Deciding to start your own business can easily be one of the most rewarding decisions of your entire life; it can also be one of the most challenging.
Finding reliable funding for your business when you need it and with terms that you can stomach can sometimes seem impossible. Platform Funding makes the process of securing a retail business loan simple—no more confusion about prequalification for your small business loan or immediate disqualification for less than ideal credit. Learn more about the easiest way to get a retail business loan and how to avoid any errors along the way.Â
Prequalification Process Made Easy and TransparentÂ
To move forward with the funding process, you will be required to fill out a prequalification application. Prequalification gives us and any other lenders a better idea of how much funding and what terms your business could qualify for based on your credit. The prequalification process is a no-obligation interaction, and it is known as a soft pull on your credit. A soft pull indicates that the level of financial investigation does not affect your credit score. You will fill out a short application and provide at least three months of your business’s bank statements for financial evaluation. If and when you prequalify for the business loan, the terms of the funding will be submitted to you for approval before moving ahead in the process.Â
Prequalification Approval Decisions and DocumentationÂ
If you are approved for funding, there will be a series of terms and monetary amounts for you to consider before you move forward with funding. In many cases, there is more than one option for funding your retail business needs. At Platform Funding, cash advances generally span from $10,000 to $3 million. Estimated terms for repayment range from three months to two years, depending on the health of the business and the borrower’s amount. Business loans have specific advantages for retail operations, including control over the advance and fixed payments with lower APR. Other funding options include:
- Borrower-specific revenue advancesÂ
- Purchase order financingÂ
- Commercial fleet financingÂ
- Inventory financingÂ
- Factoring and accounts receivable financingÂ
- Equipment leasing
Once approved, you will need to submit additional documentation for a firmer evaluation of your credit, also known as a hard pull. At this stage of the process, your credit will be slightly impacted by the investigation. For most borrowers, there is little difference, and no more than one to two points show the decrease after the hard pull.Â
The additional documentation is necessary for all borrowers. However, it is especially helpful for those who may just be starting their business or those with less than perfect personal credit. In your best interest, provide any additional information lenders can evaluate to determine that you and your business are less of a risk. You will receive optimal funding and ideal rates and repayment terms with more credible documentation. Appropriate forms of paperwork include personal and business documentation of the following items:
- Legal documents
- Tax returns for 2+ yearsÂ
- Bank statements for 12+ monthsÂ
- Other loans or liensÂ
- Detailed value of assets
- Debt scheduleÂ
Types of Business Loans for Retail OperationsÂ
Generally, retail businesses apply for two common types of loans to secure funding for their companies.Â
Business LoansÂ
Business loans include all term loans, equipment loans, invoice financing, merchant cash advances, real estate loans, franchise loans, and business lines of credit that are standard options for borrowers. Small business administration loans are those provided by the government agency entitled the Small Business Administration, and SBA loans are completed by commercial lenders and approved by the administration. There are three to four typical SBA loans that retail businesses qualify for routinely.Â
Disaster LoansÂ
This type of loan comes straight from the SBA and is a low-interest option for businesses recovering from natural disasters. An area must first be declared a state of emergency and a disaster area to qualify for this type of loan. The funding from disaster loans may be allocated for repairing or replacing inventory or damaged or destroyed assets due to the circumstances. Recent developments due to COVID-19 have been included in the disaster loan subsections.Â
MicroloansÂ
Microloans are smaller loans used for specifically defined purposes. Small businesses may be eligible for up to $50,000 so long as the loan is not used for existing debts or for purchasing real estate for the company. The amount can be used for total or partial funding for:
- ExpansionÂ
- Working capital
- MachineryÂ
- Furniture
- Equipment
- SuppliesÂ
- inventory
Equipment and Real Estate LoansÂ
Very different from the microloans that can be used to purchase equipment for new or expanding businesses, 504 loans from the SBA allow for financing significant assets. Terms include extended maturity repayment terms and fixed rate APR. Rather than $50,000 for equipment and a specific no real estate rule, 504 loans lend upwards of 5 million with no limitations on property.Â
7(a) Loans
If you’re looking for the easiest and most common way to finance your retail business, the SBA’s 7(a) loan program is it. There are still a few restrictions with this loan, but the benefits outweigh the 7(a) limits.Â
- Funding up to $5 millionÂ
- Works with short-term capital needs
- Monthly installment repaymentsÂ
- Can apply through a local lenderÂ
- Access to the SBA Express loan programÂ
- Works with international tradeÂ
- Loan maturity from 5 to 25 yearsÂ
- Restrictions on personal debt reparation
A Note on the SBA Express Loan ProgramÂ
Designed for borrowers who need funding faster than one to two weeks, the SBA Express Loan program was created to streamline the process down to a matter of days. After applying, a response will come back in no later than 36 hours. While the Express Loan cuts down on timing, it is also essential to keep in mind that it cuts down on funding. Likely the urgency of your request is considered an increased risk to lenders and ultimately affects the amount of your loan. The maximum amount for the Express Loan Program is $350,000.Â
Lines of CreditÂ
Access to working cash is a dream come true for many retail business owners. The stipulations with lines of credit can include lines that work like credit cards that you pay interest on only what you spend, but you have a more significant amount open for use, should you need it. Other options include an available line for working cash that operates the same way but can be used as cash for other business transactions. Most retail businesses have some kind of line of credit open to build inventory or pay employees or manage benefits, etc. It is not uncommon for lines of credit to be secured before as right as the business begins operating.
Details of Retail Business LoansÂ
Before committing to a retail business loan of any kind, or any loan at all, be sure that you have worked with your lender to understand the risks and benefits of taking out funding for your business.Â
Easy Retail Loan BenefitsÂ
- Excellent credit building managementÂ
- Fixed monthly payments are predictableÂ
- Interest rates are competitive so you can shop aroundÂ
Potential Retail Loan Drawbacks
- You may not qualify for enough funding if your credit is lowÂ
- Your assets may become collateralÂ
- Interest rates vary, but if your scores are low you may be stuck with higher rates
Apply for Retail Business Funding TodayÂ
Filling out the application for pre-qualification takes just a few moments of your time. If you need additional support, professionals from Platform Funding will help walk you through the process to make sure that you understand the terms and are comfortable answering questions. You will need three months of bank statements for pre-qualification, and once you complete the application, you should know in just a few days if you’re approved for the next level.Â
Representatives are standing by to help guide you through the application process. Securing funding for your business shouldn’t be the most demanding work you do all day because you are, after all, a business owner. At Platform Funding, we want you to get back to the most important job of all, successfully running your business. Contact us today to schedule a no-obligation consultation or for help getting funding for your small business.Â
