Antique shops are a unique niche that maintain a lot of popularity among consumers. Many use digital retail platforms while others take advantage of markets or have a storefront. Often, successful antique shops will incorporate all three of these sales opportunities. The art of balancing procurement with sales requires both experience and adequate business funding.
What Costs Are Involved With Owning an Antique Shop?
In addition to the standard costs of operating a business, there are many expenses that are unique to antique shops. By understanding what the real costs associated with the business will be, you can make plans accordingly. Business loans are available to assist with expenses, including:
The cost of sourcing, appraising, and procuring inventory is a major component of the antique business. You will need to spend time in research, travel; and, depending on the antique, on a professional to appraise it. These expenses are in addition to the actual cost of the antique itself.
Another expense is in presentation, a very important part of antique sales. You need to not only purchase aesthetically appealing displays, most dealers look to minimize anachronisms in their shops. The cost of displaying vintage items, and the price to maintain it, can add up quickly.
All businesses have continual expenses. These overheads refer to the cost of leases and utilities, as well as subscriptions to things like accounting services and costs to operate digitally.
No company is exempt from the need for marketing. Whether you rely on online solutions or stick to more traditional methods, there is a price tag associated with raising awareness for your company. Making an investment in marketing can help grow profits, though it comes with upfront costs (a big reason antique shops use business loans).
Depending on the structure of your company, you may have staff on payroll. Especially if you are trying to expand your operations, the immediate costs of employees are significant. It can be staff to handle your online operations or salespeople to attend events. Since hiring staff is an investment in your business’ future, it is a well-suited use for your business loan funds.
There are many avenues you can pursue when looking into business loans. The correct approach depends on your business history, your credit profile, and several other factors. The main paths to a business loan are:
Banks: Major financial institutions are usually viewed as the go-to solution for business loans due to competitive rates. However, banks are only able to offer these rates because they have strict lending standards. As a result, it can be difficult for new businesses or those with poor credit to access a loan.
Credit Unions: Another common approach is through credit unions. While these lenders feature more lenient requirements than a bank, the rates are often exclusive to members. The rates are competitive, though it can be tricky to become a member. Since it is usually a lengthy process to get approved, it may not be the best approach (especially if you need the funds soon).
Alternative Lenders: Particularly for those with a less-established track record and individuals with poor credit, alternative lenders are a good way to go. Offering flexible lending standards, they are also a lot more convenient than conventional methods. Most approval processes are very efficient and take place completely online. While they do have higher interest rates, alternative lenders still enable business owners to access loans where they otherwise could not.
Government Funding: In order to support business owners, the Canadian Small Business Financing Program (CSBFP) offers loans of up to $1,000,000. Of these funds, as much as $350,000 can go toward the acquisition or repairs of equipment and lease holdings. Since antique businesses deal largely in inventory, these loans can offer substantial funds with which owners can grow their businesses.
Prior to applying for a business loan for your antique shops, it’s important to have an understanding of what you will need to apply. Certain criteria must be met and you will be required to supply specific documentation to substantiate the information you’re providing. This includes:
Personal Credit Score
As the business owner, you will need to provide your personal credit score. Naturally, the higher your credit, the more competitive the rates you can access. While credit is not the sole consideration of a lender, it does showcase your financial situation and repayment history.
Business Credit Score
Separate to your personal credit, you will need to supply the credit information of the business itself. This is to assess the track record of the company, along with any debt under its name.
To substantiate the claims you are making when pursuing the loan, you will need to give the lender access to your:
Bank statements: These documents show the financial assets of your company, ongoing payments. They highlight the history of the company and can help establish its viability in the market.
Tax returns: Another set of documents required is your tax returns, both business and personal.
Sales proof: You will need to supply proof of your sales. These can include purchase orders or be receipts of transaction histories. Lenders may also ask for certain business revenue statements such as your cash-flow or income statement. Since antique shops are an inventory-focused business, it makes sense that you would need to prove that you can move the product (and thus get a return on investment for your loan).
Finally, you are going to need to provide a well-established plan for your antique shop. You will have to specifically detail how you plan to use the loan amount, as well as how those investments will give you a return.
If you are looking for an alternative to business loans, there are other financing opportunities that are worth investigating. In some cases, the structure of these approaches is better-suited to the antique industry. Options include:
Business Line of Credit
A business line of credit is a popular avenue for those who need ongoing access to funds. Functioning quite similarly to credit cards, most lines of credit have a reasonably high limit and low-interest rates. Since you only need to pay interest on the funds used, and once it’s repaid you can use the full funds once more, it can help antique shops with inventory procurement over the long term.
Merchant Cash Advance
This type of financing is a loan that you leverage against a future order. Effectively, you can borrow a portion of your shop’s annual revenue. You repay the amount, in addition to an established fee and an agreed-upon percentage of your daily sales. Especially for antique shops that deal with online sales or credit card payments, a merchant cash advance can be a useful type of financing.
Most applicable to antique shops that also offer restoration services, equipment loans can help finance the tools you need to do the work. If you plan on investing in machinery that will be used to grow your sales, an equipment loan is worth looking into.
How can I ensure I get a business loan to fund my antique store?
There are steps you can take to make yourself more eligible for a loan and improve your likelihood of getting a competitive rate. The most important steps include:
Get Multiple Quotes: Visit a reputable loan comparison site to learn what loans you qualify for and what rates to expect.
Improve Your Credit: If your credit is stopping you from getting optimal terms on your loan, there are some steps you can take. Start with a secured credit card and use it to slowly build your credit. Pay down debt if you are able. Ensure that you make your payments in full each month to prevent issues on your report.
Use Collateral: If you are in need of a loan quickly, you can consider securing the financing with an asset. Whether it is equipment or real property or a vehicle, putting something down can drastically improve the financing terms for which you’re eligible.
Can I get a business loan if I have bad credit?
Yes, you can access a loan with poor credit if you use an alternative lender. When dealing with alternative lenders, it’s important to keep an eye out for high-interest rates. While a marginal increase is to be expected, some lenders offer very steep rates. Use a loan comparison service to determine which places have the most competitive loan terms.
What costs should I look out for when financing my antique store with a business loan?
The main costs you should consider when using a business loan to fund your antique shop are:
Interest Rates: Interest is the amount you will repay in addition to the principal amount of funds you access. Consider the compounding frequency and the real amount you will end up paying by the end of the term.
Term Length: The next thing to consider is the amount of time over which you can expect to repay the loan in full. Longer terms have lower monthly payments, though lead to more interest paid overtime. Conversely, shorter terms result in less interest and higher monthly payments.
Loan Amount: Finally, carefully consider the amount of funding you will need. You want to request sufficient funds to achieve your goal while ensuring that you don’t take on too much debt.
When you pursue financing, it’s important to do research to be as prepared and informed as possible. Antique shops can gain substantial benefits from the cash influx offered through a business loan, so long as it’s the right fit. Having a thorough business plan and using the loan to grow your company can help you keep a foothold in this ever-developing economy.
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