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Pet Store Loans

Financing For Pet Stores

Let’s be honest – most of us simply love our furry children and tend to factor in their food, toys, and care as a priority in our finances. In the United States today, nearly three-quarters of American household’s own pets. The pet industry is booming and has continuously shown skyrocketing numbers because our pets are a significant part of our lives. According to Bob Vetere, the American Pet Products Association’s COO, “The strong growth in the industry demonstrates what an important role pets are playing in the lives of Americans. They have become a part of the family. Spending across all sectors, from pet food and veterinarian care to toys and treats, reflects what lengths we are willing to go to for our pets.” When we look at generational trends, Baby Boomers and Generation X’s have increased pet ownership, probably in relation to the kid’s heading off to college! Similarly, Millennials have almost caught up with older generations due to their large population numbers and their willingness to spend on quality care items for their pets

In 2015, over 60 billion dollars were spent on our pets, including food, miscellaneous supplies, veterinary services, and specialty animal purchases, such as grooming, boarding and training. Holistic pet spas, pet reiki, and pet massages are even considered a necessity in the pet world today! Based on industry trends, it is estimated that in 2016, Americans will spend over 62 billion dollars on pet necessities. With these current statistics, it is obvious that being in the pet care business is an incredibly profitable venture. Even more so, those small pet store owners that are expanding their businesses beyond just food, toys, and treats into animal services are expected to see a drastic financial increase. (LINK 3) According to the American Pet Products Association (APPA), spending in specialty pet services will increase to $620 billion by 2016. (LINK 4) Similarly, the prospective increase for job opportunities for animal care and service workers will increase 11% by 2024, which is much faster than average. There are endless opportunities for growth in all forms of small business specialty pet care and pet stores, even if you are competing against the large, name-brand pet stores.

Reasons Pet Stores Need Financing

While the pet store industry is expecting continuous growth due to previous year’s trends, there is always a need for pet store financing. Many times, small businesses find themselves faced with financial dilemmas and crisis’. Being aware of the different types of pet store financing loans available to your business is essential in preventing those unwarranted difficult times from hurting your business. Some instances that pet stores would need financing would include:

  • Payroll expenses and miscellaneous fees
  • Purchasing essential, often expensive, niche products for your store, such as top of the line holistic foods and treats
  • Inventory or stock purchases for preparation before peak seasons, such as holidays.
  • Expansion of current store, or purchase of new and/or secondary locations.
  • Equipment for small business pet stores that want to expand into grooming, bathing, training, and doggy day care services
  • Marketing and advertising costs that play a major role for small pet stores competing against the large, name brand stores

Pet Store 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
Invoice Finance 1-2% weekly 1 – 90 days 1-3 days

Pet Store Bank Loans

Bank term loans and lines-of-credit are always the best and most preferable loan options for borrowers looking for the lowest rates, longest terms and fewest financing fees. Bank financing for pet stores have rates starting as low as 5% and have enxtended terms ranging between 5-20 years (depending upon use). The only drawback to bank financing is the fact banks have the most extensive due diligence process out of all small business lenders. The funding process for a bank loan or line-of-credit for a retail pet store will often take no less than 30 days, and can see the process take as long as 60-90 days.

Documents needed for a pet store bank loan include:

  • Business tax returns (3 years)
  • Income statements (year-to-date)
  • Balance sheets (year-to-date)
  • Schedule of liabilities (list of all business debt)
  • Personal tax returns (3 years)
  • Personal financial statement

SBA Pet Store Loans

SBA loans for retail pet stores offer borrowers with borderline credit and cash flow with the opportunity to obtain bank-rate financing through the use of a SBA enhancement. Through the SBA lending program a financial institution agrees to offer financing to a small business owner, and in return the SBA agrees to cover most of the lender’s losses should the borrower default. But in return for the SBA enhancement the government requires the small business owner and lender to provide specific (and sometimes extensive) documentation.

Retail pet stores looking for SBA financing will need to provide the following documents:

  • Business tax returns (3 years)
  • Income statements (year-to-date)
  • Balance sheets (year-to-date)
  • Schedule of liabilities (list of all business debt)
  • Personal tax returns (3 years)
  • Personal financial statement

Alternative Pet Store Loans

For retail pet stores that are unable to secure bank or SBA financing there are other options. Through the use of alternative financing (mid prime financing, institutional lenders) pet store owner are able to get affordable rates with fewer credit and documentation requirements than a traditional pet store lender would require. Preapproval for an alternative business loan for retail pet stores take just minutes, and the pet store can be funded within a week.

Documents needed for alternative lending:

  • Business tax returns (2 years)
  • Income statements (year-to-date)
  • Balance sheets (year-to-date)
  • Schedule of liabilities (list of all business debt)
  • Personal tax returns (1 year)

Asset Based Pet Store Loans

Asset based business loans provide retail pet stores with less than exceptional credit and cash-flow the ability to obtain financing through the use of collateralizing commercial or personal real estate. An asset based lender is willing to provide financing based on a percentage of the personal or commercial real estate in a 1st position, or in a 2nd or 3rd position behind a mortgage company. The process is relatively quick, with most asset based loans funding within 3 weeks.

Documents needed for alternative lending:

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

Pet Store Equipment Financing

If a company is looking to obtain business equipment but doesn’t want to pay the full price upfront, doesn’t want to be stuck with equipment long-term, or is just unable to get a loan for equipment, an option is to lease equipment. Equipment leasing is a relatively simple process in which a company needs only submit an application and purchase order (or vendor quote to get approved) and the process can be finished within days to a week.

Documents needed for equipment leasing:

  • Application
  • Bank statements
  • Vendor quote/purchase order

Pet Store Merchant Cash Advance

Merchant cash advances (and business cash advances) offer retail pet stores with fast business funding for nearly every credit profile. A merchant cash advance (sometimes called MCA and ACH loan) is the sale of future business revenue, in return for an upfront sum of cash. A lender will look at a company’s total cash-flow over the past 3 to 6 months, and then use that as basis for funding — not the company’s or owner’s credit history (making this a good option for business looking for loans with bad credit). Pre-approval for a retail store looking for a cash advance takes minutes, and funding can happen within days, if not the same day. But in exchange for fast funding, a borrower can expect to pay the highest rates of all pet store loan options.

Documents needed for a merchant or business cash advance:

  • Application
  • Bank statements and/or credit card statements
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