The retail industry is a large and diverse trade sector that incorporates a variety of business types. For years, the retail industry consisted mostly of large department stores and chains, but with younger consumers now demanding a more inspiring and tailored experience, the attraction to small, local retail businesses has increased. With the increase in retail business sales, growing trends, and the need for financing options come to the focus. Just as retail businesses come in various sizes and types, so does the working capital finance available to retail business owners.
In this article, we’ll discuss the various financing options available to retail businesses. We aim to provide you with enough information to find the option that best meets the needs of your business.
Working Capital Finance Options for Retailers
A term loan is a lump sum you borrow from a bank or alternative lender. You receive the funds upfront then repay it along with interest in fixed amounts over a set period or term. Many borrowers favour term loans because of their flexibility, low-interest rates, predictable repayment schedules, and fast approval processes. However, term loans vary in amount, and repayment periods can range from months to years.
One of the fastest funding options available, a merchant cash advance, is a loan product tailored to businesses that receive the bulk of their revenue via credit card transactions. As a business owner, you receive the loan funds upfront. The lender takes a fixed percentage of your daily credit or debit card sales to repay the loan.
A personal loan is a financing option that can help you with all kinds of financial needs, including setting up your business. A personal loan is a secured loan; hence using the personal loan amount for business can be a good use of a personal loan. Moreover, personal loans are unsecured loans. So none of your valuables are needed to put at risk for getting the approval of the loan.
A business line of credit is a rolling credit that works similar to a credit card. This is an agreement between the lending institution and the individual where the lender assures the individual to lend a certain amount of money. Unlike a traditional business loan where the loan is disbursed at once, the borrower can withdraw the loan amount in small parts whenever there is a need. The borrower has to pay interest only on the amount that has been withdrawn, not the whole granted amount.
The borrower can maintain the balance by repaying the amount that has been withdrawn. A borrower can access working capital finance from the line of credit as long as the maximum amount doesn’t exceed. A borrower should make the minimum payments every month to avoid paying a higher interest rate. A business line of credit is generally used for longer durations, like 10 to 15 years. Hence with a better withdrawal and repayment facility, you can opt for a business loan of credit as a source of business funding. Enjoy working capital finance for your business.
An equipment loan is a secured loan that is similar to a car loan. An equipment financing loan helps businesses financially to own equipment for the business. One can buy any instrument needed for business with the help of equipment loans. An equipment loan is self-secure as the equipment you purchase itself serves as the security of the loan. But you have to keep in mind that even if the equipment shows any malfunction, you will have to continue to pay the loan.
At Oxyzo, we offer unsecured loans to businesses to manage their working capital finance requirements. The loan granted is up to 2 crores, and there is minimal documentation. Why wait for more? Contact us now!