Top 5 Financing Options for Retail Business Owners
Owning a business in the retail market comes with cash flow challenges that can affect your growth strategy. Having easy access to working capital is key to maximizing your growth potential.
1. Business Line of Credit for Retailers
If your market segment has seasonal trends that create gaps in cash flow, a business line of credit is usually the best funding option. With a business line of credit, you get approved by a lender for a fixed amount of credit (similar to a credit card).
The biggest advantage of having a credit line is that you only pay interest on funds you withdraw. It’s a good hybrid between a traditional term loan and a business credit card.
Best suited for:
Retail businesses that need money for occasional expenses like renovations, stocking up on inventory, and hiring short-term staff to handle seasonal demand.
Line of credit at a glance:
- Interest rates starting as low as 7% on Clarify’s marketplace
- On-demand working capital anytime you need it
- Funding within 24 to 48 hours with minimal paperwork
- Only pay interest on funds used, with no fixed costs
- No prepayment penalties
- Improves your personal credit score
2. Short-Term Loans for Retailers
When you’re in a crunch to meet payroll or pay for unanticipated expenses, term loans are the fastest funding option. Since unsecured term loans require no collateral, you can quickly get money in your bank account with minimal paperwork.
A key advantage of short-term loans is that most retailers can get approved — even with bad credit. The speed at which term loan applications get approved makes it the preferred choice for small business owners needing to meet urgent demands.
Best suited for:
Retail businesses that need flexible financing with payment terms tailored to their cash flow. Term lengths range between six months and two years.
Short term loans at a glance:
- Fast approval and funding
- No collateral needed
- Six- to 24-month term length
- APRs starting at 7% on Clarify’s marketplace
- Interest paid on the principal loan amount is tax-deductible
3. Equipment Financing for Retailers
Equipment purchases can range from a computer and point-of-sale (POS) software to restaurant kitchen appliances. An equipment financing loan can pay for 100% of the cost upfront and break the expenses down into manageable monthly payments.
The core benefit is the ability to borrow up to 100% value of the equipment, which makes investing in new equipment possible with minimal paperwork. Since the equipment you’re buying serves as collateral, you can get approved even with bad credit.
Best suited for:
Purchasing equipment needed for your business, regardless of your personal credit score.
Equipment loans at a glance:
- Finance up to 100% of equipment costs
- APRs as low as 7% on Clarify’s marketplace
- Fast approval and funding within one to two days
- Simple, monthly payment terms
- Low documentation requirements
4. Inventory Financing for Retailers
Inventory is the lifeline of every retailer. Whether you’re a bar owner needing to stock up on wines or an electronics store scaling up inventory for the holiday season, having adequate inventory to meet customer demands is essential for business success.
Similar to an equipment loan, inventory financing is a self-secured funding option that allows you to buy goods without the need for extra collateral. Alternative lenders are usually the best option, as traditional banks and credit unions typically only approve large, established wholesalers and retailers. Clarify’s lending marketplace makes the process easy.
Best suited for:
Product-based business owners looking to supplement inventory before a seasonal sales spike.
Inventory financing at a glance:
- No collateral needed; inventory acts as collateral
- Low credit score requirements
- Funded within 24 to 48 hours
- Monthly payment terms
- APRs starting as low as 7%
5. SBA 7(a) Loans for Retailers
SBA loans are the best option if you have patience, good credit, a business plan, consistent annual revenue, and an established business history to qualify. The U.S. Small Business Administration (SBA) backs up to 85% of your loan amount through its approved lending institutions. The downside to SBA 7(a) loans is the strict financial requirements and lengthy paperwork needed.
Best suited for:
Retailers with an excellent credit score, established time in business, and no urgent need for funding.
SBA 7(a) loans at a glance:
- Excellent credit score needed
- Partially backed by the SBA
- Interest rates as low as 5.75%
- Long repayment term lengths
- Low down payments
FAQ: Business Loans for Local Retailers and E-Commerce
There is no one-size-fits-all solution. Determining which funding type is the best for you depends on your business goals and circumstances. Common loan options include:
- Business line of credit
- Term loan
- Equipment financing
- Merchant cash advance (MCA)
- SBA funding
- Inventory factoring