Business Loans

Retail Business Loans: Top Options for You

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The expenses for a retail business owner may seem endless, from products to payroll to point-of-sale systems. If you find yourself needing a financial boost to cover costs, financing is available for retailers.

The retail industry has had its fair share of recent trouble, as numerous big-box stores have closed, but a bright spot was an uptick in retail and food services sales this fall leading up to the holiday shopping season. Small Business Saturday – initially just an American Express-sponsored shopping incentive – has become a Christmas shopping staple as more people choose to spend their money at independent retailers.

A busy season may be one reason why retailers need an injection of funding or, alternatively, enough cash to tide you through a slow period. Understanding why — and when — you need capital would help you decide which lender and loan product to choose. Common reasons retailers seek funding include:

  • Inventory and supplies. Inventory is the foundation of retail businesses. You may find yourself needing help maintaining your supply during times of high turnover. A short-term loan or line of credit could provide money to quickly purchase inventory and supplies if you’re facing a cash crunch.
  • Equipment and fixtures. Retail businesses may have more equipment and fixture needs than other small businesses, especially brick-and-mortar stores. You could take out a long-term or short-term loan to cover the cost of display counters and racks or tables and chairs for your retail space.
  • Marketing. To get the word out about a new business or initiative, you could use a short-term loan or line of credit to fund a marketing campaign.
  • Expansions. Retailers may need extra capital when expanding to a bigger location or adding a new space. A long-term loan could cover the expenses incurred when expanding your business.
  • Seasonal cash flow. Retailers may face a downturn throughout the year, especially if the business depends on a certain season or holiday. A line of credit could cover cash flow issues as they come.

Nailing down how much money you need and what you need it for would help you borrow the right amount in the format best suited for your business.

What stands in the way of getting a retail business loan?

The nature of your retail business may affect your chances of approval for a retail business loan. For instance, restaurants are sometimes considered risky investments because of the volatility of the industry.

What you’re selling could also be considered a risk factor. For example, lenders may not want to work with retail businesses selling firearms, while drug dispensaries may also be restricted.

When applying for retail business loans, your personal credit history could determine whether you’ll be approved for the funds you need. If you have a weak credit profile, your financing options may be limited.

However, bad credit isn’t always a deal breaker. Retailers could offer business assets as collateral to obtain a secured business loan, rather than relying on credit history alone. You could present property, equipment, inventory, invoices or cash savings as collateral when applying for a secured loan. Signing a personal guarantee would also improve your chances for approval, as it would indicate that you would assume personal liability if your business can’t pay the debt.

6 options for retail businesses

Many lenders provide small business loans to retailers, including banks that issue Small Business Administration loans, which we’ll discuss next, and online lenders that can issue loans in a few days. The online lenders below specifically target retail businesses on their websites.

SBA 7(a) loan

The 7(a) loan is the U.S. Small Business Administration’s primary financing option for small business owners. Several variations are available, including small and express loans, but the standard 7(a) loan provides up to $5 million in funding. Loans are administered through SBA-backed lenders, including banks and credit unions. SBA 7(a) loans can be used for many purposes, including working capital, marketing and advertising, hiring employees and refinancing debt. Interest rates max out at 12.81% for fixed-rate loans or 4.75% plus the maximum of the prime rate for variable-rate loans. Fees range from 0.25% to 3.75% of the loan amount.

Both are generally lower than rates and fees charged by online lenders, though the tradeoff is speed. Online lenders, including the ones listed below, may provide funding as soon as one day, in contrast with the lengthy process to apply for SBA loans.

National Funding

National Funding is an online lender that provides business loans for retailers needing assistance managing cash flow, inventory and business expansions. You can apply online and get a decision in as few as 24 hours. Small business loans from National Funding range from $5,000 to $500,000 and terms span 4 to 24 months. National Funding also offers equipment financing up to $150,000. National Funding requires eligible businesses to be operational for six months to one year, ruling out financing for startups.


Kabbage offers online loans up to $250,000 for retail businesses. Retailers can use Kabbage loans to purchase technology, create marketing materials, hire employees or buy inventory. Loan terms range from six months to one year. Kabbage doesn’t charge loan origination fees or prepayment penalties, and borrowers make monthly payments rather than daily payments like some other lenders may require.

Rapid Finance

Rapid Finance’s online loans extend to retail businesses including restaurants and bars, auto repair shops, franchise businesses and grocery stores. Rapid Finance offers small business loans from $5,000 to $1 million, as well as a smaller loans between $25,000 and $100,000. Loan terms range from nine to 18 months. Loans from Rapid Finance can cover any business expense, such as equipment repair, inventory, renovations and emergency expenses.

Reliant Funding

For retail business owners with expenses that exceed their cash flow, Reliant Funding provides online loans to fill the gap. Reliant Funding offers approval in a matter of hours and may fund a loan in as little as one day. Minimal paperwork is required to apply and no personal collateral or assets need to be offered.

Small business loan amounts range from $5,000 to $250,000, with terms from 3 to 15 months. While Reliant Funding does review your credit history, it is not a determining factor in whether you’re approved for a loan.

Shopify Capital

For retailers using the ecommerce platform Shopify to host their online store, Shopify Capital may be able to meet funding needs. Shopify provides a lump sum between $400 and $500,000, which is then paid back as a percentage of daily sales. Retailers give Shopify a portion of daily sales until the total is paid back at the end of 12 months. At the end of a 60-day period, at least one-sixth of the total debt would be due. Shopify Capital is similar to a merchant cash advance rather than a loan. A merchant cash advance provider purchases a portion of your future sales in exchange for money, instead of issuing a loan.

The bottom line

As the owner of a retail business, you likely handle many moving parts on a daily basis. With so much fluctuation, it’s not uncommon for retailers to come up short on cash from time to time.

The good news is there are many financing options for retail business owners, giving you the ability to choose the product that best meets your needs. Keep in mind that rates, fees and terms vary. Whether you need a boost to get through the holiday shopping season or some extra funds to open a new location, retail business loans may be able to fill funding gaps.


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