Loans For Supermarkets
The grocery store and supermarket industry is the largest retailing channel of food products in the United States.The $638 billion grocery store and supermarket industry in the United States has seen steady annual growth over the past 5 years (1.2% average annual growth). Employment in the grocery and supermarket industry has now surpassed 3.4 million employees — or 2% of total U.S. private sector jobs. The nearly 38,000 supermarkets in the U.S. carried roughly 42,000 products per location and generate, on average, $516,000 in median weekly sales per location, with average costumer spending $30 per transaction. Average total sales in the supermarket and grocery industry average $148 per labor hour. With low profit margins in the grocery store and supermarket industry, stores and chains rely on lots of sales volume and streamlined efficient operations. Large supermarkets have an obvious advantage due to purchasing power, marketing and distribution (with the top 50 grocery stores and chains generating 70% of the industry revenue. But small supermarkets and grocery stores are finding they are able to compete by offering specialty and local products.
What Are The Options To Fund Supermarkets?
Some of the different financing options used to fund supermarkets and grocery stores include:
- Term loans
- Lines of credit
- SBA loans
- Alternative business loans
- Invoice financing
- Cash advance funding
What are the Uses of Loans for Supermarkets and Grocery Stores?
Grocery stores use loans and financing for many different purposes, including:
- Working capital
- Grocery and supermarket expansion
- Make Payroll
- Advertising for supermarket
- Pay suppliers and/or vendors
- Hire employees
- Pay taxes or other liabilities
Conventional term business loans allow grocery stores and supermarkets to get the best financing rates available, while providing these stores and chains with the longest terms available to ensure easiest repayment schedule of all the business debt funding options. This type of financing is usually only available to the most creditworthy supermarkets and grocery stores because of the limited amount of risk the lenders are willing to take.
- Rates: 5-10%
- Terms: 1-25 years
Grocery Store and Supermarket Lines of Credit
A line of credit offers grocery stores and supermarkets to have access to readily-available financing that they can draw on as needed, and only pay interest on the amount drawn. A lender will prequalify the grocery store or supermarket for a total amount they will have access to, and when the business owner needs money, it can access this cash without having to obtain additional clearance from the lender.
- Rates: 5 – 15%
- Terms: 1 – 3 years
SBA Loans for Grocery Stores and Supermarkets
SBA loans are simply traditional bank loans that the U.S. Small Business Administration provides an enhancement to. An SBA enhancement allows lenders to loosen up lending requirements because the government agrees to accept bulk if the lenders’ risk by covering up to 90% of the lenders’ losses should the borrower of the SBA loans default.
- Rates: 6 – 8%
- Terms: 3 – 25 years
Alternative Grocery Store Financing
Alternative business funding provides grocery stores and supermarkets who lack bank-rate credit or cash-flow, with access to affordable rates and terms. Mid prime alternative loans are the middle ground between a bank loan and a high-interest business cash advance. Mid prime lenders require minimal paperwork and have lower credit requirements than banks, which allow them to fund in a fraction of the time a traditional commercial takes.
- Rates: 8 – 20%
- Term: 1 – 5 years
Grocery Store and Supermarket Business Cash Advances
Cash advance financing for supermarkets and grocery stores provide these businesses with access to fast funding, without much paperwork required. A cash advance isn’t a loan, but is instead the sale of future grocery store bank or credit card deposits in return for an advanced lump sum of cash. After funding the merchant cash advance lender will then draw a fixed amount of percentage from the supermarkets bank and/or credit card deposits each day until the agreed payback amount is paid-off.
- Factor rates: 1.15 – 1.55
- Terms: 4 – 24 months