Last annual update:
If you’ve been to the mall lately or one of the retail strip centers dotting the nation’s landscape, you’ve noticed that foot traffic continues to pick up. The pandemic’s peak is behind us, and people are happy to be once again moving about their community and spending money at their local retailers.
While SBA lending for brick and mortar retailers was tight during the pandemic, it is much more promising now. While people will always shop online to some degree, many prefer to physically be in a retail environment when buying clothes, accessories, home furnishings, and many other goods.
Many major retailers in America started with a single location and expanded as their first location prospered and their customer base grew. In many cases, SBA loans made that possible.
An SBA loan for a retailer can be used to buy inventory, purchase furnishings and equipment such as shelving and cash registers, expand, pay down debt, or even purchase a competitor’s retail location.
Benefits of being a retailer store owner
The biggest benefit of being a retail store owner is owning your own business. Most store owners began their career in retail working for a large retailer and decided to set up their own store to increase their income and control their own destiny.
In addition, retail store owners provide jobs for many people, including students or individuals seeking a new career path after being downsized or retiring from a previous career.
How to obtain financing to open, expand, or buy a retail location
If you’re looking for financing as a retailer, consider applying for an SBA loan. The various loan programs offered by the Small Business Administration can help provide the financing you need to set up shop.
The SBA is a government agency that doesn’t lend you the money directly. Instead, it guarantees a significant portion of your loan. That lowers the risk profile for SBA’s lending partners, which include conventional banks and financial institutions, so they’re more willing to approve loan requests.
You also must put significantly less cash or equity down to qualify with an SBA loan. And, with an SBA loan, no covenants or collateral is required.
The most common SBA retail loans include the SBA 7(a) and Express loans.
SBA 7(a) loan for opening or buying a retail location
The 7(a) is the preferred SBA loan for retailers. You can use the funds made available through this program to purchase inventory, expand your location, open a new location, or even purchase a competitor’s store.
If you own an existing retail store and want to buy out a partner, you can utilize the funds from an SBA 7(a) loan for that purpose.
The maximum SBA loan for a retailer is $5 million. These term loans are generally repaid with monthly payments that include interest.
The payment stays the same for fixed-rate loans since the interest rate is locked in. However, for variable rate loans, it’s up to the lender to request a different payment amount if the interest rate changes.
SBA Express Loans for retailers
SBA Express Loans are a part of the agency’s 7(a) loan program. Up to $500,000 can be borrowed under an Express loan. The approval times are typically much faster for these loans.
If approved, the funds can be utilized for inventory, furniture, supplies, working capital, and real estate. Express loans over $25,000 have a collateral requirement. The SBA usually responds to Express loan applications within 36 hours.
The lenders ultimately make all eligibility and credit decisions. The market prime rate plus 4.5-6% interest is applied with repayment terms of up to 10 years.
How to apply for an SBA retail loan
Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced in handling applications for retailers, so they will diligently pursue your opportunity.
There are countless SBA approved lenders that are ready to offer you a retail SBA loan. These are just some of the top lenders:
| Rank | Bank | # Loans | Avg Loan | Avg Rate | Term (Mos) |
|---|---|---|---|---|---|
| 1 | Wells Fargo | 452 | $147,113 | 10.0% | 129 |
| 2 | TD Bank | 365 | $108,737 | 10.0% | 121 |
| 3 | The Huntington National Bank | 358 | $186,758 | 7.3% | 131 |
| 4 | U.S. Bank | 266 | $198,704 | 7.9% | 102 |
| 5 | JPMorgan Chase Bank | 209 | $227,442 | 8.6% | 116 |
| 6 | M&T | 207 | $140,479 | 8.8% | 108 |
| 7 | First Home Bank | 149 | $261,117 | 8.1% | 121 |
| 8 | Newtek Small Business Finance | 118 | $653,353 | 8.3% | 166 |
| 9 | Bank of Hope | 111 | $430,650 | 7.4% | 134 |
| 10 | Celtic Bank | 105 | $1,008,278 | 7.7% | 203 |
| 11 | Independence Bank | 94 | $141,223 | 6.5% | 120 |
| 12 | Commonwealth Business Bank | 93 | $943,871 | 6.9% | 212 |
| 13 | Five Star Bank | 67 | $238,097 | 8.0% | 125 |
| 14 | Hanmi Bank | 62 | $707,363 | 7.1% | 180 |
| 15 | Pacific City Bank | 62 | $1,176,387 | 6.9% | 236 |
| 16 | Live Oak | 60 | $1,503,917 | 7.3% | 136 |
| 17 | Eastern Bank | 55 | $79,316 | 9.8% | 72 |
| 18 | Byline Bank | 52 | $1,169,806 | 7.9% | 186 |
| 19 | Columbia State Bank | 52 | $201,140 | 7.7% | 121 |
| 20 | Citizens Bank | 50 | $814,351 | 7.5% | 202 |
Top retailing businesses obtaining SBA loans:
| Rank | Industry | # Loans | Avg Loan | Avg Rate | Avg Term(Mos) |
|---|---|---|---|---|---|
| 1 | Gasoline Stations with Convenience Stores | 569 | $1,251,224 | 7.1% | 247 |
| 2 | Beer, Wine, and Liquor Stores | 547 | $640,126 | 7.5% | 155 |
| 3 | Electronic Shopping and Mail-Order Houses | 484 | $304,711 | 8.9% | 121 |
| 4 | Pharmacies and Drug Stores | 330 | $646,844 | 7.5% | 125 |
| 5 | Supermarkets (except Convenience) Stores | 291 | $536,042 | 7.5% | 144 |
| 6 | Convenience Stores | 286 | $370,341 | 7.8% | 163 |
| 7 | All Other Misc Retailers (except Tobacco Stores) | 238 | $243,551 | 7.8% | 121 |
| 8 | Used Car Dealers | 217 | $322,357 | 8.3% | 159 |
| 9 | Sporting Goods Stores | 187 | $256,132 | 7.5% | 120 |
| 10 | All Other Specialty Food Stores | 167 | $274,508 | 7.5% | 113 |
| 11 | Automotive Parts and Accessories Stores | 164 | $330,922 | 7.5% | 136 |
| 12 | Women's Clothing Stores | 145 | $161,522 | 8.5% | 117 |
| 13 | Other Direct Selling Establishments | 138 | $338,430 | 7.7% | 119 |
| 14 | Other Building Material Dealers | 135 | $455,798 | 7.6% | 130 |
| 15 | Cosmetics, Beauty Supplies, and Perfume Stores | 135 | $304,856 | 8.3% | 118 |
| 16 | Other Clothing Stores | 116 | $211,760 | 8.0% | 124 |
| 17 | Hardware Stores | 113 | $550,024 | 7.2% | 142 |
| 18 | Pet and Pet Supplies Stores | 113 | $436,312 | 7.8% | 125 |
| 19 | Furniture Stores | 111 | $449,212 | 7.9% | 128 |
| 20 | Baked Goods Stores | 102 | $381,054 | 7.6% | 121 |
| 21 | Gift, Novelty, and Souvenir Stores | 100 | $267,990 | 8.0% | 122 |
| 22 | Jewelry Stores | 94 | $351,172 | 8.5% | 117 |
| 23 | Vending Machine Operators | 78 | $370,203 | 8.1% | 114 |
| 24 | Florists | 75 | $127,801 | 8.1% | 120 |
| 25 | Tire Dealers | 74 | $547,220 | 7.4% | 158 |
| 26 | Meat Markets | 68 | $393,375 | 7.8% | 136 |
| 27 | Electronics Stores | 68 | $319,656 | 8.4% | 117 |
| 28 | Floor Covering Stores | 67 | $295,757 | 7.4% | 124 |
| 29 | All Other Home Furnishings Stores | 66 | $271,655 | 8.0% | 127 |
| 30 | Shoe Stores | 64 | $305,498 | 7.8% | 125 |
| 31 | Used Merchandise Stores | 63 | $201,327 | 7.6% | 129 |
| 32 | Nursery and Garden Centers | 62 | $355,847 | 7.1% | 132 |
| 33 | All Other Health and Personal Care Stores | 61 | $348,708 | 8.2% | 120 |
| 34 | Food (Health) Supplement Stores | 57 | $207,991 | 8.3% | 110 |
| 35 | All Other General Mdse Stores | 52 | $272,081 | 8.2% | 127 |
| 36 | Tobacco Stores | 51 | $184,765 | 8.3% | 108 |
| 37 | Hobby, Toy, and Game Stores | 50 | $160,072 | 8.3% | 111 |
| 38 | Window Treatment Stores | 45 | $237,460 | 7.8% | 122 |
| 39 | Clothing Accessories Stores | 44 | $91,064 | 8.5% | 105 |
| 40 | Family Clothing Stores | 43 | $285,219 | 7.2% | 129 |