SBA Liquor Store Loan

SBA Liquor Store Loan
Liquor Store Loan

What You Need To Consider Before Getting an SBA Liquor Store Loan

Deciding to purchase a  liquor store is not only a wise investment, but it is also a great way to create a stable income. SBA loans, which are loans guaranteed by the Small Business Administration, provide an excellent opportunity for you to leverage the money you have while getting the funds you need for working capital. The money from an SBA Liquor Store Loan can also be used for marketing, inventory and business improvements. However, this business opportunity may not be as passive as you may think it is.

There are several things that you will need to take into consideration before you purchase a liquor store.

Can You Afford the down payment and starting costs?

Before you sign any papers, you need to take some time to think about how much money you will have on hand towards this investment. Did you know that with an SBA loan you may be able to become the owner of a liquor store with just 10% down?

With the low down payment, you will be able to buy into a higher income by leveraging your money. This down payment can be in the form of:

Cash

Home equity line of credit

Retirement (401K, etc)

Gift

Another investor

There are online funding calculators that you can use to really know how much you can afford to buy.

Keep in mind that when you get an SBA loan for the purchase of a liquor store, you will also have the money you need for other business expenses such as payroll, marketing, business improvements, and inventory.

With conventional loans, not only is it more difficult to get them approved, but these types of loans often require higher down payments usually in the 20-25% range. In addition, many conventional lenders offer loans that have shorter repayment terms, and the balloon payments do not leave much money available for miscellaneous business expenses.

With that said, if you plan to apply for an SBA Liquor Store Loan, you can begin the pre-qualification process online. This is a great way to get ahead of the application process, and it will also be beneficial when it comes to negotiating the terms of the loan. There are no credit checks associated with SBA loans, and business owners typically receive pre-qualification letters within 24 hours.

Stand out from your competition

If you want your liquor store to stand out from among the numerous other liquor stores in your area, you will need to know what your customers want and give it to them at a price that is competitive but still profitable.

This means that you will not only need to have a large inventory, but the inventory should be a complete selection of what your customers are looking for.

Depending on the laws in your state, you may be able to upsell your customers with other products such as:

Tobacco products (cigarettes, cigars)

Groceries

Party supplies (cups, party favors, etc)

As with any other type of brick and mortar business, it is critical that your customers’ shopping experience is a pleasant one. This type of business thrives on repeat business. Make sure your liquor store is clean and always provide friendly and helpful customer service.

Stay Updated On The Industry Trends And Consumer Preferences

As previously mentioned, you will need to know what your customers want and sell it to them at the right price if you want to stay in business.

You will need to do more than simply make sure your liquor store is in the right location. The industry is forever changing as trends come and go, and customers’ taste changes with them.

A great liquor selection has the following characteristics:

Variety of alcohol categories

Variety of alcohol brands

Variety of sizes

Price ranges that are aligned with your target audience

For example, the following are some trends that have been popular in the past. The digital revolution has changed the way customers learn about new products on the market. Your liquor store will need to have an online presence if you want to stay competitive.  That means a website listing the products available in your store and all pertinent information that a customer may need to make the decision to shop at your liquor store.

Another popular trend has been the increased interest by consumers in wanting to know the backstory behind the product they are purchasing. They want to know things such as where the alcohol is manufactured and about the owners.  You can do this with an “about us” page on the website that will tell your customers about you and why you got in to the business.  Remember, people buy from people that they like, so make your about us page a good one and you may gain customers just from that.

So, what else does this mean? You and your employees must be very familiar with the inventory you are selling if you want to keep customers coming through the door.   

Know The Regulations And Licensing Requirements In Your Area

There are different licensing regulations depending on the city and/or state you live in. Some of these regulations are enforced at the state level, while other jurisdictions may enforce these regulations at the county or city levels.

Although this is great news because this prevents national chains from monopolizing an area, it also means that you will need to do in-depth research to make sure your store remains in compliance. You will also need to understand what rules are in place if you ever want to sell the store.

One resource you can contact for more information in addition to your local or state agencies is the Alcohol and Tobacco Trade and Tax Bureau.

Owning A Liquor Store Is Not A Hands-Free Or Passive Business

Even though owning a liquor store can provide you with recession-proof income when compared to other types of retail, these types of business operate more efficiently when they are owner-operated. It will be your responsibility to make sure you are monitoring the trends and changes in the industry regularly.

A lot of inventory and cash exchanges hands in this type of investment. These transactions must also be monitored to reduce theft by employees and shoppers.

In other words, you will need to have basic information about business administration. Be prepared to handle employment, marketing, payroll, sales, customer service, accounting, and other business tasks.

Purchasing a liquor store is a stable investment and it can be financed with and SBA Liquor Store Loan. However, it is important to know that this type of business will require you to have a hands-on approach as you will need to monitor the business on a daily basis. You can leverage your money so you can have working capital for other business needs.

Neal Business Funding has a variety of loans including SBA loans to finance your liquor store purchase.  Call 315-699-4703 or Fill out the contact form for consultation on a loan.

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