Why you might need a loan if you run a convenience store
Like any business in the retail sector, your biggest challenge as the owner or manager of a convenience store is likely to be cash flow.
You have rent or mortgage on your premises to cover, utilities and insurance, plus the hefty wage bill that comes with keeping your store open at all hours to suit the needs and expectations of your customers.
You also need to make sure your shelves are stocked with the wide range of goods – but for some stock lines there may be a long gap between paying your suppliers and making a sale, so a lot of your precious cash may be tied up in your inventory.
A business loan could help you avoid the cash-flow issues that can bring down a retail business of any size and give you the funds you need to keep your working capital at a healthy level.
If you want to grow your business, a small business loan could help you upgrade, refurbish or expand your convenience store, hire more staff so you can extend your opening hours, or even set up another convenience store in a new area.
What are the requirements for getting a business loan?
Getting a business loan can be easier than you think.
You can probably expect to be rejected by the big banks unless you have an excellent 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 convenience stores.
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 your convenience store businessSee if you qualify
What options are available to convenience stores?
There are several types of small business loans you could consider, to support or grow your convenience store 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.
There are several types of business car finance you can use to buy your work vehicles, including car 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.