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Appliance Store Business Loans: Funding Options for Appliance Shops

Appliance Store Funding

According to appliance store industry data, demand for major household appliances across the world are expected to rise to over 430 million items by the end of 2017, which is an estimated annual growth of 3.8 percent. Overall, the unemployment rate has drastically lowered in the United States. Coupled with the rising minimum wage, the job availability for many low-income American families, and the rates of highly educated Millennials that are graduating from college, there is more disposable income throughout the United States. Higher rates of disposable income allow more families to purchase high quality home appliances, as well as being able to spend more on environmentally green products that reduce CO2 emissions and waste less water.

The appliance store industry is a smaller sector of the overall retail environment. For years, the appliance store sector has appeared to be on shaky ground, but this was mainly due to the misconception that because incumbent retailer, Sears, has continuously experienced lowering appliance product sales year over year, then the rest of the appliance store sector must be struggling as well. Luckily, for most appliance store retail business owners, this has not been the case, especially within the past few years.

Appliance store retailer data has shown that appliance sales have actually been one of the top spots for growth for many large retailers, such as Home Depot, Lowe’s, Best Buy, and JC Penny. The studies have shown that consumers throughout the United States have drastically increased their spending, with appliance store sales rising 5.6 percent to $69 billion. While there has been continuous growth for many large players within the appliance store sector, there continues to be a growing customer base for smaller, niche appliance stores that are not associated with big businesses.

Appliance Store Industry Trends

Consumers today want access to a variety of niche services and products within the appliance store world, and many appliance store business owners have been quick to adjust to the demands of the consumer. Additionally, appliance store retailers are focusing on integrating top of the line, cutting-edge technologies into their product offerings. Many industries and business owners throughout the United States have struggled to adopt “new age” technological practices to cater to the rapidly growing Millennial and Generation Z lifestyle – surprisingly, most appliance stores have started to cater to this demand at a much faster pace than other sectors in the United States. This is especially important for any type of business owner that has a retail store front. Shifting to new technologies to remain relevant and engaging to a more diverse customer base is essential for any growing business, but there are a variety of other areas that appliance store business owners must be focusing on. Some of the top appliance store industry trends include:

  • Retail’s Continuing Shift to Online: As mentioned above, shifting to an online and offline platform, often referred to as omnichannels, is one of the best business moves any appliance store business owner can make. Whether this means creating a successful online website where consumers can search and order products directly, utilizing social media to engage with consumers, creating mobile apps to draw in more consumers who are looking for niche services, or all of the above – incorporating an online and offline presence is essential. This is no longer optional or avoidable if a business owner wants to be successful in today’s technologically focused consumer world. 
  • “Do It Yourself” Projects: DIY projects have become a major profit generator for many appliance store business owners. First, this started as a way for Millennials to furnish their homes in creative, fashionable ways without having to pay a ton of money to make this happen. Growing up in the midst of a recession and seeing many parents lose everything, coupled with increasing college debt, many people from younger generations do not have the ability to pay for expensive projects to make their house a home. Luckily, many appliance store business owners can cater to the needs of the younger generation in supplying affordable supplies, as well as connecting with consumers through social media sites like Pinterest. Through sites like this, consumers are able to search for DIY projects easily, which is where many appliance store business owners can reach new customers. By appropriately and strategically utilizing this social media platform, many appliance store owners can showcase fun DIY projects while marketing to consumers all the varying products they have in their store. 
  • Smart Home Appliances: The Internet of Things is here to stay – and any appliance store retailer that is not offering products that are “smart” will notice declining sales. Sure, having more affordable products, that are often not smart products, for lower-income consumers is important, but being able to cater to those customers that want all facets of their life connected through IoT is essential. Right now, highly demanded smart appliances include refrigerators, water systems, and televisions; in particular, smart televisions with HD are flying off the shelves of many appliance store retailers. These high-ticket items can be vital in remaining competitive in the appliance store sector. 
  • Green Appliances: Having environmentally friendly green products is at the forefront of trends for every single industry today. After a year of tragic natural disasters, ranging from hurricanes to forest fires, many consumers are adamant about preserving our environment, while taking every possible step to ensure this is a priority. While not every consumer can afford green products, many consumers are willing to reducing spending in other areas to make this a priority. In terms of green appliances, there are many new product options on the market today. Many appliance store owners are also trying to determine what the new presidency will entail in terms of water and energy efficiency regulations. New regulations can alter the necessary requirements for household appliance items like water filters and more energy-efficient refrigerators, ovens, microwaves, televisions, dishwashers, washer and dryers, and so forth. Overall, there are plenty of environmentally friendly products out on the market right now, and consumers everywhere are seeking these products out.

Types of Appliance Store Loans and Working Capital Options

Obtaining access to financing for a Houston small business isn’t necessarily difficult – but obtaining access to capital that is also affordable and helps grow your company’s margins can be challenging. The key is finding the loan with the lowest rates, longest terms, minimal fees, and a funding time that fits with your growth plans. Below we will take a look at the most common small business financing options for Houston companies.

Bank Loans

When it comes to obtaining the lowest cost business financing for Appliance stores and appliance companies, there is nothing better than a conventional bank term loan. Traditional bank lenders have the longest terms, lowest fees and lowest APR than any other commercial lenders.

Rates 5-8%
Terms 3-25 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs


Line of Credit

A business line of credit for appliance stores allows the business to have access to pre-approved financing that they can draw on whenever needed. An appliance store line of credit can be secured against assets like the appliance store’s accounts receivable or commercial real estate, or can be issued on an unsecured basis through use of business credit cards.

Rates 5-15%
Terms 1-2 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs


SBA Loans

This type of financing is offered by SBA lenders to appliance stores who have good credit and cash-flow, but are unable to get approved for conventional financing. An appliance store SBA loan is provided by large and small banks, credit unions and community lenders.

Rates 5-8%
Terms Up to 25 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs


Asset Based Loans

Appliance stores may leverage their assets to obtain alternative business financing for working capital purposes. Common types of asset based collateral includes commercial real estate, AR, equipment & machinery, and appliance store inventory.

Rates 8-25%
Terms 1-2 years
Funding Amounts $100,000-$5,000,000
Collateral Required
Fees Medium costs


Merchant Cash Advance

For appliance stores in need of fast funding, has bad credit, or has been unable to get approved for conventional financing, another option could be to use an unsecured funding option called a merchant cash advance. This type of financing involves selling future appliance store revenue to a funder to obtain immediate cash.

Factor rates 1.10 – 1.50
Terms 1-24 months
Funding Amounts $5,000-$2,000,000
Collateral Not required
Fees High costs


As you can see there are many options available for appliance stores seeking financing for working capital. The key is to obtain financing that is the lowest rates, so you can maintain the maximum profitability. If you are an appliance store owner seeking financing for your storefront and need help understanding your options, please reach-out to one of our appliance store financing specialists and we’ll help you get the right funding.

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