Liquor Store Business Loans: How to Get Funding for a Liquor Business

Getting a Business Loan for a Liquor Store

For many, a love of liquor and wine is less recreation and more passion. If you’re fascinated by spirits, and enjoy helping others find what they love, too, it might be time to open your own liquor store. But how do you secure the funding for a liquor business, and what kind of liquor store loan is right to build your dream emporium?

The answer is that, luckily, you have many options to explore for a liquor store business loan. And if you’re well beyond the dream phase, and need to stock your shelves with Becherovka, Malort, or artisanal sake, then liquor store inventory financing could be just what you need.

We’ll explore the different types of liquor store financing, their best-use cases, and what you’ll need to be a strong candidate for any and all business loans. The good news is that finding a liquor store loan isn’t impossible—you just need to know where to look.

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Understanding What Kind of Liquor Store Financing Will Help You

Let’s start with a point we mentioned above: matching your needs with the right kind of liquor store financing. Because, well, what good is a liquor store business loan if it doesn’t help you accomplish your goal?

First and foremost, ask yourself these questions:

  • What do I need a liquor store loan for?
  • How quickly do I need liquor store financing?
  • How flexibly do I want to be able to spend the cash?
  • Am I taking care of an emergency, taking advantage of an opportunity, or taking care of business as usual?
  • How strong or weak is my cash flow?
  • How erratic or consistent is my cash flow?

If you can’t yet answer those questions, then take a step back.

You’ll need to know how you’re planning to use the funds and what you’re hoping to do with the capital before you can match yourself with the right liquor store loan type. For instance, someone who needs to put new bottles on the shelves can accomplish what they need with liquor store inventory financing, and likely won’t need to go through the process of applying for an SBA loan.

Qualifications Lenders Will Evaluate for Liquor Store Financing

The other thing you’ll certainly need is a good understanding of your own financial situation. That means your credit score, revenue, cash in the bank, and outstanding debts for starters.

The good news is that you don’t need a perfect credit score or even profitability to be able to secure a liquor store loan. The reality check within that, however, is that you do need to be able to show a solid cash flow position in order for lenders to trust that you’ll return their loan. So, the quality of your financial foundation is directly tied to the types of opportunities you’ll get for funding a liquor business as well as how much the loan will cost you.

Lenders may look at any or all of the following qualities of both you and your business:

  • Personal credit score
  • Business credit score
  • Time in business
  • Annual or monthly revenue
  • Cash flow
  • Bank statements

The Best Types of Liquor Store Business Loans, According to Your Needs

By now, you know the importance of choosing the right liquor store financing—so, let’s figure out which types of business loans will best suit you.

Best All-Around Liquor Store Financing: SBA Loan

The best business loan around for most entrepreneurs, regardless of industry, is an SBA loan. That’s because these loans are guaranteed through the U.S. Government’s Small Business Administration, which means that they are lower risk to dole out from the banks that issue them. This also enables lenders to offer better terms, including repayment periods of up to 25 years, and substantial sums of capital (up to $5.5 million) at priority interest rates.

As you might expect, SBA loans are competitive, since so many borrowers would like to take advantage of these strong offers. That means lenders can be choosy and only provide loans to some of the most qualified candidates. This usually amounts to a credit score of 680 or so at minimum as well as strong revenue and several years in business.

In other words, this isn’t a liquor store loan for entrepreneurs looking to get a business off the ground. There’s also quite a bit of paperwork involved in applying for these loans, so if you need fast access to capital, you’ll want to look into an alternative route for capital. But there’s no better option for working capital if you’re looking for flexibility.

Best for Stocking Your Shelves: Liquor Store Inventory Financing

Purchasing inventory is sure to be one of the biggest expenses you’ll incur throughout the life of your store—once your liquor store opens its doors to the public, all the way through the years that follow. You’ll have to keep plenty of bottles on hand—and keep up with new and interesting options—in order to keep your customers coming back. This is where liquor store inventory financing can help your business in a big way.

Inventory financing works by giving you money to purchase products you plan to sell. You’ll be able to get the cash you need to purchase the inventory that stocks your shelves without having to fork over additional collateral in the process. The inventory you purchase serves as the collateral for these loans, which means that the lender can repossess what you’ve bought in case you’re unable to pay them back.

As long as you’ve made smart inventory decisions, and can afford to pay back the loan on time, you can get the upfront cash needed to stock shelves and build your client base—all without becoming cash-poor in the process. Plus, once approved, you’ll get access to funding more quickly than you would with a term loan (and much faster than you would with an SBA loan).

Best for Access to Cash: Business Line of Credit for Liquor Stores

A business line of credit isn’t exactly like a “traditional” small business loan. Rather, it’s almost a hybrid of business loans and a credit card cash advance, since it offers borrowers a fixed amount of money that they can “draw” against several times throughout the duration of the contract with the lender. This option lets you take out different amounts of cash from an overarching sum of money, only paying interest on what you’ve borrowed.

Business lines of credit are a great option for entrepreneurs who need periodic access to a little extra funding but may not need enough money to make a conventional loan a savvy option. Or, alternatively, a line of credit can also help pay for purchases in a way that doesn’t require borrowers to pay interest on money they’re not using.

This is a liquor store loan that’s well-suited for flexibility, whether you need quick capital to purchase out another store’s deeply discounted inventory or triage an emergency break-in. A business line of credit application decision has a fast turnaround, which means you’ll get quick access to the money you need—sometimes in as little as a day.

Best for Buying Physical Assets: Equipment Financing for Liquor Stores

Liquor stores aren’t just about the liquor inside of them. Many customers will pop in on their way to a party or en route from work and want a ready-to-drink bottle. In plainer terms? You’ll likely need a commercial fridge. And there are other fixtures involved in opening or expanding a liquor store: display cases, POS systems, tables, and more.

For these kinds of expenses, consider a liquor store equipment loan. With equipment financing, you secure a quote from a vendor for the equipment you’d like to purchase, which you submit to a lender. Once you’re approved for the loan, the lender will provide you the capital to finance the purchase, and the assets you buy will serve as the loan’s collateral. Because of this set up, called “self collateralizing,” your liquor store financing has collateral built in the case of default, so lenders are sometimes more willing to open up qualification criteria to a wider group of buyers. You should have strong credit to secure an equipment loan for liquor stores, but don’t need perfection.

Although these liquor store loans aren’t flexible working capital, you can get a hold of them quickly. If you need to finance outfitting an expansion or replacing a piece of broken equipment (like, say, that fridge), then you don’t need the flexibility—and you can use an equipment loan to get the job done.

Best for Odds-and-Ends Purchasing of Liquor Store Supplies: 0% Intro APR Business Credit Card

You might not think of a business credit card as a liquor store financing tool, but the right credit card is far more powerful than most small business owners realize. What can be specifically helpful to you is a 0% introductory APR business credit card.

You can use this type of business credit card to spend during a predetermined period without paying interest on balances. That’s very powerful—think of not owing anything on your business credit card for a year or more (which is often how long these intro periods last). Savvy business owners often use these credit cards as an interest-free loan, utilizing what they need on their credit line to spend on supplies or even large purchases. And, of course, that purchasing power is instant. You can even choose to transfer your existing business credit card balance so that you don’t accrue more interest on your existing debt.

The benefits are easy to see! But a word of caution: If you choose this route, make certain you plan on paying off your full balance by the end of your introductory period. Once your 0% APR goes away, an interest rate will set in based on your creditworthiness and the market Prime Rate, so your debt is no longer “free.” If you plan well, though, and work closely with your bookkeeper, you’ll have a great weapon in your arsenal.

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Why It’s Important to Choose the Right Liquor Store Loan

Operating a great liquor store means having the financial flexibility to purchase popular inventory, stock exciting new products, and keep supplying your neighborhood with the wines and spirits they know and love.[1] Not all loans are created equal—nor are their designed purposes. By having a specific purpose in mind before you seek financing, you can ensure that you’re choosing the right loan option for you. And that in itself is something worth toasting to.

Meredith Turits

Meredith Turits is a contributing writer for Fundera.

Meredith has worked as a writer and editor for more than a decade. Drawing on her background in small business and startups, she writes on lending, business finance, and entrepreneurship for Fundera. Her writing has also appeared in the New Republic, BBC, Time Inc, The Paris Review Daily, JPMorgan Chase, and more.

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