Top reasons why butchers might need a business loan
As a butcher you have hefty up-front costs to cover, and the constant challenge of keeping the cash flowing even if sales fluctuate or demand drops.
Whether you operate from a shop premises or a market stall, you need to cover the expenses of purchasing, transporting, preparing and storing your meat, plus fixed costs like rent, wages, tax and insurance, all before you make a sale.
Cash flow can be a major challenge for butchers, which is why many take out small business loans.
A loan can help you to smooth out your working capital and make sure you have the cash on hand to meet your financial obligations and pay your staff and suppliers. Having loan funds behind you could also improve your negotiating position with suppliers.
You may be thinking of growing your business by opening a new butchery or branching out into supplying restaurants or catering clients.
A business loan could give you the funds to purchase the specialised butchery tools and refrigeration equipment you need, hire and train more staff and market your business to your new target market.
What are the requirements for getting a business loan?
Getting a business loan can be easier than you think.
You can still expect to be rejected by the big banks unless you have a long and solid trading history, a top-rate credit rating and collateral to offer.
But there are plenty of alternative lenders out there willing to offer business loans to butchers.
Each lender will have their own criteria when it comes to things like credit rating, how long you’ve been in business, and how high your turnover is.
If you’re higher risk (e.g. if your credit score is low) you may still be able to get a business loan, although you can expect to pay a higher rate of interest to compensate for that risk.
The most important factor ALL lenders will look at is your capacity.
Lenders need to know that you will have enough cash – after all your expenses – to cover your loan repayments.
How to apply for a business loan
If you are applying to an alternative lender for a business loan, the process is usually quick and easy:
1Create a business case to check how much you can afford to borrow.
2Prepare your supporting documents – expect to be asked for:
3Choose your lender and loan product – be sure to shop around, because costs, terms and conditions vary. Be sure to find out about hidden fees and compare all the costs of each product, not just the interest or factor rate.
4Complete a simple online application form and upload your supporting documents. Most lenders will respond within days or even hours. Some will even give an on-the-spot decision.
Grow the business you want.See if you qualify
What options are available to butcheries?
There are several types of small business loans you could consider, to support or grow your butchery business.
Unsecured small business loan
A short-term option, unsecured business loans are usually for between 3 months and 2 years.
You can use the funds for any purpose. Many lenders will let you set a repayment schedule to suit your trading patterns.
A specific-purpose business loan secured on the equipment you are buying, such as a new forklift for supplies.
The term will often be tied to the lifespan of the equipment. You will not be able to sell or upgrade the equipment until you have repaid the equipment finance.
There are several types of business car finance you can use to buy your refrigerated meat van/s, including vehicle loans, hire purchasing and leasing.
While your work vehicles are under finance you will not be able to sell or upgrade them.
Business line of credit
A business line of credit is similar to an overdraft facility, giving you access to cash up to an agreed limit, often with the right to draw, repay and redraw funds as you need them.
You only pay interest on what you borrow, but there are often set up and admin fees.
Business credit card
Business credit cards are great for covering day-to-day expenses and making purchases, but unless you clear the balance each month the cost can be extremely high.
Before entering in to any business loan agreement, be sure to seek professional advice. It’s also important to ensure you understand all of the costs (including all fees). You can get a head start by using our business loan calculator.