Retailer Funding: The Essential Guide to Retailer Loans

Female cafe owner wearing mask collecting payment by credit card

Understanding your funding options and applying for the right small business loan for your business can be confusing. Our Industry Funding guides make it easy to compare your funding options and choose the right loan for your business, whether you’re just starting up or are looking to grow an existing business.

Getting Started with Retailer Funding

According to the National Retail Federation, there are over 1 million retail establishments in the United States—98% of which are small businesses.

Retail businesses include any enterprise that sells finished goods and/or services, such as salons and spas, specialty stores, clothing stores, convenience stores, furniture stores, electronic and appliance stores, hardware stores, and more. Regardless of what product or service you specialize in, the retail sector is distinguished by a number of unique characteristics, such as:

  • Seasonality: Many retailers are dependent on seasonal purchasing patterns and need to stock up on inventory and merchandise before their busy season. Dips in cash flow, including predictable lulls, can make it difficult to purchase the inventory you need when you need it.
  • Storefront: Retail businesses need to present an inviting atmosphere in order to draw in foot traffic and encourage purchases. The circumstances surrounding COVID-19 have created further complications as retail businesses must make adjustments to their storefronts to help control in-store traffic and discourage customers from spending more time browsing.
  • High turnover: Employee turnover is high in the retail industry, creating cash flow challenges for businesses who must hire and train new employees.
  • Technology: Retail businesses need attractive and easy-to-use websites to thrive, as well as up-to-date point of sale systems and secure customer relationship management software.
  • Buyer behavior: 73% of consumers are “omnichannel” shoppers who use multiple channels during their shopping journey, such as browsing and reading reviews online before purchasing in-store. Adjusting to this new buyer journey often requires investment in new channels and technologies.

All retailers can benefit from an infusion of working capital, whether you’re looking to open a new business, fill seasonal cash flow gaps, stock up on inventory, or expand your existing retail store.

Retailer Loan Options

Multiple types of funding are available to help retailers overcome challenges and continue to grow. Long- and short-term funding is available, as well as secured and unsecured loans, including:

  1. SBA retail business loans
  2. Bank loans
  3. Alternative lending
  4. Business lines of credit
  5. Equipment financing
  6. Inventory financing

Let’s take a closer look at these options:

1. SBA retail business loans

The Small Business Administration doesn’t provide funding directly—instead, the SBA guarantees loans issued by commercial lenders like banks or credit unions up to 85%. This reduces the risk to the lender and encourages lenders to issue more retailer loans.

Because the risk to the lender is lower, SBA loans typically offer the best terms and rates. However, the application process for SBA funding is rigorous, with strict eligibility requirements and extensive application forms that require years of detailed personal and business financial information. It can take weeks or months to process your application, and approval is never guaranteed. Most applicants are rejected, especially those with low credit, a history of unstable cash flow, or those seeking short-term financing for retail business.

SBA loans are available to both start ups and existing retailers. Several SBA loan options are available, but there are typically two types of SBA loans that are ideal for retailers:

  • 7(a) Guaranteed Loans: With loans up to $5 million available, longer repayment terms, and low interest rates, 7(a) Guaranteed Loans are the most popular form of SBA funding. These loans typically require collateral but have the fewest restrictions on how you use your funding. Express loans are also available with a turnaround time of 36 hours or less and typically don’t require collateral for funding under $25,000.
  • 504 Local Development Company Program: 504 loans are long-term, fixed rates loans that are most commonly used to purchase real estate or equipment. These loans are provided by CDCs through commercial lending institutions and require the borrowing business to use the financing to create or retain jobs or uphold other public policy goals, such as rural development, revitalizing a business district, or supporting minority-owned businesses.


  • Lowest rates and typically better terms
  • Large loan amounts are available, up to $5 million
  • Most applicants are rejected, especially those with low credit
  • Extensive application requiring years of detailed business and personal financial information
  • Can take weeks or months to process with no guarantee of approval
  • Some loans restrict how you can spend your funds

2. Bank loans

Retailers may also be able to access funding through commercial lenders like banks or credit unions. Terms and rates are competitive, but are not as low as SBA-guaranteed loans and will typically depend on the size of the loan and your credit history. Lending requirements are also generally not as strict as the SBA, especially if you have an existing relationship with your lender, but it can still be difficult for retail businesses to get financing due to the presumed risk level of the industry and factors like volatility and unstable cash flow.

Similar to SBA loans, applications for retail business loans from banks can take weeks or months to process with no guarantee of approval. Banks typically prefer to lend to large businesses or issue loans for larger amounts, making it tough for small retailers or retailers looking for smaller loan amounts to access funding from commercial lenders.



  • Low rates and good terms depending on size of loan and credit history
  • Slightly less strict application requirements than SBA loans
  • Many applicants are rejected, especially small loan amounts and applicants with low credit
  • Extensive application requiring detailed business and personal financial information
  • Can take weeks to process, with no guarantee of approval
  • Some loans restrict how you can spend your funds

3. Alternative funding

Alternative funding from direct online lenders like Greenbox Capital® is easier to acquire than SBA or bank retail business loans. These lenders base your approval on the overall health of your business, with flexible lending requirements that place less emphasis on factors like your credit score. Approval can be made in less than 24 hours, making alternative funding one of the best options for retailer loans. These lenders are also more likely to lend to newer businesses, though some will not lend to start-ups or businesses in operation for less than 6 months.

Because the underwriting process is less strict for alternative lenders, funding from these sources typically has higher rates than SBA or bank loans, often with daily or weekly repayment terms depending on the type of funding you’re seeking.

Multiple types of short- and long-term funding are available depending on your medical practice’s needs, including lines of credit, alternative small business loans, and real estate collateral loans, as well as non-loan financing such as merchant cash advances and invoice factoring, typically with no limits on how you use your funding.



  • Faster approvals with funds deposited in as little as 24 hours
  • Easier lending requirements
  • No restrictions on how funds are used
  • More likely to fund younger businesses
  • Higher rates
  • Daily or weekly repayment terms depending on type of funding

4. Lines of credit

Business lines of credit are the most flexible form of retailer funding. Lines of credit function similarly to business credit cards but with longer terms and lower rates, allowing you to draw and repay from the line at any time. There are no restrictions on how funds are used and you’ll only ever pay interest on the amount you borrow, making lines of credit ideal for unexpected expenses, occasional purchases like inventory or new equipment, or other major expenses that don’t require a larger loan but which can still strain your cash flow.



  • Only pay interest on the amount you borrow
  • Draw and repay funds as needed
  • No restrictions on how you spend your funds
  • Lower rates and higher limits than business credit cards
  • Tougher application requirements
  • Lower amounts than other forms of funding

5. Equipment financing

Equipment financing is designed to help retailers purchase expensive equipment such as new computers, point of sale systems, delivery vehicles, specialty equipment, store fixtures, and more.

Lenders will typically supply 80-100% of the cost of the new equipment. The equipment serves as collateral to secure the loan so this type of financing typically has lower rates, and is typically repaid in regular monthly installments with the length of the term dependent on how long the lender anticipates your equipment will last.



  • You own the equipment instead of leasing it
  • May be easier to qualify for because equipment serves as collateral
  • Funding can only be used to purchase specific equipment
  • Higher rates than other funding types
  • Very specific equipment or equipment that goes out-of-date quickly may have higher interest rates

6. Inventory financing

Similar to equipment financing, inventory financing is designed to help retailers replenish their stock without putting up additional collateral because the inventory itself is used to secure the loan. Inventory financing typically takes the form of a business line of credit, a short term loan, or a term loan with the specific purpose of purchasing inventory.



  • Financing can take multiple forms
  • May be easier to qualify for because inventory serves as collateral
  • Funding can only be used to purchase inventory
  • Higher rates than other funding types

What Is The Best Retailer Loan?

The best retailer loan depends on your business’s goals. Your funding, including the amount you borrow and your repayment terms, should always serve a specific purpose that aligns with your business’s goals, such as replenishing inventory ahead of a busy season, purchasing new equipment or technology that will help you conduct more business, or boosting your business’s marketing.

For short-term funding, non-loan forms of financing such as merchant cash advances or online invoice factoring can provide a quick infusion of working capital. These types of short-term financing can be used to purchase inventory, fill in cash flow shortages, or market your business to a wider audience.

For long-term funding, SBA 7(a) loans offer the best rates and terms but are the most difficult to acquire. Retail business loans from banks may be easier to acquire, but can still be difficult due to the perceived risk and cash flow volatility. If neither of these options are available to you, alternative lenders also offer long-term funding like small business loans or collateral business loans.

For fast funding, your best option is always an alternative lender. These lenders can approve and deposit funds in as little as 24 hours, while SBA and bank loans can take months with no guarantee of approval.

How To Use Retailer Funding

Retailer funding can help retail businesses in all specialties overcome the unique challenges of their field, including:

  • Seasonality: Retailers are especially susceptible to seasonal fluctuations in supply and demand, leading to inconsistent cash flow that can make it difficult to maintain operations throughout the year or acquire funding needed to navigate challenges or continue to grow.
  • Competition: Retail businesses are under constant pressure to attract and retain customers. Setting your business apart from other retailers in your area or big box stores with lower price points often requires a financial investment that many retailers may struggle to make.
  • Customer behaviors: Customer behaviors are changing rapidly, especially thanks to the COVID-19 pandemic—59% of customers say they’re more likely to continue curbside pickup after the pandemic, for example. Customers want to be able to purchase items online for delivery or curbside or in-store pickup, which requires retailers to have an easy-to-use website and a streamlined order fulfilment infrastructure.
  • Inventory: Inventory management—knowing what to buy, when to buy it, and when to mark down or clear out underselling products—is an ongoing challenge for retail businesses. Inaccurate inventory records cost companies on average 10% per year, but inventory management systems can be expensive to purchase and implement in addition to the time it takes to train employees how to use them properly.
  • Technology: Technology such as security systems and point of sale software that enables tap payments for credit and debit card processing may require a significant investment in order to keep up with competitors.
  • Employee turnover: Employee turnover is especially high in retail. Losing employees and having to rehire and train new staff can drain your business’s cash flow.
  • COVID-19: Many small retail stores were forced to close or alter operations during the early phases of the COVID-19 pandemic, but fixed expenses like rent and utilities still need to be paid. As businesses reopen, new restrictions like capacity limits and other strict guidelines may continue to impact your revenue while also increasing your operating costs.

Retailer loans can be used for more than navigating the challenges faced by retail businesses—they can also be used to grow or expand your business, such as:

  • Upgrading equipment: Up-to-date point of sale and inventory management systems can help you improve inventory control and provide a better experience for your customers.
  • Updating your website: Building a website that allows you to respond to customer inquiries and sell orders online both locally and internationally can help you get ahead of your competition during and after the COVID-19 pandemic. Don’t be afraid to hire an agency or web developer to help you build or update your website if you aren’t confident in your own web development abilities.
  • Setting up online order fulfilment: Create a workflow where you fulfill online orders and ship packages to customers across the country or around the world.
  • Expanding your space: Expand to a second location, upgrade your current furnishings and fixtures, renovate your existing space to make room for more inventory, or create the facilities you need to offer online order fulfilment and shipping.
  • Boosting your marketing: Embrace multi-channel marketing and create offline and online advertising campaigns to reach more people and generate more revenue throughout the year, even during slow seasons.
  • Stocking up on inventory: Use your funding to purchase additional inventory for your store opening, stock up ahead of seasonal rushes, or take advantage of bulk discounts for unspoilable inventory.
  • Adopting customer relationship management: Invest in a safe and secure customer relationship management (CRM) platform so you can track purchases and preferences and offer personalized promotions and service to inspire loyalty.

How To Apply for a Retail Business Loan

Retailers are often considered to be a riskier loan applicant because of factors like seasonality, cash flow shortages, and difficulty predicting demand. Here’s what you need to know before applying for financing for your retail business:

  • Retail businesses are particularly susceptible to seasonality, economic fluctuations, and volatile demand. This can result in inconsistent cash flow that may make these businesses seem riskier to lenders.
  • Your lender may ask you to provide a business plan that explains how you intend to use your retail business loan. Business plans will always be required for SBA loans and often bank loans, but are not always necessary for alternative lenders (though it’s a good idea to have one prepared just in case).

The steps you’ll follow when applying for a retailer loan will be similar to other industries.

Learn more about how to apply for small business funding

Frequently Asked Questions

Can I get a small business loan with bad credit?

Yes, you can get a small business loan with bad credit, but only certain lenders will consider financing businesses with low credit scores. SBA-guaranteed and bank loans have strict credit score requirements, but alternative lenders are more lenient and are typically the best option for retail businesses with bad credit.

What if I’ve already received funding from another lender?

Some lenders will evaluate your debt-to-income ratio when reviewing your application, and may not fund you if you’ve already received funding from another lender and are still repaying it. Depending on the strength of your business, alternative lenders often fund retailers who have already received an advance.

Greenbox Funding Options for Retailers

As an alternative lender, Greenbox Capital® can approve more retailer loans than traditional lenders. We can also approve your retail business funding faster, with funds deposited in as little as 24 hours. We provide several types of small business funding to help grow your retail business, with funding from as low $3,000 up to $500,000.

Greenbox Capital® funds all retail specialties. Our expert Funding Advisors will work closely with you to determine which funding option will help you achieve your goals without compromising your business’s cash flow.

Learn more
Contributor and expert in finance and loans, business and economics