Best Business Loan for Your Food Market & Grocery Store

It’s no secret that small business grocery stores and food markets have had difficulty getting financing for their businesses over the years. Whether you go to a credit union or national bank, it is challenging to get any type of grocery store business financing or even a simple bank loan, for that matter. But these are new times, and demand is high in most communities for grocery from consumers.

Some new alternative lending sources have come into the market. The grocery business and food market industry, in general, have more access than ever before to loans for grocery stores which helps them serve their local communities.

Grocery store financing can be a tricky process, though. Traditional lenders see a grocery store or supermarket as a risky industry, which means qualifying for loans is a serious burden. These lenders won’t give grocery store loans out to just anyone. They’ll likely require grocery store owners to have excellent credit, a robust business plan, and a significant amount of assets in the business. Some could even ask you about your relevant hospitality experiences as well.

Whether your business is a corporation, LLC, or sole proprietor, AdvancePoint Capital offers a wide variety of financing options that a grocery store owner can take advantage of to get the funding required with minimal hassle or as harsh of standards at the bank.

AdvancePoint Capital has been experienced in loans for grocery stores for years and can help you access grocery store business loans you need. We understand the grocery store business, the difficulties of operating grocery stores, and the need for business funding to support it. Our job is to effectively provide the best business funding products to supermarkets so you can effectively operate your business. As a grocery store owner, if you’re looking to purchase equipment, inventory, working capital, expanding operations for growth, or taking on a new opportunity- we are your source.

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Types of Businesses in the Grocery Industry That We Provide Funding:

  • Supermarkets
  • Grocery stores
  • Convenience stores
  • Wholesale grocery
  • Supermarket/grocery store distribution centers

 

The 7 Best Business Loan Options for Grocery Store Financing

1. Long-Term Business Loans for Grocery Stores
Grocery store business loans, specifically long-term loans, are always the most desirable as they offer the longest terms to repay, typically from 2 to 7 years, and have the lowest cost. Long-term loans are a lump sum provided upfront with an interest rate that starts around 7% with monthly payments over a fixed period to repay.

Long-term small business loans require high credit standards for established businesses, with at least two years in business as a store and a significant amount of paperwork needed for approval. Grocery stores and supermarkets use long-term business loans for essential business expansions and other vital investments.

Benefits of Long Term Small Business Loans:

  • Low-interest rate starting from 7%
  • Term loans from 2 to 7 years to repay
  • Accommodates a larger loan amount
  • Monthly payments
2. Short Term Small Business Loans for Grocery Stores
Short-term loans provide a fixed amount of money that is repaid over terms of 6 to 18 months. When approved, you get a set amount of capital and a fixed number you have to pay back. The difference between is the cost, with a fixed payment auto-deducted from your bank account monthly, bi-weekly, weekly, or in some cases daily out of the bank account. Limited paperwork is required, with only a 1-page application and bank statements.The credit requirements for a short-term loan are more lenient than that of banks or traditional term loans due to the reduced risk. Grocery stores and supermarkets use short-term business loans for inventory, equipment, and/or working capital.

Benefits of Short Term Small Business Loans:

  • Excellent to poor credit score considered
  • Loan amount as little as $10,000 up to $500,000
  • Term loans for 6 to 18 months to repay
  • Lower monthly or annual revenue requirements than those of traditional loans
  • Fast and simple application process with the same day to next day financing

 

3. Business Line of Credit for Grocery Stores and Food Markets
A business line of credit is a small business financing option that offers a flexible feature that a short-term loan does not. It works like a credit card in that it is a revolving credit line and allows you to draw money out and then repay at any time with you only paying principal and interest on your outstanding balance. Lines of credit have a credit limit that you cannot exceed and is set at the time of consummation. This product is not considered a term loan. Grocery stores and supermarkets use business lines of credit for working capital needs.Highlights of a Line of Credit:

  • Ability to draw money at any time from lines of credit
  • Allows borrowers to spend the money, repay it, and spend it again
  • Principal and interest rates starting at 5% for lines of credit
  • Lower costs and fees than most other financing products
  • Flexible repayment terms
4. The Best Small Business Administration [SBA] Loans for Your Grocery Store
The U. S. Small Business Administration (SBA) is a federal government agency headquartered in Washington DC that provides resources, programs, guidelines, and guarantees to approved SBA Lenders to issue loans to small businesses. The Small Business Administrations’ (SBA) mission is to help American enterprises to start, build, and grow their businesses successfully. The SBA is not a lender.The Small Business Administration provides a guarantee that gives the approved SBA lender the ability to take on the risk of lending and decisions under SBA term’s that they would not ordinarily do so on their own and has all rights reserved for any recourse need. SBA loan application processes can be lengthy, but with the help of an experienced SBA-approved lender to help your business through the application process, the SBA application package can be a smooth and efficient experience.

Product Overview of SBA Small Business Loans

Loan Amount Limits: Up to 5 million
Interest Rates/Cost: Starting at 3.50%, treasury index plus 1% to 2.5%
Repayment Terms: 3 to 25 years
Fees: Origination fees 0% to 3%
Payments: Fixed monthly
Credit: Good to excellent credit history required
Application Process: SBA loan application, business assets, and numerous financial statements

Popular Small Business Administration Small Business Loan Products for Grocery and Food Market Enterprises in 2021:

  • SBA Standard 7(a) – SBA loan 7(a) is the SBA’s primary program is designed to provide financial assistance to businesses with a good track record. Excellent for access to cash for working capital or business debt funding options.
  • SBA Disaster Small Business Loan Program – SBA Economic Injury Disaster Loans (EIDL) – This type of SBA loan assists not only grocery-related small businesses after natural disasters like tornadoes, wildfires, or floods but also during unforeseen emergencies like the recent pandemic. Congress provided small businesses access to relief options like this SBA loan for emergency funding.
  • SBA Paycheck Protection Program (PPP) – The Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan in response to COVID-19. This is one of SBA’s relief options that provides loans and cash to small businesses affected by the Coronavirus (COVID-19) crisis and needs financial help.
5. Merchant Cash Advances (Business Cash Advances) for Grocery Stores
Merchant cash advance (also known as future receivables purchase and sale agreements) provides an upfront lump sum of money to the business in exchange for a fixed percentage of the businesses’ future sales. Repayment is typically made daily or weekly.Either ACH payments auto deducted from a business’s bank account, or a portion is taken out of future grocery store bank deposits and credit card deposits until the payback obligation is met. Terms are expressed as a future sale, so you are given a fixed amount and then responsible for paying back a larger amount through a fixed percentage of future sales, be it credit card deposits or overall sales. The difference between the amount given and the amount paid back to complete the agreement is your fixed cost.

The estimated time to repay is typically 6 to 18 months. Still, there are no term limits as the repayment is based on future grocery store bank deposits, so merchant cash advance is considered a “funding” and not considered a term loan. A business cash advance is an excellent option for cash needed for working capital for grocery stores and supermarkets.

Benefits of Merchant Cash Advances (Business Cash Advances):

  • Flexible repayment terms attached to future sales
  • Excellent to poor credit history considered
  • Provides funds to owners with sub-prime credit
  • Payments fluctuate to future sales
  • Profit margins not considered for approval
6. Equipment Financing for Grocery Stores
Grocery store equipment is an essential part of the supermarket business. The necessary equipment for grocery stores and food markets can be quite costly. Equipment financing usually comes in the form of leasing or a term loan.With this type of lending option, the equipment is used as collateral, and decisions made are based on the personal credit of the market or shop owner(s) and the health of the business’s financials. Business owners of grocery stores and supermarkets use equipment financing to upgrade old and less efficient equipment.

Benefits of Equipment Financing:

  • Simple 1-page application
  • Limited financial paperwork
  • Repayment terms from 1 to 5 years
  • Term loan or lease
  • Monthly payments
  • Funding available same day
7. Business Credit Card (s) for Grocery Stores
Business credit cards are revolving credit lines with a credit limit. Business cards most commonly come with a minimum monthly payment requirement less than that of a smaller loan. You are issued a plastic card with an account number that can be used online and in-person for any purchases. You only pay interest based on the current principal. This funding is not considered a term loan. Supermarkets use this product along with many other options.Benefits

  • Can be used 24 hours a day, seven days a week
  • No limitations on the use of funds
  • Flexible monthly payments payments
  • Principal & Interest rates

Benefits of Getting Financing for Grocery Stores

Cash Flow/Working Capital Loans

The grocery store business is a complicated venture that has a lot of moving parts to it. Various issues can impact cash flow in this industry, such as seasonality, holidays, location, changes in trends, and competition.

Failing to meet payroll for employees is not an option as well, so it’s essential to have access to cash for working capital to control the ups and downs of the grocery business and stabilize cash flow.

Business Facility Expansion/Renovations

Supermarkets may need expansion, upgrades, and/or repairs to the facility, spruce up the supermarket’s interior décor or exterior appearance to maintain or attract customers and have a competitive edge. Perhaps you’re adding a new location for growth. With so many financing options available, growing supermarkets can come in many forms. Grocery store owners can use financing options to purchase additional grocery inventory, lease more space, expand marketing efforts, buy new equipment, or even open up another operation.

Advertising: Attracting Customers to a Grocery Store

What grocery store business doesn’t want more customers and growth? Internet marketing and social media are not just a trend anymore but have quickly become a must-have for grocery store business owners looking to grow. The need for good advertising and marketing strategies has added additional costs to grocery stores.

Demand for more effective advertising is why grocery store financing for marketing campaigns and social media is so popular. Having a presence online through various outlets such as Google, Yelp, and Trip Advisor, plus maintaining a social media presence on Facebook and Instagram, Is very important for a grocery store’s success. Building a robust website for your store and focusing on search engine optimization (SEO) helps keep your small business on the top of google search. Additionally, more traditional sources like mailers and flyers are also advertising mainstay and costs money to execute.

Point of Sale Systems, Software, and Technology Upgrades

The point of sales system’s out there are continuously improving and providing efficiencies to grocery store operations. Grocery store financing can be used to update systems and create more efficient processes within your operation. Grocery store owners are always looking for new ways to keep customers coming in by improving customer experience, improving service, and implementing easier processes or systems for staff, which can all make a significant impact. You must make sure eventual investments in this area are a foregone conclusion and know that financing most likely will be needed.

Business Facility Expansion/Renovations

Supermarkets may need expansion, upgrades, and/or repairs to the facility, spruce up the supermarket’s interior décor or exterior appearance to maintain or attract customers and have a competitive edge. Perhaps you’re adding a new location for growth. With so many financing options available, growing supermarkets can come in many forms. Grocery store owners can use financing options to purchase additional grocery inventory, lease more space, expand marketing efforts, buy new equipment, or even open up another operation.

Business Debt Funding Options

Sometimes supermarkets need funding to refinance existing debt through long-term financing.
Inventory

Sometimes funding inventory is the only way to benefit from special deals and opportunities related to acquiring a product for your store.
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How Do You Get a Business Loan for Grocery Stores?

There are many options to consider in the grocery store business. With such a wide range of lenders and financing options available, it can often be challenging and overwhelming to get started. Lenders will want some pertinent information from grocery store owners, regardless of whether they’re an online lender or a traditional financial institution. This information mainly serves to confirm your small business’s financial history and legitimacy — and grocery store owners must stay informed about the necessary information to have on hand before applying for grocery store loans.

For years, we’ve empowered small businesses around the United States with the best grocery store financing opportunities and loan options that people like you can use to fund your operation.

Depending on the business financing you’re looking at, each will have different requirements. However, there are some standard questions that you can expect to run across during your search for loan options.

How Long Has Your Grocery Store Been in Business?
Time in business is a standard requirement for grocery store loans — or really any type of loan you plan on obtaining financing as a business owner. A new grocery store is far riskier than a seasoned one, which shouldn’t be news to any business owner reading this website.

Due to the industry’s high risk, lenders must know if your grocery store has been around for a substantial amount of time. Time in the industry shows that your business can overcome obstacles and tackle challenges with ease that only comes with age and experience. If so, you’re in much better shape to obtain financing for your grocery store.

How Do You Handle Money in the Grocery Industry?
There are some documents that many lenders will require so that they can assess a loan. When planning on seeking out a loan, you should always be prepared to offer up critical information. Lenders might require access to your business’s bank statements, personal or business tax returns, profit and loss statements, income, cash flow forecasts, and perhaps, even more. The information you need to deliver will depend on the grocery store loan itself. This information proves any revenue and profit — which is frequently a big player in whether or not you’ll qualify for loans.

Now, what paperwork you’ll need ultimately depends on the grocery store financing itself. A business cash advance may require one thing, but a term loan is likely to have much harsher requirements. However, all of these documents we mentioned are relatively typical when attempting to obtain a liquor store loan.

What Are Your Borrowing Habits?
While many financing options have varying credit score requirements, all of them will require some sort of personal and business credit score and overall credit history. Grocery store owners need to show lenders how well they manage loans. It’s all about trust and sound investments when it comes to financing.

A credit score is a great way to show banks that your borrowing habits are fruitful for the lender. Now, even if you have less than stellar credit, there are still grocery store loans that you can seek. However, the interest or terms will be more costly due to bad credit. You won’t see banks or credit unions offer loans to poor credit borrowers.

That being said, alternative business finance companies still provide financing opportunities that small business owners can take advantage of for working capital or any other need. Make sure you are constantly working to improve your personal credit.

Frequently Asked Questions from Grocery Stores

How can I get a loan/funding to buy a supermarket? How can I get a business loan with no money?
The answer to this question honestly depends on which grocery store business model you’re considering. Different funding options depending on the lender will have different application requirements — so there’s no one size fits all solution to this question. However, there are some typical avenues that many small business owners take to open up a grocery store. Down payment may be required.

What is the most straightforward grocery store business loan/funding to acquire?
Did you know that grocery stores don’t have to be profitable to get financing? It helps if they do, but revenue is not necessarily required. The grocery store business can be an excellent opportunity because these types of businesses are somewhat recession-proof. Grocery stores are essential and make it through the good times and the bad. Alternatives like short-term business loans and business cash advance, to name a few, are great options for your grocery store financing needs.

The Bottom Line: Why AdvancePoint Capital?

Experience – with Grocery Store Industry. We have been financing grocery stores for years.
Trust – Excellent reviews and feedback from grocery store owners
Loan Specialists -Experienced Business financing specialists who know the grocery business.
No Obligation – No cost, no commitment quotes
Products – A variety of loan products with a strong lender network. We don’t just offer what we have; we offer access to what’s available in the marketplace.

AdvancePoint Capital

Are you looking for growth and funding opportunities for your grocery store or supermarket? Contact or email AdvancePoint Capital!
The fast, convenient, and straightforward way to get the capital you need for a grocery store or food market – now!
Get a quote today by filling out our simple online form found below.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.