Top Banks for SBA Grocery Store Loans

Last update: Aug 10, 2022

 

  find me a grocery Store lender

Everyone has to eat – multiple times per day. And unless they grow all of their own food, they’ll be making multiple trips to the grocery store every month, if not every week or two. The same can’t be said for very many industries.

While margins are typically 1-3% for national chain grocers, independent grocery stores often sell the same items for higher margins because of the convenience they offer. And, people in smaller communities often prefer to “shop local” and patronize community grocers over chains and superstores.

Grocery stores were one of the businesses that stayed open and had a steady business during the pandemic. During lockdown, people ventured out very little, but one of their regular destinations continued to be the grocery store.

An SBA loan for a grocery can be used for buying equipment (shelving, cash registers, coolers, etc.), purchasing inventory (bread, milk, staples, etc.), refinancing debt, expanding, or even purchasing a new store.

 

Benefits of owning a grocery store

The biggest benefits of owning a grocery store are owning your own business and being involved in a much-needed industry. Grocery stores and markets have been serving locals for centuries, and there is no sign that smaller grocery stores won’t still be valued by shoppers in the future.

 

How to obtain financing to buy a grocery store

If you’re looking for grocery store financing, 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 your operation.

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 are required.

The most common SBA grocery store loans include the SBA 7(a) and Express loans.

 

SBA 7(a) loan for buying a grocery store

The 7(a) is the preferred SBA loan for grocery stores. You can use the funds made available through this program to purchase equipment and inventory, refinance debt, expand your current location, or buy a competitor’s grocery store.

If you own an existing market 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 grocery store 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 grocery stores

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 equipment and inventory purchase, 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 on SBA loans. 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 grocery store loan

Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced handling applications for grocery stores and markets, so they will diligently pursue your opportunity.

There are countless SBA approved lenders that are ready to offer you a brewery SBA loan. These are just some of the top lenders:

RankBankCityState# of LoansAvg Loan $Avg Interest
1U.S. BankCincinnatiOH52$584,0695.2%
2The Huntington National BankColumbusOH33$374,5585.5%
3Bank of HopeLos AngelesCA28$1,245,6185.2%
4Metro City BankDoravilleGA21$1,824,7624.7%
5TD BankWilmingtonDE20$363,7006.4%
6Wells FargoSioux FallsSD17$348,3297.0%
7Newtek Small Business FinanceLake SuccessNY16$918,8136.0%
8Byline BankChicagoIL13$1,418,7695.7%
9Commonwealth Business BankLos AngelesCA13$745,8465.0%
10First IC BankDoravilleGA12$2,140,1674.8%

  find me a Grocery Store lender