Florist Shop Loans

Financing For Flower Shops

According to the National Retail Federation, consumers spent over 1.9 billion dollars on flowers, professional floral arrangements, and plants for Valentine’s Day in 2016 – imagine what is going to be spent this upcoming Valentine’s Day? It is estimated that over 250 million roses were produced for this past Valentine’s Day alone. On top of that, other holidays have been booming in the past few years as well. There are endless amounts of occasions where loved ones enjoy buying floral arrangements; Christmas, Thanksgiving, Easter, Mother’s and Father’s Day, Anniversaries, and so forth. Statistics have also shown that women today even enjoy purchasing flowers for themselves on a regular basis! Aside from traditional roses and floral arrangements for gifts, the floriculture industry is an incredibly diverse field with experts in flower production, distribution, design, retail and sales, greenhouse design, engineering, and so much more! This field attracts people with all sorts of passions and degrees, ranging from liberal arts to science, which is probably why there are over 15,000 retail florist shops available to the public – and this is not including online floral shops.

While there has been significant growth in the past for these retail flower shops, in fact, flower industry trends are showing a steady decline, as well as concerned florists for the upcoming seasons. Unfortunately, American consumers have decided to stop spending regularly on flowers for now due to rough economic conditions. There is currently limited disposable income for households, and flower shops are experiencing the brunt of these hard times. The Society of American Florists took a variety of surveys and interviews at the beginning of this year, and while many florists appeared optimistic and were hoping for the best, by the end of January 2016, floral retail shop owners were a bit discouraged. The Society of American Florists claimed that, “…While no one is comparing the current economy to the disaster zone surrounding 2008, the mood among many industry members seems centered on tempered expectations and wait-and-see attitudes.” This news may seem alarming, however there is growing optimism because plenty of people still find enjoyment in purchasing flowers and floral arrangements for their loved ones during holiday’s, special occasions, and just for their homes. For small business floral store owners today, being aware of different loan and financing options are extremely important, especially if you need a quick option to management expenses to stay afloat until the next peak season.

Reasons a Flower Shop Would Need a Business Loan

For small business floral store owners today, being aware of different loan and financing options are extremely important, especially if you need a quick option to management expenses to stay afloat until the next peak season. Reasons for funding include:

Emergency funding is essential in today’s economy for retail floral shops. Since the industry trends and statistics are currently dropping, being able to access financing in a pinch for those random, unexpected emergencies is important.
Equipment and new products are always essential in the diverse field of floriculture – and expensive. If your company is in need of an equipment upgrade, exploring different loans should be considered.
Payroll and miscellaneous taxes are expenses that cannot be avoided, but when business is slow, access to quick funds is essential.
Stocking up for peak seasons, such as Valentine’s Day, can be very pricey.
Expanding, renovating, or adding additional locations for your business is always a possibility for those local shops that have done well this year is always a cost that financing options can help with.

Florist Shop Loan Comparisons

Types	Rates	Terms	Funding
Bank	6-10%	3-7 years	14-30 days
SBA	6-10%	3-7 years	10-30 days
Line of Credit	5-15%	1 – 3 years	7-30 days
Alternative	6-25%	1-5 years	5-7 days
Cash Advance	1.16-1.55	3-24 months	1-3 days
Equipment Lease	5-15%	1-10 years	1-2 weeks

Flower Shop Bank Loans

As is almost always the case, traditional bank business term loans and lines-of-credits offer florists and flower shop owners with the best rates and terms of all the funding options, along with having very few fees. Traditional small business lenders are able to offer such good rates because they take very little risk. Therefore, a flower shop needs to have good business and personal credit, and solid net revenues in order to qualify for financing.

Documents flower shops need to apply for a bank loan:

Flower shop tax returns (3 years)
Flower shop income statements
Flower shop balance sheets
Flower shop schedule of liabilities
Owners’ personal tax returns (3 years)
Personal financial statement(s)

SBA Flower Shop Loans

If a flower shop is unable to obtain traditional financing, the next best option to to seek SBA enhanced financing. SBA loans offer small business owners the opportunity to obtain bank-rate financing by having the lender obtain a SBA guarantee. With the guarantee by the SBA, the government agrees to cover a large percentage of the traditional lenders’ losses should the florist shop default on their loan. By issuing this guarantee, the government is encouraging lenders to provide small business financing to florist shops that have borderline credit and revenues.

Florist shop SBA loan approvals require these documents:

Flower shop tax returns (3 years)
Flower shop income statements
Flower shop balance sheets
Flower shop schedule of liabilities
Owners’ personal tax returns (3 years)
Personal financial statement(s)

Alternative Flower Shop Loans

If a business is unable to obtain traditional and/or SBA financing, the next best option may be a mid prime alternative business loan (institutional lending). Mid prime loans (sometimes called fintech loans) for flower shops are the mid path between bank-rate financing, and high-interest cash advances and credit cards. A florist can apply for an alternative loan, and receive pre-approval within minutes, and funding within a week.

Documents needed for alternative florist shop loan includes:

Flower shop tax returns (2 years)
Flower shop income statements (year-to-date)
Flower shop balance sheets (year-to-date)
Flower shop schedule of liabilities (list of all business debt)
Owners’ personal tax returns (1 year)

Asset Based Flower Shop Loans

Asset based florist shop loans offer business owners with an option to obtain financing by using their commercial or personal real estate as collateral for financing. Even if a florist has a 1st or 2nd mortgage and on their personal or commercial real estate an asset based lending company can offer up to a 3rd position on the collateral.

Documents a flower shop will need to provide to apply for asset based lending include:

Application
Bank statements (proof of cash flow)
List of collateral
Appraisal

Florist Equipment Financing

If a Florist needs to obtain equipment for their flower shop, but the florist doesn’t want to pay for the cost upfront, and option is to seek equipment leasing. With equipment leasing a lender will purchase the equipment for the flower shop, and then lease it to the flower store for an agreed upon term. At the end of the term, the flower store will be given the chance to purchase the equipment, continue leasing the equipment, or return the equipment to the lender.

Documents a florist will need for equipment leasing include:

Application
Bank statements
Vendor quote/purchase order

Flower Shop Merchant Cash Advance

If a florist has exhausted all other financing avenues, an option by be to obtain a merchant cash advance. Cash advances (sometimes called MCA or ACH loans) are the sale of future credit card and/or bank deposits in return for upfront funding. Cash advances are especially handy for owners seeking bad credit business loans because the cash advance lenders focus on cash-flow not credit.