to utilize grocery store financing.3. Update Your Business's Interior
If your grocery store’s interior is outdated or worn down, customers won't want to shop there; instead, they'll seek out a nicer, more inviting location. Understandably, you have a variety of consistent costs that you need to pay for, so making interior updates might be low on your priority list. To improve your business, invest in interior updates so that you don’t have to worry about scaring away your loyal patrons!4. Expand Your Grocery Store
Is your grocery or convenience store starting to feel cramped, or are you running out of room to display your inventory? If so, it might be time to research convenience store business loans so that you can grow your business. If your customers find a larger, better-stocked establishment to shop at, you may lose their business. To avoid this, use your business financing to expand your existing store, or move to a larger space!5. Invest in New Technologies
Make you and your employees’ day-to-day lives easier at work by investing in the latest technologies. For example, you can purchase new payment systems, inventory management software, and other necessary services. Having technology that you can rely on will make your business run smoothly, which is why you should integrate these costs into your grocery store business plan and pay for it with additional working capital.6. Pay Rent and Other Bills
Unfortunately, rent payments, utility bills and other service fees can add up every month! Don’t let this stress you out or deter you from making essential changes to your business; apply for additional working capital so that you have cash on-hand to pay bills and afford other short-term expenses.