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Vape Shop Loans & E-Cig Store Financing

Financing For Vape and E-Cigarette Shops

Society is now at a turning point. Generation X’ers and Millennials are fighting non-stop to improve the quality of living in our world and environment. We are starting to focus more and more on the impacts that pollution, big agricultural businesses, oil companies, fracking companies, and so much more are having on our environment. Due to the rising concern of health and environmental impacts of traditional tobacco smoking, it comes as no surprise that the vaping and electronic cigarette, or e-cigs, industry has consistently grown since the beginning. While the topic of positive health impacts of vaping and e-cigarettes are still somewhat taboo and controversial, it is important to look at what we do know from the data and research that has been conducted so far.

What the Facts Say

There is no 100% absolute proof that long-term smokers will quit smoking if they transition into the world of electronic cigarettes and vaping, nor any definitive studies yet that outline the true health and environmental impacts of using these no-traditional methods of smoking. However, there are quite a few studies that show the starts of a healthier alternative in the tobacco industry that does seem to help quite a few people quit smoking traditional cigarettes. Lead author Dr. Leonie Brose, who published a study that researched E-cigarette use in December 2012, showed that 65% of those who were using an e-cigarette on a daily basis were able to attempt to give up smoking within the first year of use, as well as 14% of case studies having drastically reduced their intake of tobacco. Dr. Leonie Brose claims that, “This study did not test how helpful they are as quitting aids because we looked at smokers who were suing them for any reason, including just to cut down on their smoking or in situations when they cannot smoke. But it is encouraging to see that even then, regular e-cigarette use was linked to reduced numbers of lethal cigarettes smoked and increased attempts to quit smoking in the following year.”

Similarly, other studies have shown that while we may not know all of the damaging side effects, if any, of vaping and electronic cigarettes, we do know that they are nowhere near as dangerous or toxic to the person smoking and those around them as traditional tobacco cigarettes. First and foremost, we must remember that it is not the nicotine in cigarettes that kill people, it is only the addictive agent in the product. Vaping liquid, or vape “juice”, only has nicotine in it, not tobacco. Multiple other studies have shown benefits of e-cigarettes may outweigh harm many positive effects of transitioning from traditional cigarettes to electronic vape pens; they also show that it is incredibly rare for a non-smoker to start vaping. According to the study researcher Thomas Eissenberg, who is also the co-director of the Center for the Study of Tobacco Products at Virginia Commonwealth University, “Current evidence suggests that there is a potential for smokers to reduce their health risks if electronic cigarettes are used in place of tobacco cigarettes and are considered a step toward ending all tobacco and nicotine use.” The senior author, Dr. Hayden McRobbie from the Wolfson Institute of Preventive Medicine, added that, “If there are any risks, these will be many times lower than the risks of smoking tobacco… If there is evidence that e-cigarettes reduce smoking-related harm, then they need to be easily obtainable and not regulated more strongly than tobacco products.”

E-Cig and Vape Regulation

Regulation of vaping and electronic cigarettes has been a controversial topic in recent months, due to the newly released FDA regulations. Many vape store business owners are worried about the potential impacts of these new regulations released in May 2016, especially because it is shown that these new regulations are more hazardous than helpful for customers. For example, current vape shops can no longer add or create new products, such as vape liquids that are account for over 60% of sales in vape stores; this also includes prohibiting safety improvements that may be necessary for certain products, including battery modifications. Essentially, “the FDA is freezing all defective batteries, impure e-liquids, and overheating coils, preventing companies from address these impending safety hazards.” These regulations have unfortunately stifled a vaping company’s ability to innovate and create new products that could only improve the quality of products and continue to reduce health risks to even lower levels. These regulations are proving to be bothersome for most companies, however most vaping and electronic cigarette businesses are finding ways around these regulations to continue to thrive.

Industry Trends

Even with these new pesky regulations, industry trends are showing that vaping and electronic cigarette stores, as well as their products, are a booming industry that is continuing to grow at an exponential rate. Current research has shown that the global electronic cigarette and vaping industry will experience a growth of over 22.36% from 2015 to 2025, leading to a total market value of over 50 billion dollars by 2025. These growing industry trends are also reflected in the amount of people who have stopped smoking traditional tobacco cigarettes. New York City, one of the most populated cities in the United States, has majorly reduced their intake of tobacco cigarettes. New York City’s Health Department conducted a study that showed more than half a million people now use electronic cigarettes and vape pens instead of traditional cigarettes. This is quite an amazing feat considering the large role traditional cigarettes have played in society for many generations. The number of vape shops are only increasing, leading to over 6,000 specifically vaping shops, and over 35,000 stores that sell other products in conjunction with vaping and electronic cigarette products.

Reasons a Vape Shop Could Need Financing

With this incredibly competitive and quickly growing industry, it is important for vape and electronic cigarette business owners to know about their financing options; especially since these new regulations have been released and may hinder business for a period of time until everything adjusts to the new rules!

  • Payroll is always a priority in any business, but when funds are limited, there are always fast business financing options to consider to cover these costs.
  • Inventory for vape stores is now a costly investment; an investment that most people do not want to pay out of pocket for right away. Reviewing different inventory loan options could help with producing new products.
  • Expansion and renovation costs are always an option for a small, thriving businesses looking to test the waters with new locations.
  • Marketing costs are unavoidable in today’s booming industries. Allocating funds for marketing are sometimes difficult, so having other loan options is extremely important.
  • Campaigns and “vaping for causes” are the new trend. Many businesses are trying to promote purchasing certain products that donate partial funds to charities. Starting these campaigns can be expensive, so being aware of financing options is essential.

Vape Shop Loan Comparison

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 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

Vape Shop Bank Loans

While they are extremely tough to obtain — especially in the vape store and smoke shop industry, bank term loans and lines-of-credit provide affordable funding for any small business. Rates start in the mid single digits, and terms extend up to 10 years, providing a vape store with healthy financing. With low rates comes more due diligence, so an owner should expect to provide lots of documentation.

Documents needed include:

  • Vape store tax returns (3 years)
  • Vape store income statements (year-to-date)
  • Vape store balance sheets
  • Schedule of liabilities 
  • Personal tax returns 
  • Personal financial statement

Alternative Vape Shop Loans

Smoke shops and vape stores who are unable to obtain traditional financing should consider applying for a mid prime alternative loan. Institutional loans have rates that are higher than banks offer, but much more affordable than high-rate business loans and cash advances. Approval for an alternative loan can be done in minutes, with funding in the matter of days.

Documents needed for alternative lending:

  • Vape shop business tax returns (2 years)
  • Vape shop income statements (year-to-date)
  • Vape store balance sheets (year-to-date)
  • Schedule of liabilities (list of all business debt)
  • Personal tax returns (1 year)

Vape Shop Merchant Cash Advance

Merchant cash advances aren’t actually business “loans” in the traditional sense, but instead the sale of future credit card transactions for an upfront sum of cash. A MCA lender will provide financing, then then collect a percentage of a vape stores daily credit card transactions until the loan is paid in full.

Documents needed for a merchant cash advance (MCA loan):

  • Application
  • Credit card processing statements

Vape Shop ACH Cash Advance

A business cash advance (ACH loan) is the sale of future bank deposits for an upfront sum of cash. A business cash advance lender will provide funding, and then collect a set daily amount from the company’s bank account each day via ACH until the loan is fully-paid.

Documents needed for a business cash advance (ACH loan):

  • Application
  • Bank statements

Get a Vape Shop Loan

Who We Are

GUD Capital is a nationally recognized leader in the financing industry for providing the best business lending solutions available to small and mid-sized businesses. We leverage our network of 4,000 competing commercial lenders to provide your business the largest selection of commercial financing options.

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