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Hardware Store Loans: Financing for Lumber, Paint and Tool Supply Companies

Hardware Store Financing

It is no surprise that Lowes and Home Depot dominate the home center and hardware store industry, leading many consumers and business analysts to believe that they are slowly pushing out all other home center and hardware stores in the industry – especially after all of the home center and hardware store closures during the Great Recession. Luckily, the home center and hardware store industry for both small, medium, and large businesses has rebounded, showing consistent signs of growth over the past few years. This is especially true because the home center and hardware store industry is directly correlated to the housing marketing. As many people know today, the housing market has finally recovered, leading to more consumers buying homes, resulting in more consumers making personal home improvements. Plus, many consumers today are dedicated to promoting small businesses and increasing their local business economies. While no industry is perfect, overall, the home center and hardware store industry is doing well, with an expected average annual rate of 3.7 percent into 2021. This has led to over 29,500 home center and hardware store establishments in the United States today, which generate over $180 billion in combined annual revenue for the industry.

Home Center and Hardware Store Industry Trends

Even though the overall home center and hardware store industry is faring well in the economy, many home center and hardware business owners have been slow to adopt vital technological and customer focused business ventures, especially when it comes to online and mobile services. Many home center and hardware stores are constantly trying to find niche areas to compete with big box stores, and the current trends show a few key areas to focus on for the upcoming year.

  • Customer Focused Business Models: Customers should be the number one priority in any retail environment. For the home center and hardware store industry, there are a variety of ways to make this happen. Retailers are offering amazing loyalty programs, expert financing options for consumers who are looking to lease or buy expensive products, and technology based systems to speed up and enhance customer experiences. While all of these may not be a priority for every hardware store, making consumers the number one focus for the business is vital.
  • Technology for Business Operations: There are a variety of technological systems that are enhancing the way retail businesses operate – cloud based systems, improved and efficient point of sale systems, in-store videos to answer common consumer questions, and so much more. Some of these technological systems can be incredibly expensive up front, but they will only lead to increased sales and overall consumer satisfaction.
  • Omnichannel Services and Content Marketing: In order to compete against incumbent home center and hardware stores, small and medium sized home center and hardware stores must be implementing strategic content marketing campaigns via social media and blogs, all while creating a user-friendly omnichannel service. Customers want instant gratification through online and mobile shopping experiences, which many large hardware stores already offer. This does not mean brick and mortar home center and hardware stores do not have a place in the market, but by not offering omnichannel services, many smaller hardware stores will have difficulties competing.

Reasons Hardware Stores Can Use Capital

  • Technology: This is one of the most important business essentials for every single industry today. For the home center and hardware store industry, there has been slow adoption of technological systems that could greatly enhance business practices and increase customer satisfaction. Whether a home center or hardware store is looking for cloud based systems to manage inventory better, wanting to experiment or expand omnichannel services, or offer better point of sale systems to speed up customer check out times, there are a variety of loan options that can make these vital necessities a reality.
  • Expansion and Renovation: For any small or medium sized business, expansion and/or renovations are always an exciting venture. As mentioned above, the home center and hardware store industry has fared well over the past few years with moderate growth, so expansion may be in the near future for many home center and hardware stores. Sometimes, expansions and renovations end up costing more than a hardware store business owner can afford, which is why there are plenty of funding options to help facilitate this important business venture.
  • Inventory: Whether a home center and hardware store business owner is looking to implement inventory management systems, looking to stock up on key products before peak seasons, considering expanding retail products, or is offered a great deal to stock up on essential inventory items, there are a variety of loan choices to help with any and all business inventory needs.
  • Working Capital: Most business owners in every industry experience difficult financial times, and while this is a typical fluctuation with owning a business, it can feel almost impossible to survive when there are endless amounts of operating capital needs. Whether a home center and hardware store business owner needs working capital to cover payroll costs, technological ventures, or other miscellaneous and unexpected fees, there are financing options that can be used for working capital during difficult times. Considering the variety of loan choices below can help during these unavoidable situations.
  • Social Media and Marketing: For any business today, effective marketing, especially through social media and content marketing, is vital to stay competitive. Consumers today are heavily reliant on third party business reviews, online shopping through social media and other venues, and being attracted to effective content marketing campaigns. This is a vital component for any business, but the home center and hardware store industry has been slow to implement these new marketing techniques. Many times, creating substantial and effective content marketing campaigns via social media can be difficult, which is why many home center and hardware store businesses utilize marketing companies to help boost sales. Remembering that there are plenty of funding choices to help with this necessity can help.
  • Hiring New Employees and Payroll: For any growing home center and hardware store, hiring new employees is inevitable – and many business owners underestimate the potential costs associated with this business need. In addition, once that employee is hired, it adds more payroll pressures. When difficult financial times arise, business owners contemplate cutting payroll, or delaying payroll costs, until more capital comes in – but this is a major mistake for any business owners. Avoiding payroll can lead to disengaged and/or angry employees who are often the most vital component of any retail establishment. Utilizing the variety of payroll financing options to cover this essential cost can help.

Types of Hardware Store Loans

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

Hardware Store Bank Loans

Standard business loans provided by banks and credit unions with low rates and low fees. Bank loans usually come as either term loans or lines of credit with rates starting in the mid single digits. Financing can be used for a wide number of uses, including working capital, purchasing or refinancing real estate, debt consolidation, etc..

Hardware Store SBA Loans

SBA loans are designed to help borrowers who are unable to get a bank loan to obtain affordable financing by using a SBA guarantee that much of the lender’s losses will be covered by the US government to reduce the lender’s risk.

Alternative Hardware Store Financing

Non-bank lenders that offer affordable financing to borrowers who were unable to obtain bank-rate financing from a conventional lender. Much faster to fund than a bank or SBA loan, but higher rates than both.

Hardware Store Cash Advance

The fastest financing option for just about any business, but also the most expensive option. A cash advance is simply the sale of the hardware store’s future revenue to get upfront financing. Unlike more conventional lending options, a cash advance can be funded within just a few business days, and sometimes even the same day.

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