Banks are usually very hesitant when it comes to Small Business Finance For Liquor Stores as they consider the liquor industry extremely risky. But does a liquor store really deserve this reputation? It is an industry that experiences constant, steady demand and is considered virtually recession-proof. Of course, no business venture is without its challenges, and liquor store owners too must deal with competition from other sellers, factor in changing customer tastes, and of course, comply with a whole bunch of state regulations.
However, a smart liquor store owner can run a highly profitable venture with just a little bit of liquor store business financing. Pumping in extra money can open up fresh revenue streams and strengthen the existing customer base.
Here is a look at some alternative financing offers that are popular with liquor store owners:-
Merchant cash advance (MCA) –
An MCA is technically an advance against future earnings. It is a perfect option for business owners who need small lump-sum amounts, which they want to pay back quickly in a few months. The repayment is made as a percentage of their daily sales revenue.
MCAs can be used for stocking up on seasonal inventory (such as during Christmas) or managing sudden expenses.
Invoice Factoring –
This is an excellent option for bad credit funding situations, as it gives money against accounts receivables. Business owners can convert their unpaid invoices into immediate cash for a fee. When the invoices are paid in a few months, they can pass on the money to the alternative lending company.
This is an option for wholesalers who are awaiting payments from their customers but must carry on paying their expenses.
Business Line of Credit:
A business line of credit is a long term funding offer that works almost like a credit card. Business owners have access to a certain sum of money, but they don’t have to use it all together. Just like a credit card, they withdraw and use what they need and repay when they can. Fees are charged on the amount withdrawn till it is returned.
For Liquor Stores, this is an ideal small business financing deal, if they are looking for expansion that can stretch out over months. They can pay as and when expenses arise and don’t have to worry about mounting fees on large lump-sum amounts. It is an ideal way to expand the premises or to open a second store.
Naturally, collateral makes large amounts more accessible. While alt-lenders give substantial unsecured funding as well, for larger amounts, putting up collateral can secure you a better deal.
This is a perfect option when you need a large funding amount but with bad credit. For example, to build a new store, purchase a new location, or start a second store. Bad credit funding against collateral makes the risk much more manageable and will get you better rates from alt-lenders.
While traditional lenders have stayed away from liquor store business financing, niche alternative companies have filled in the credit gap. Where conservative risk assessment models see red, alt-lenders take a longer and more holistic view of funding liquor store owners. Their business models also ensure that financing deals, especially in bad credit funding scenarios, is based on the real value of invoices or proven business revenue, which gives them a better idea of the financial health of the company. With new-age fintech and a fresh approach, alt-lenders have become the go-to financial partners for small liquor store businesses.