Best Hardware Store Financing for Your Business
It’s no secret that the hardware store industry has had difficulty getting financing for their businesses over the years with the advent of big box stores like Lowes and Home Depot. Whether you go to credit unions or banks, it is tough for small business owners to get any type of hardware store loans or any bank loan, for that matter. But these are new times as demand for more personalized service from a local hardware store is highly valued.
Hardware store financing can be a tricky process, though. Traditional lenders and credit unions see the hardware store industry as risky because of competition of the big box stores, which means qualifying for loans is difficult. These lenders won’t give loans out to just to any industry; they’ll likely require a business owner to have great credit, high fico score, a robust business, and require a significant amount of details and documentation from the company to prove creditworthiness and ability to receive financing.
AdvancePoint Capital services offer a variety of financing options that you can take advantage of so that you can get the funding you need through our marketplace without the bank hassle. AdvancePoint Capital has been experienced in loans for hardware stores for years and can help you access the various business lending products, terms, and payment options you need from our alternative lenders network. We understand the difficulties of operating a hardware store and the need for business financing to support it. Our job is to effectively provide the best business funding products to you so you can effectively operate your business. Whether you’re looking to purchase equipment or inventory, need working capital, expanding operations, or taking on a new opportunity- we are your source to access business loans and alternative financing. Check out our services and lending process.
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The 6 Best Hardware Store Business Loan Options
Long-Term Hardware Store Loans
Hardware store owners looking to finance a large expansion or funding for new locations turn to long term business loans because the expansion can be quite costly and the need to spread those costs over years to get affordable payments is a must. Long term business loans for hardware stores will require additional documentation, tougher financing qualifications and face more stringent underwriting. Its worth the effort to apply for funding as rates and terms are attractive.
Short Term Small Business Loan for Hardware Stores
A short term unsecured small business loan is a good alternative when the hardware business does not qualify for traditional funding. Hardware store business loans that are shorter in term have a greater likelihood of getting approved due to the reduced risk.
Business Lines of Credit
A business line of credit is a popular option because it offers flexibility, unlike business loans, with the ability to draw funds when needed and only pay interest on the outstanding balance.
Small Business Administration [SBA] Loans for Hardware Stores
SBA loans are popular with hardware store business owners because the rates and terms are very attractive. Getting an SBA loan is not easy and will require substantial paperwork and proof of qualifications but its worth the effort to seek SBA funding.
Merchant Cash Advance for Hardware Stores
A merchant cash advance is an alternative to a traditional hardware store business loan. Advances are not loans, but purchase of future sales agreements. Repayment is made by the funder taking a fixed set percentage of future credit card processing sales until paid back in full. A good option if you have less than perfect credit or bad credit.
Business Credit Cards for Hardware Stores
Credit cards are an additional resource that can be used on top of other hardware store business funding solutions. Credit cards are a great option for quick purchases, everyday expenses and paying bills.
Benefits of Hardware Store Financing
Cash Flow/Working Capital Loan
Operating small businesses like a hardware store is a complicated venture with many moving parts to it with everyday expenses. The hardware store business is not easy. Various issues can impact cash flow to small businesses, such as seasonality, holidays, location, changes in trends, and competition.
Failure to meet payroll for employees is not an option, so it’s essential to access working capital loan for payroll to control the hardware store business’s ups and downs and stabilize cash flow. Having a financing option to satisfy working capital needs is a must in the hardware store business.
Business Facility Expansion/Renovations
Your hardware store business may need upgrades or repairs to the real estate/facility. Perhaps something to spruce up the interior decor, or renovations to the store’s exterior appearance to attract and maintain customers is needed. Perhaps you’re adding new locations or a second store. Hardware store business loans can be used to purchase additional inventory, lease more space, expand marketing efforts, buy new equipment, or even open up another operation.
Advertising: Attract Customers to Your Hardware Store
What owner doesn’t want more customers? Internet marketing and social medial is not a trend but has become a must for a hardware store owner looking to grow. These additional costs to the stores operation can come at a price. That’s why hardware store business loans for marketing campaigns and social media is so popular.
Having a presence on the internet with various sources such as Google, Yelp, and Trip Advisor and maintaining a social media presence with Facebook and Instagram is very important for success. Your website and work on search engine optimization help keep your small business on the top of google search. Additionally, more traditional sources like mailers and flyers are also advertising mainstays and costs money to execute.
Point of Sale Systems, Software, and Technology Upgrades
The point of sale system’s out there are continuously improving and providing efficiencies to store operations. Hardware stores are always looking for new ways to keep customers coming in and enhance the customer experience or alter services with easier processes and systems for staff to make a significant impact. Equipment financing via an equipment loan can be used to update systems and create more efficient processes within your operation.
Hardware stores need to maintain inventory to survive. If you don't have what customers want in inventory, when they want it, then they may not come back. A working capital loan or line of credit is a must for businesses with inventory requirements.
How to Break Down Business Loan Offers, Terms, and Financing Options
What are the terms and costs of Small Business Loans?
Interest Rate of Factor Cost
There are two most common types of small business loan rates out there when shopping for a loan. Some business loans charge an interest rate like consumer lending, but others charge a “factor rate” or “factor cost,” which is a flat cost and not principal and interest.
Interest rates are charged based on the daily principle, whereas factor rates are flat costs.
Factor rates means you pay the same total cost whether you pay off loan early or not unless they offer an early pay discount or penalty. But interest rate or factor cost does not tell the whole story. Most lenders charge additional fees, so you have to count those in overall cost when comparing.
Terms of Small Business Loan
The length of the repayment term for loan products varies greatly and can be from 6 months to 7 years, depending on the product and qualifications. Although one loan may seem cheaper than another, you must factor in the length of time of repayment.
You may want to consider a more affordable payment with longer-term versus short-term loans if you are willing to pay more in rate and/or cost for that benefit. If the option is a principal and interest rate loan, then check for the APR (Annual Percentage Rate), which factors not only rate and cost but also the length of repayment and payment frequency.
Installments and Method of Repayment
Disbursements can be monthly, biweekly, weekly, and even daily (weekdays), depending on the business funding product. It is very common for collection to be in the form of an auto deduction from your bank account via an ACH. Although payment frequency can be a factor if you have very low average daily balances in your business bank account, the interest rates, costs, and term should be a more significant consideration than that of payment frequency.
This is a charge for services at the time of consummation of the loan. The fee is often a percentage of the loan amount, typically ranging from 0% to 5%.
Frequently Asked Questions
Why AdvancePoint Capital?
- Experience with Bakery Owners – We have been providing bakery financing for years.
- Trust – Excellent reviews and feedback from bakery small business owners
- Loan Specialists – Experienced business funding specialists who know the bakery industry and can provide financial growth tips as well as find the best interest rate.
- No Obligation – No cost, no commitment quotes
- Products – A variety of business loan products for professional bakeries. We don’t just offer what we have; we supply what’s available in the marketplace.