The baking market in Canada is a $8.6 billion dollar industry. It includes bread, cakes, biscuits, pastries and even frozen baked goods and desserts. With the increasing demand for special dietary products in the baking market, many entrepreneurs are looking to open their own bakeries. However, whether you’re trying to start a bakery, expand your services, hire new employees, or cover some unexpected cost, you’ll need access to some working capital.
Whatever type of bakery you’re running, one thing is sure. With great quality comes great financial responsibility. That’s why it’s important, for the sake of your business, that you get the best business financing whenever you need it. That’s right, like any type of homegrown business out there, owning a bakery surely comes with a lot of expenses that require just as much attention as a cake in the oven.
While managing your own bakery can certainly be expensive, a little bit of financing is helpful in more ways than one. You could use your business loan to cover the costs of:
A business loan can help finance the ingredients you need to create delectable bread, cakes, muffins, tarts, cookies, pies and other delicious treats. This includes dry ingredients like flour, white/brown/icing sugar, yeast, baking powder/soda, sprinkles, chocolate chips, syrups, and cocoa powder. It can also be used to finance raw ingredients such as fresh or candied fruit, nuts, eggs, cream cheese, butter, shortening, cooking spray/oils and more. If you plan on offering vegan or gluten-free baked goods, you’ll also need to purchase separate ingredients for that.
Keeping tabs on your inventory can be difficult. Check out the best ways to manage your small business inventory.
Baking is an art, it requires great precision and top-quality baking equipment. Unfortunately, paying for industrial stoves, ovens, blowtorches, hand or planetary mixers, freezers, refrigerators, cooling racks, food processors, and other crucial equipment, upfront is very expensive. Fortunately, a business loan can help cover and spread the costs.
Spatulas, measuring cups/spoons, rolling pins, knives, dough cutters, cake and pie pans, cookie scoops/cutters/trays, cutting boards, decoration tools and more are small expenses that quickly add up. As a bakery, these are necessary baking tools that you must have on hand in order to properly operate. In addition, you need to consider the items you’ll need for takeaway and delivery such as cake/pie boxes, doggie bags, wax paper, string/ribbon and more.
With time, equipment will wear down and break, causing unexpected needs for funds to repair or replace equipment. Depending on demand, you may also need to expand your kitchen or renovate your sitting area to better accommodate your customers.
Learn how to expand your business with new capital.
In order to properly run your bakers, you’ll need a team to support you. Waiters, cashiers, cooks, cleaners, are just some of the types of employees you’ll need to hire to run the front end of your business. In addition, you’ll need to provide them with aprons, smocks, hairnets, chef hats, name tags, oven mitts, and more for safety and branding.
Check out how to set up payroll for your small business.
| Amount | APR | Term (months) | ||
 | 1k-300k | Fee-Based: Starting at 9% | 12- 60 | Learn more |
 | 5k-300k | 8% – 29% | 6-18 | Learn more |
 | 1k-500k | +5.9% | 3-60 | Learn more |
 | Up to 300k | 8%-22% | 6-12 | Learn more |
 | 5k-500k | - | 6-18 | Learn more |
 | 100K + | 6.05% + | 60 | Learn more |
 | 5K-100k | 15%+ | 12-18 | Learn more |
Whether you apply with a bank, credit union or alternative lender, the requirements for approval will vary. Each lender has its own underwriting guidelines that they use and abide by. However, there are a few factors that are commonly used to evaluate a business’s ability to repay debt.
Find out if your business is a desirable candidate for financing.
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As previously mentioned, bakeries require an array of equipment to properly run their business. Unfortunately, paying for the equipment outright is very expensive. That’s where an equipment loan comes in. An equipment loan works like a traditional business loan but, the equipment you purchase acts as collateral to secure the loan. This security makes equipment loans easier to qualify for and get a better rate.
As a bakery, you’re likely to offer catering services for big events like weddings, baby showers, birthday parties, Christmas parties, and other events and holidays. While some clients pay their invoices quickly, others may lag behind. This, in turn, can cause a shortage of cash flow. That’s where invoice financing can help. Invoice financing works by selling your outstanding invoices to a lender at a discount. This ensures you get the money you need quickly to run your business.
A merchant cash advance is an expensive but quick way of obtaining a lump sum of cash. This form of credit works well for bakeries and businesses that accept cards (credit, debit) as a form of payment. The reason is, a merchant cash advance is not a typical loan, it provides a lump sum of cash in exchange for a portion of your future card sales.
Running a bakery involves managing a lot of inventory. You need to keep tabs on your takeout items like the cake/pie boxes, doggy bags, wax paper, as well as the ingredients for baking all your goods. However, sometimes, miscalculations or sudden increases in demand can lead to shortages and urgent needs for more inventory. In such cases, a business line of credit can help fund small emergency expenses like these. You’re able to withdraw money up to a certain credit limit whenever you need and you only need to pay interest on the amount you use. It is a versatile and highly accessible form of credit that every business owner should have.
There are a number of financial services for small businesses available through the Government of Canada. One of the most well-known and most accessible loans available is the Canadian Small Business Financing Program (CSBFP). The CSBFP is partially backed by the government and you can apply for it with any major financial institution such as banks and credit unions. You can qualify for a maximum of $1 million dollars in funding for your business expenses. However, loans for equipment purchases and leasehold improvements only go up to $350,000.
True, running your own bakery can be extremely expensive and time-consuming. However, with an appropriate business loan, you’ll be able to put your mind at ease and concentrate on what’s really important, the success of your shop. Loans Canada can help you find a lender that offers the options and terms you want, including:
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