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SBA Express Loans for Retail Stores
If you want to start a retail business, or you want to take your current retail store to new heights, an SBA Express loan can help in a number of key ways.
With nearly $5.5 trillion in revenue generated in 2017 alone, the retail industry is one of the largest market sectors in the United States, employing more than 18 million American workers. While it’s true that e-commerce has shifted the market online, and big-box stores dominate the industry for many product categories, retail stores can still thrive if they have the right strategy.
So, if you want to start a retail business, or you want to take your current retail store to new heights, you might want to consider an SBA Express loan. SBA Express loans can be funded in as little as 30-45 days and can offer up to $500,000, making them a great choice for many retail stores.
Using an SBA Express Loan for Your Retail Store
SBA Express loans are known for their versatility, as they can be used for a variety of purposes, such as working capital, equipment, inventory, and owner-occupied commercial real estate. In many ways, Express loans are like their larger sibling, the standard SBA 7(a) loan, but they require less paperwork, and can get approved significantly faster.
Retail stores can utilize SBA Express loans for purposes including:
Inventory financing: Paying for whatever it is you sell can be one of the most expensive parts of running a retail store— and if you don’t have enough inventory, you won’t be able to maximize your potential sales. Fortunately, SBA Express loans can help you get the money you need to fill up your shelves with the good stuff.
Working capital: Whether it’s paying rent or simply keeping up with payroll, everyday expenses can eat into your cash flow, making it difficult to invest in marketing efforts or new merchandise that could take your business to the next level.
Partner buyouts: If you’ve gone into your retail business with a partner, and you want to buy their share of the business, an SBA Express loan can help you do so.
Buying a retail business: Buying a retail business can take serious cash, but since SBA Express loans can finance business acquisitions, they might be able to get you the funds you need.
Building a retail store: If you don’t want to buy an existing business or retail store, you might want to build one on your own— and an SBA Express loan can help you do so.
Business debt refinancing: SBA Express loans can help you refinance eligible business debt that’s currently being offered to you at high interest rates, or has other unreasonable terms that make it difficult for you to reasonably repay it.
SBA 7(a) Loans: The SBA offered nearly $26 billion of SBA 7(a) loans in 2017, making it the Small Business Administration’s most popular loan product. While SBA 7(a) loans can often take between 45 and 90 days to close (somewhat longer than SBA Express loans), they are offered in amounts of up to $5 million, making them a great choice for larger small businesses.
SBA Microloans: SBA Microloans only come in amounts of up to $50,000, so they might not be a great choice for businesses that need a lot of capital. However, they can be approved in as little as 28 days, and don’t require great credit, which makes them a fantastic choice for bootstrapped startups and other ultra-small businesses.
SBA 504 Loans: If you need up to $5.5 million for heavy equipment or commercial real estate, then the SBA 504 loan could be the solution you’re looking for. Unlike SBA Microloans, 7(a) loans, or Express loans, SBA 504 loans cannot be used for inventory or working capital— but to make up for it, they do have incredibly low interest rates, which currently hover at around 5%.
What are the eligibility requirements for SBA Express Loans for retail stores?
To qualify for an SBA Express loan for a retail store, businesses must meet the eligibility requirements determined by the SBA 7(a) program. These requirements include operating for profit in the USA, having been in operation for at least two years, meeting SBA size standards, and having already looked for alternative funding. Furthermore, there must be no delinquencies or debt obligations to the US government. Certain businesses may be ineligible, and borrowers must have good character and a credit score of 600-650 to be approved. Additional documents, such as a personal history statement and financial projections, may be required.
For more information, please see Eligible and Ineligible Industries for SBA 7(a) Loans and SBA Express Loans Terms.
What are the advantages of SBA Express Loans for retail stores?
SBA Express loans are known for their versatility, as they can be used for a variety of purposes, such as working capital, equipment, inventory, and owner-occupied commercial real estate. In many ways, Express loans are like their larger sibling, the standard SBA 7(a) loan, but they require less paperwork, and can get approved significantly faster.
Retail stores can utilize SBA Express loans for purposes including:
- Inventory financing: Paying for whatever it is you sell can be one of the most expensive parts of running a retail store— and if you don’t have enough inventory, you won’t be able to maximize your potential sales. Fortunately, SBA Express loans can help you get the money you need to fill up your shelves with the good stuff.
- Working capital: Whether it’s paying rent or simply keeping up with payroll, everyday expenses can eat into your cash flow, making it difficult to invest in marketing efforts or new merchandise that could take your business to the next level.
- Partner buyouts: If you’ve gone into your retail business with a partner, and you want to buy their share of the business, an SBA Express loan can help you do so.
- Buying a retail business: Buying a retail business can take serious cash, but since SBA Express loans can finance business acquisitions, they might be able to get you the funds you need.
- Building a retail store: If you don’t want to buy an existing business or retail store, you might want to build one on your own— and an SBA Express loan can help you do so.
- Business debt refinancing: SBA Express loans can help you refinance eligible business debt that’s currently being offered to you at high interest rates, or has other unreasonable terms that make it difficult for you to reasonably repay it.
What are the disadvantages of SBA Express Loans for retail stores?
SBA Express loans are a great option for retail stores, but there are some drawbacks to consider. For example, SBA Express loans are limited to $350,000, so they may not be suitable for businesses that need more capital. Additionally, SBA Express loans are only available to businesses that have been operating for at least two years, so startups may not be eligible. Finally, SBA Express loans may have higher interest rates than other SBA loan products, such as SBA 7(a) loans and SBA 504 loans.
How long does it take to get approved for an SBA Express Loan for a retail store?
An SBA Express Loan for a retail store typically takes up to three days for a determination on the application and funds can be dispersed in as few as 20 days after approval.
The SBA 7(a) loan, on the other hand, takes a bit longer. Approvals take up to two weeks, generally speaking, and fund dispersal can take up to a month and a half following an approval.
SBA Microloans may be the fastest form of SBA funding, with an average closing time of 28-30 days. Plus, microloans don’t require businesses to have great credit.
What documents are required to apply for an SBA Express Loan for a retail store?
To apply for an SBA Express Loan for a retail store, you will need the following documents:
- Completed SBA Express Loan Application
- Business Plan
- Personal Financial Statement
- Tax Returns for the Last 3 Years
- Bank Statements for the Last 3 Months
- Business Financial Statements for the Last 3 Years
- Business Debt Schedule
- Business Lease Agreement
- Personal Guarantee
- Collateral Agreement
For more information, please refer to the SBA Express Loan Application Checklist.
Retail Stores Can Also Use SBA 7(a) Loans, SBA Microloans, and SBA 504 Loans To Achieve Their Goals
SBA Express loans are one of the fastest and easiest forms of SBA financing— but there are other SBA loan options you should know about, too. These include: