Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238
Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238

Coffee Shop Financing

Loans For Coffee Shops

As of last week, it is now officially fall, and who doesn’t love coffee beverages during these chilly months? On top of that, the most exciting day for all coffee aficionados is approaching – National Coffee Day! Amazingly, there are over 100 million daily coffee drinkers in the United States alone, and over 68% of us coffee drinkers have a cup of coffee within the first hour of waking up. These numbers are only continuing to grow, especially now that coffee is deemed a superfood and is linked to numerous health benefits, ranging from type 2 diabetes, Parkinson’s disease, liver disease, liver cancer, and encouraging a healthy heart.

Among millennials, growing health food trends, specialty coffees, and the desire to only shop local is a huge factor in today’s industry trends, making small, local coffee shops an incredibly profitable business today. I know, I know, not everyone is a fan of the millennials, but they are the generation that will shape the economy and influence industry trends the most because they are the largest generation in the United States, as well as the most technology savvy, allowing businesses to reach them easily. Even the (LINK4)National Coffee Association in their 67th National Coffee Drinking Trends report continuously emphasized the millennial’s and the importance of this generation in how coffee is bought and consumed. According to the NCA, “This 2016 NCDT data shows that the factors driving coffee consumption are fundamentally changing. The next generation of consumers has a more personal relationship to the products and brands they support. The things they use reflect their larger worldview. ‘Value’ is not always a questions of price per ounce…For some consumers, ‘value’ may be more about a brand’s philosophy, authenticity, and commitment than anything measured in dollars and sense.”

So what does all of this mean for small business coffee shops? Well, it means that the coffee industry business is continuously booming, especially with the growing love of specialty coffees, such as top of the line espresso’s and fancy Frappuccino’s. The number of people consuming these specialty coffee beverages increased 9% in 2000 and 16% in 2004, leading to a shocking total of 30 million people consuming specialty beverages in the United States alone in 2016. Due to this massive influx of people buying coffee outside of the home, the amount of coffee shop establishments has gone from 37,006 in 2002 to 55,246 in 2016 – and this industry is only going to continue to grow. While this is great news in terms of profitability for those successful coffee shops, it also means more competition for small business coffee shops. Through the use of different funding options, competing against the big chains is doable.

When Would I Need Financing Options

  • Marketing is the most essential tool in growing coffee shops today, and while plenty can be done for free via the internet and social media, vital marketing techniques such as the use of loyalty cards and coupons is a pricey necessity today. Doing as much marketing as possible is also essential in reaching younger generations (the key demographic for successful coffee shops!).
  • Expansion, or renovation, of local coffee shops is always a possibility, albeit an expensive one. It is important to have an efficient, customer-friendly set up with a large enough seating area in a coffee shop.
  • Equipment financing options could help when looking to purchase new, expensive equipment to produce quality coffee drinks. As mentioned above, the demand for specialty coffee drinks is rising, especially for expensive, quality products.
  • Inventory of products, especially expensive espresso, can push the budget. Being aware of the different options for funding, such as during peak seasons, is essential.
  • Payroll and miscellaneous fees can also take a toll during slower seasons, leading business owners to need fast financing options.

Comparing Coffee Shop Loans

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
SBA 6-10% 3-7 years 10-30 days
Asset Based 10-30% 1 – 3 years 7-21 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Coffee Shop Bank Loans

Bank term loans and lines-of-credit are by far the best financing options for new and existing coffee shops. Traditional bank lenders offer coffee shop owners with very low rates, extended terms and lowest fees of all commercial lenders. Banks are able to offer financing to coffee shops at such low rates because the traditional lenders are unwilling to take much risk. So in order for a coffee shop to quality for traditional financing, the small business must have very good credit and cash-flow. At a minimum, the coffee shop needs to be profitable in one of the past two years. On top of profitability, the coffee shop company must show that its profitability will be sustained into the future.

Documents needed for traditional coffee shop financing include:

  • Coffee shop’s tax returns (3 years)
  • Coffee shop’s income statements (year-to-date)
  • Coffee shop’s balance sheets (year-to-date)
  • Schedule of liabilities (business debt)
  • Owners’ tax returns (3 years)
  • Owners’ personal financial statement

SBA Coffee Shop Loans

SBA loans are a way for a coffee shop or cafe to obtain traditional bank-rate business financing (up to $5 million) for businesses that a bank may not approve for traditional financing because its barely misses the financial institution’s cash-flow, credit or revenue requirements. SBA financing for coffee shops are not loans provided by the government, but are instead traditional bank loans in which the government agrees to cover up to 85% of the lenders’ losses should the borrower fail to repay their loan. In order to obtain SBA guaranteed financing, the borrower must complete the application and underwriting process with the SBA lender, and then the SBA lender submits the application to the SBA for final approval. The process can be drawn-out at times (but not always) because of the large amount of paperwork and documents required.

Some of the documents required for a coffee shop SBA loan include:

  • Coffee shop’s tax returns (3 years)
  • Coffee shop’s income statements (year-to-date)
  • Coffee shop’s balance sheets (year-to-date)
  • Schedule of liabilities (business debt)
  • Owners’ tax returns (3 years)
  • Owners’ personal financial statement

Alternative Coffee Shop Loans

While traditional bank business loans are usually the preferable option for financing a coffee shop, it may not be an option for many business owners. Fact is, traditional banks only approve between 20-40% of business loans. If a business lacks sufficient credit or revenues to qualify for traditional financing, an alternative loan is an option that provides coffee shops and cafes with fast financing at affordable rates. Pre-approval for an alternative loan takes minutes and final approval and funding can take place within days. The entire process can usually be done online, with just a simple funding call when the loan is deposited into the company’s account.

Documents needed for an alternative coffee shop loan include:

  • Coffee shop tax returns (2 years)
  • Coffee shop income statements 
  • Coffee shop balance sheets 
  • List of coffee shop debt (Schedule of liabilities)
  • Coffee shop owners personal tax returns (1 year)

Coffee Shop Asset Based Loans

Asset based coffee shop loans are a way for coffee shops to leverage their commercial real estate, or the owners personal real estate, to obtain financing. An asset based lender will offer 1st, 2nd or 3rd positions on the real estate and lend up to 50% of the property’s equity. The funding process usually takes less than 3 weeks, but can be competed faster if there was a very recent appraisal.

Documents needed for coffee shop asset based financing include:

  • Application (signed by owner)
  • Bank statements (proof of coffee shop’s cash flow)
  • List of collateral (real estate)
  • Appraisal

Coffee Shop Equipment Financing

Equipment leasing is a way for coffee shops to obtain vital business equipment without having to pay the full-price of the equipment upfront. After the coffee shop decides on the equipment it wants to lease, it can simply provide the equipment leasing company with a purchase order or invoice for the equipment, and the equipment leasing company will purchase the equipment for the coffee shop, and lease it to the store for a period of time.

Documents needed for coffee shop equipment leasing:

  • Application
  • Bank statements
  • Vendor quote/purchase order

Coffee Shop Merchant Cash Advance

Merchant cash advances are rarely the first choice of a coffee shop seeking financing. But, oftentimes it’s the only choice for many small business owners with less than perfect credit (or even bad credit), or company’s with limited cash-flow. A merchant cash advance isn’t a loan but, instead, the sale of future bank and/or credit card deposits in exchange for an upfront sum of cash. A lender will purchase the receivables at a discount, and receive repayment through daily remittances of their bank or credit card accounts.

Documents needed for a coffee shop cash advance include:

  • Application
  • Bank statements and/or credit card statements of coffee shop

Get a Coffee Shop Loan

Who We Are

GUD Capital is a nationally recognized leader in the financing industry for providing the best business lending solutions available to small and mid-sized businesses. We leverage our network of 4,000 competing commercial lenders to provide your business the largest selection of commercial financing options.

Get Started

Recent Posts

Cannabis Business Loans: Dispensary Financing and Marijuana Industry Investment
July 26, 2017
Commercial Loan Broker: Types of Commercial Finance Brokers
July 19, 2017
Utah Business Loans: Financing For Utah Small Businesses
July 18, 2017
Georgia Business Loans: Financing For Peach State Small Businesses
July 17, 2017
Low Doc Business Loans: Financing with Low or No Documents:
July 12, 2017
Arizona Business Loans: Financing For Arizona Companies
July 11, 2017
Investment Real Estate Loans: Financing For Investment Properties
July 10, 2017
Commercial Balloon Refinancing: How to Refinance Commercial Balloon Mortgage
July 8, 2017
Office Building Loans: Commercial Financing and Mortgages For Office Buildings
July 3, 2017
Idaho Business Loans: Financing For Gem State Idaho Companies
June 30, 2017
MCA Split vs. MCA Lockbox: Comparing Different Merchant Cash Advance Funding Payments
June 28, 2017
Purchase of Future Receivables: Selling Future Bank and Merchant Receivables
June 26, 2017
101 Business Loan Tips: Advice For Small Businesses Seeking Loans
June 22, 2017
Types of Commercial Real Estate Loans & Mortgages
June 21, 2017
Merchant Cash Advance Without a Confession of Judgment: Cash Advances with No COJ
June 19, 2017
Two Merchant Cash Advances Stacked? Reasons Business Resort to Stacking Cash Advances
June 15, 2017
Alternatives to Merchant Cash Advances: Non-MCA Funding Options
June 13, 2017
Long-Term Working Capital: Loans & Financing For Long-Term Growth
June 12, 2017
Oregon Business Loans: Financing Options For Oregon Companies
June 10, 2017
How to Use Business Real Estate to Get Working Capital
June 9, 2017
Refinance a Commercial Mortgage: Commercial Real Estate Loan Refinancing
June 8, 2017
Colorado Business Loans: Lending For Colorado Small Businesses
June 7, 2017
Virginia Business Loans: Financing For Virginia Companies
June 4, 2017
Subprime Business Loans: Funding For Companies With Subprime Credit
June 1, 2017
Illinois Business Loans – Financing For Illinois Small Businesses
May 31, 2017