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Liquor Store Loans: Beer, Wine & Spirits Financing

Financing a Liquor Store

Beer, wine and liquor stores have always had steady revenue growth, even during the Great Recession; numbers are now skyrocketing thanks to Millennials and their love of American made spirits, specialty craft beers, and artisanal wine. Liquor stores are essentially recession proof; these businesses have their up’s and down’s like any small business, but no matter the situation, trends have shown that people consistently drink – whether they can afford to or not. Today, drinking is considered a popular way to socialize, both at local bars, breweries, and wineries, but also at home. The growing trend of drinking at home has helped propel the liquor store industry into a booming industry. Whether consumers are more conscious of the negative side effects of drinking and driving, wanting more personal interactions with friends and loved ones, or a little bit of both, the home entertainment trend is here to stay – which is a huge win for liquor stores everywhere.

The liquor store industry has experienced growth due to rising expendable income, leading to more purchases of high-margin products. This is also being seen because of the growing love of local, craft beer. Consumers are willing to spend more on quality products today – unfortunately, trying to accurately figure out which products are the most popular among Millennials is incredibly difficult. American’s today are constantly trying new, exciting products (i.e. Fireball Whiskey), making it more difficult for liquor store owners to accurately stock up on appropriate inventory. Even though deciphering Millennial wants and needs is proving to be problematic, the liquor store industry has still seen increased revenues and growing employment. However, there is still a ways to go for the liquor store industry to reach optimal earnings, so remembering that there are a variety of loan options out there to help can be essential in staying ahead of the competition.

Liquor Store Financing Uses

  • Innovation, Creativity, and Mixology: The number one growth factor for any liquor store business is innovation and creativity, especially through the promotion of mixology tips and tricks in a liquor store. Partnering with local breweries, wineries, and even restaurants to grow the customer base while catering to new, hip trends are essential. Another major way that liquor store owners are innovating is through providing local products, eco-friendly products, and a variety of products. Younger generations are all about experimenting and trying new things; they are also more focused on at home entertainment and parties. Becoming more engaged and innovative is key for liquor store owners to capitalize on this new trend, and there are a variety of loan options out there to help fund whatever innovative idea needed to grow a liquor store.
  • Commercial Real Estate: Rather than simply leasing their commercial real estate, some liquore store owners may choose to purchase the property, or if they already own the store they may look to refinance their existing mortgage.
  • Payroll: In order to keep employees eager to upsell while keeping them happy, consistently paying them on time every time is essential. Many struggling businesses consider cutting payroll costs before other expenses, leading to an aggravated and disengaged workforce; thus, a liquor store owner will not be able to keep a satisfied work force. Cutting payroll costs should always be a last resort, no matter what industry the business is in. Customer service is too vital to a liquor store for payroll costs to be low on the list of a liquor store owners financial priorities. There are a variety of loan options that can help cover this necessary and unavoidable cost.
  • Hiring New Employees: During the 2008 recession, many businesses in every industry cut employment costs to stay afloat, however in today’s rebounding economy, there is plenty of room for liquor store owners to consider hiring new employees and growing their workforce. This is also a necessity for any liquor store owner looking to expand or renovate their liquor store business. Hiring new employees, especially employees that understand the growing trends and demands of key demographics, is essential for a booming business. If a liquor store owner is ready to take that next step, there are a variety of financing options available to help cover this cost.
  • Expansion and Renovations: If a liquor store is generating positive revenue and is ready to test the waters with a new location, or even expand the current location of the liquor store, there are a variety of loans to help. Also, staying hip and trendy to cater to Millennial’s can be considered a much needed excuse to renovate. Expanding or renovating can help draw in more customers, but even if a liquor store owner is ready to make this transition, there are times when unexpected costs arise. Considering financing options can help with any expansion or renovation of a liquor store.
  • Inventory: Inventory is the most important aspect of any liquor store. Whether a liquor store owner needs to stock up before peak seasons, has a great offer on a large purchase, or simply needs extra of a popular item, considering a loan to help cover this vital cost may be a good ideqa. Not having enough inventory can make or break a liquor store; having too much of a less popular item can also be an issue. There are loan options to help cover technologies that mitigate the issues that are associated with inventory management as well.
  • Technology: Technology is unavoidable in society today, even in the liquor store industry. There are a variety of cloud based systems to help liquor store owners focus more on selling products and less time dealing with the hassles of running a business. Another major technological shift that is starting in the spirits industry is the sale of these products through ecommerce and digital platforms – this trend will eventually trickle down into the liquor store industry, so getting ahead of the game can be incredibly beneficial. There are also a variety of Point of Sale Systems that have been shown to increase productivity and enhance consumer purchasing. Whatever the system is, investing in top of the line technological products is vital for every single industry, and there are always funding options available to help implement these technological systems.
  • Marketing and Social Media: Since younger generations are the most important demographic for liquor store owners to be targeting, focusing on aggressive marketing campaigns streamlined through social media venues is essential. People today are dominated by their cell phones, the internet, and social media; learning to effectively use omnichannel’s and the various social media portals are vital in producing effective marketing strategies for liquor stores today. Reviewing the variety of financing options available for marketing for liquor stores today can help.

Comparing Liquor 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

Liquor Store Bank Loans

Conventional bank loans for liquor store are the preferred financing route of any company looking for the healthiest rates and terms. Obtaining great rates allows liquor stores to hold on to as much cash as possible to put back into their business, and also to put in the owner’s pockets as profits. With good rates and great terms comes strict lending requirements — so the liquor store and its owners must have excellent credit to qualify for traditional financing.

  • Rates: 5-10%
  • Terms: 1-25 years

Liquor Store SBA Loans

As surprising as it may seem, liquor stores do in fact qualify for government-enhanced SBA financing. SBA loans are the perfect type of financing for stores that are looking for bank-rates but may present just a little too much risk for the lender. The SBA agrees to cover a portion of the lender’s losses should the liquor store default on their loan. By doing this, the government hopes to encourage more banks to lend to borrowers with borderline credit and revenues.

  • Rates: 6-8%
  • Terms: 7-25 years

Alternative Liquor Store Loans

For liquor stores that have exhausted both the SBA and conventional lending routes without getting the needed capital they wanted, another great option is to obtain an institutional lending facility or FinTech business loan. This type of alternative financing is especially beneficial to businesses with a limited credit history, limited time in business, and for growing companies in need of fast financing.

  • Rates: 9-25%
  • Terms: 1-5 years

Liquor Store ACH Cash Advance

An ACH loan for liquor stores isn’t actually a loan at all, but the sale of the liquor store’s future bank revenue in exchange for an upfront cash advance. Far from being the cheapest business financing, a cash advance may be quite useful for stores that have been locked-out of all other forms of financing. Another great benefit is that cash advances make funds available within a day or two (and sometimes even the same day). ACH cash advances are repaid by having a set amount deducted from the borrower’s bank account each day via ACH until the merchant funder is repaid on a set term.

  • Factor Rates: 1.16-1.50%
  • Terms: 4 months – 2 years

Liquor Store MCA Advances

Much like a business cash advance (or ACH loan) a merchant cash advance is also the sale of future revenues in exchange for immediate financing. The main different between an MCA loan and ACH loan is how the lender collects repayment. Whereas an ACH loan is collected via the bank account, a MCA is collected by taking a percentage of the liquor store owner’s daily credit card processing activity.

  • Factor Rates: 1.16-1.50%
  • Terms: 4 months – 2 years

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