Bake Shop Business Loan Options
According to the American Bakers Association, the baking industry generates more than $154 billion in economic activity annually and employs almost 800,000 highly skilled people. Who doesn’t like baked foods or pastries? The fact remains, it’s challenging for bakery owners to get business loans from traditional sources. Whether you are a member of a credit union or a national bank customer, it is tough to get many types of bakery funding or bank loans in general. Alternative business financing sources have stepped up and bakery owners have more choices in the past when trying to get small business loans.
A traditional bank sees bakeries as risky businesses. Traditional banks won’t give loans out to just any small business. Traditional banks will likely require an excellent credit score from bakery owners, strong financial statements, and collateral from your business. Some could even ask you about your relevant hospitality experiences as well. That’s where AdvancePoint Capital can help.
AdvancePoint Capital’s goal is to help small business owners. We have lots of experience providing bakery loans for bakeries for years and can allow you access to the best alternative business lending products through our network of lenders and financing options. We have no minimum credit score requirements, although the better the credit score, the more options we can offer.
We understand the difficulties of operating a bakery and the need for financing. We are laser-focused on providing the best business funding products to you, the small business owner, so you can effectively operate your business. Whether you want to add customers, purchase equipment, expand operations improve counter service, need some working capital, or have any other business needs — we can find the best bakery loan for your business.
Small Business Owners in the Bakery Industry that we Serve
We help a wide range of bakery businesses acquire loans for their shops including:
- Commercial/Wholesale Baked Goods
- Retail Bakeries
- Bakery Cafes
- Pastries and Baked Goods Shops
- Home Bakeries
- Bakery Schools
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Bakery Business Loan Options
Long-Term Small Business Loans for Bakeries
Long-term loans are used for bakery businesses that want to grow, need to expand, and have a high price tag for that expansion. Long-term loans spread the cost out over the years so payments are affordable. Interest rates are also attractive.
- Terms that can stretch from 3 to 10 years
- Monthly payments
- Application process is detailed oriented
Short-Term Small Business Loans for Bakeries
A short-term loan comes in handy when a traditional loan is not an option due to credit or other reasons. Short-term loans are more tolerant of credit and reduced documentation is necessary for funding making it a popular alternative.
- Quick access to funds with same day approval
- Various forms of credit considered
- Simple application and limited documentation required
Bakery Equipment Line of Credit
A line of credit is a great option when small businesses like bakeries want access to a line that they can draw money when needed and only pay interest on the outstanding balances.
- Funds available on demand by draw
- Pay interest on balance only
- Low interest and draw fees
Small Business Administration (SBA) Loans for Bakeries
SBA loans are popular with bakery business owners because they have attractive interest rates and terms. SBA loans are backed by the Small Business Administration and funded by SBA-approved lenders. Be prepared for the SBA loan application process and supply a lot of documentation when applying as the SBA process is lengthy, but don't worry we are here to make it easy.
- Terms that on SBA 7(a) loans of 5 to 10 years, (Real Estate as collateral up to 25 years)
- Business loans up to $5,000,000
- Backed and Guaranteed by the Small Business Administration
Merchant Cash Advance for Bakeries
Merchant cash advances are a business financing alternative to a small business loan. A merchant cash advance is not a loan, but an advance of future sales of the business based on the business's annual revenue. The merchant cash advance is paid back by a set fixed percentage of future credit card processing. A great working capital loan alternative.
- Easy application process, Funds available in a day
- Excellent to Bad credit considered
- Flexible repayment with no term limit
Invoice Financing for Bakeries
Invoice financing, also known as invoice factoring, is a great product for businesses that invoice their clients monthly and would like to get an advance off of the unpaid invoice before the net terms of 15, 30, 45, or 60 days.
- Invoices purchased and advanced upon issuance
- Invoices can be advanced daily
- Low factor rates and processing fees
Bakery Shop Equipment Financing
The bakery industry relies on equipment for its baked goods and operations. Equipment financing uses the equipment as collateral so that the business can get favorable financing terms.
- Structured as a lease or loan
- Repayment duration from 2 to 7 years
- Monthly payments
Business Credit Cards for Bakeries
Credit cards are an additional bakery financing tool that compliments the needs of the business. Credit cards are commonly used by many small business owners who have the need to make quick purchases or pay some bills.
- Money available 24/7 by use of card
- Simple interest, only pay interest on balance
- Low monthly payments
Common uses and Benefits of Acquiring Bakery Loans
Bakeries have several needs that would benefit from acquiring business financing. Some needs are necessary to compete in the market and other needs are required for the survival of the business. Many needs can be costly and business financing can defray the costs so the business does not suffer from a cash reserves perspective.
In some cases, business financing is the only option because the business lacks the capital to move forward.
Lets look at the following benefits of acquiring financing for a bakery business:
Working Capital
The day to day operations of a bakery can be drain on finances sometimes. Whether its payroll, or making repairs to equipment, or just low on cash flow due to slow sales, working capital loans can come in handy to smooth out the cash flow of the business.
Business Facility Expansion/Renovations
Financing is very common for bakeries that are looking to expand or renovate because sales are growing and they need to accommodate the growth. An expansion can not only expand capabilities but also improve the efficiencies of a bakery increasing revenue and profits. The reality is that expansions are costly, whether it involves construction or moving to a new location, the costs are high. In fact, without business financing, many bakeries would not have the capital to expand.
Point of Sale Systems, Software, and Technology Upgrades
A point of sale (POS) system tracks the sales, inventory and provides reporting for bakeries to properly manage the business. The technology is advancing rapidly, with innovative POS systems that can improve operational processes and efficiencies. The systems and upgrades can be costly and having access to business financing can help purchase the necessary equipment and services to take the bakery to the next level.
Advertising
Advertising is a must for bakeries looking to expand and grow. A bakery needs to maintain its presence on Google, yelp, trip advisor and other online services. Engagement with social media sites like Facebook, Instagram, and TikTok can get your brand out there and create brand awareness with potential customers. Bakeries also still use other advertising methods such as print and mailers to reach customers with promotions and discounts. One thing is clear, advertising costs money and financing may be an option.
Maintenance and Repair of Bakery Equipment
Maintenance of a bakery as well as equipment repairs can be costly. Have a business funding solution like a business line of credit can come in handy to cover the costs.
Purchase of New Bakery Shop Equipment
Equipment is an essential part of a bakery. The business simply can not function without equipment. The equipment can be costly, so many bakeries turn to equipment financing to acquire the best equipment available for bakery operations so you can improve efficiencies and avoid business interruption do to unexpected repairs.
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Requirements to Check Before Applying for a Bakery Loan
Qualifications and requirements are an important part of what products and terms you can be offered to financing your business. Lenders are looking to evaluate credit worthiness by looking at the business profile, personal profile of the business owner, credit, and financial documents to determine eligibility.
1. How does time in business of a bakery impact terms for getting a business loan?
The longer time in business you own the bakery, the less the risk to the lender. Based on the data, the longer you are in business the less likelihood of default. This experience shows proven track record of managing the businesses finances.
2. How does your bakery business handle cash flow impact business loan approval?
Cash flow management plays an important role in the lenders ability to determine your ability to manage the finances of the bakery. The business operating bank account can tell a story to lenders of how a bakery manages the debits, credits and daily balances. The better your cash flow management the more options and better terms can be offered.
3. How does my credit impact getting a business loan for the bakery?
Both personal credit of the business owner and the business credit plays a significant role in credit worthiness decisions. Lenders access this information to determine what products you qualify for and what rate and terms you with be offered. Better the credit the better the options and offers will be.
Why AdvancePoint Capital?
- Experience: Advancepoint has over 10 years experience working with bakeries to secure business financing.
- Business Finance Specialists: At advancepoint you get a dedicated specialist who have the experience and knowledge in searching for the best business funding options and terms that meet the needs of the client.
- Products: Advancepoint Capital's lenders network is comprised of a variety of products such as business term loan, business line of credit, business cash advance, equipment financing, invoice factoring, accounts receivable financing as well as other alternatives.
- Streamlined application process: Our application process for bakeries consists of an application and document requests, followed by a pre-qualification and terms to consider within 3 to 6 business hours, with funding sometimes in as little as 1 day.
- Customer Service: Responsiveness is what advancepoint is known for. Your emails and phone calls will always be responded to in an expeditious manner. There is no question or concern that we won't address timely and accurately. We are here to address your needs.
How to Choose the Best Bakery Financing and Business Loan Program
- Product Features - Look clearly at the product features and determine the flexibilty and structure of the financing such as if its a term loan, revolving line of credit, or an advance. Determine rate and fees. Is it a factor rate (fixed funding costs) or simple interest. Any prepayment penalties or other post funding fees, like draw fees, NSF fees or other penalty performance fees.
- Application Process - Ask the following questions; How much time does it take to get approved and funded? How much information do I have to disclose on application? How much documentation must I provide for offer and approval to fund? How is my credit evaluated, soft or hard pull?
- Rate and Fees - Determine if its a factor rate or interest rate and how the rate is amortized. Ask what are the total costs to fund and any fees to fund as well as any post funding fees.
- Business Loan Originator - Check the background, reputation and customer service of the business originator on the internet. Chose an originator who has a lot of experience and plenty of Google reviews.
- Agreements - Always read your agreements BEFORE you sign, for product description, features, rates, term, conditions and your responsibilities. Look for any hidden fees are aggressive performance penalties like pre-pay penalties, bounced payment fees, default fees, etc...Make sure the product matches your need for capital for your bakery.
Business Loan Originators who offer Business Loans to Bakeries
- Banks and Credit Unions
- Business Loan Brokers
- Online Business Lenders
- Merchant Cash Advance Funders
- Invoice Financing Companies
- Equipment Financing Companies
- Alternative Lenders
- Marketplaces
How to Apply for a Bakery Business Loan
- Chose the Right Business Funding Product - Educate and research what is the best product that matches your need whether it be business loan, line of credit, SBA loan, equipment financing or other products.
- Select Business Loan Originator to Work With - Determine what entity ( bank, credit union, business loan broker, online lender or other) you wish to apply with based on product diversity, reputation, customer service and competitiveness.
- Submit Application & Documents - Provide to your originator(s) completed application with both personal and business information along with documentation required based on product selected for pre-approval.
- Consider Offer(s) - Read offers carefully and consider rate and terms as well as look at the fine print to determine what's best for your specific use of funds. Shop and compare multiple offers.
- Select Offer - Select the option you like best and provide closing conditions to fund.
- Fund - Sign agreement, have conditions cleared by lender/funder and fund!
Why AdvancePoint Capital?
- Experience: Advancepoint has over 10 years experience working with bakeries to secure business financing.
- Business Finance Specialists: At advancepoint you get a dedicated specialist who have the experience and knowledge in searching for the best business funding options and terms that meet the needs of the client.
- Products: Advancepoint Capital's lenders network is comprised of a variety of products such as business term loan, business line of credit, business cash advance, equipment financing, invoice factoring, accounts receivable financing as well as other alternatives.
- Streamlined application process: Our application process for bakeries consists of an application and document requests, followed by a pre-qualification and terms to consider within 3 to 6 business hours, with funding sometimes in as little as 1 day.
- Customer Service: Responsiveness is what advancepoint is known for. Your emails and phone calls will always be responded to in an expeditious manner. There is no question or concern that we won't address timely and accurately. We are here to address your needs.
How to Start a Bakery in 6 Steps
If you don't have an existing bakery and you wish to start a bakery and get into the business, the following steps are necessary to cover when getting your bakery off the ground.
Step 1: Determine Bakery Concept- First step in the process is to determine what is the best bakery concept based on the needs of the marketplace and what you are serving. Ask yourself, who are you serving and what do they want? Is it going to be wholesale, retail or both? Is it going to be just bakery items or coffee as well?
Step 2: Create Business Plan- Put your business plan together that lays out the needs of your bakery from location size, square feet needed, required equipment, marketing and put a financial plan covering all working capital needs to start the business. The plan should include; executive summary, market analysis, products and services, marketing and sales plan as well as financial plan and projections.
Step 2: Find Location- Finding the right location at the right price is vital to the success of the bakery. Over extending could cost you so be conservative in the beginning as its easier to grow out of a space than have too much space at to high of a cost.
Step 3: Purchase Equipment Needs- Acquire the necessary equipment to operate your business. You can save money by purchase good quality used equipment when possible.
Step 4: Create Brand and Awareness Plan- Depending on your bakery structure, creating brand awareness is important such as social media and local promotion is a must before opening a bakery. It's important to build anticipation of your new business to drive traffic.
Step 5: Hire Employees & Training- Acquire essential well trained staff who meet the goals and mission of your bakery. Work ethic and customer relation skills are a must.
Step 6: Grand Opening- Make sure all parts of opening a bakery are covered before you open for business. If you feel something isn't the way you want, then make those corrections before opening as first impressions about your products and services are so important when opening as it's about momentum and word of mouth.
