Business Loans For Florists

Business Loans Florist

Florists in Canada offer a number of services including the sale of cut flowers, potted plants, trees, seeds, bulbs, nursery stock, and floral arrangements. While flowers can be bought in supermarkets, florists provide individuals purchasing floral arrangements for weddings and other big events with personalized customer service and coordination. According to a report by IBISWorld, in Canada, there are 2,809 Florist shops, which accounts for a market size of $742 million. The flower shop industry is quite unique with no major players and no business with a market share of more than 5%. 

Check out this guide on starting a business in Canada.

Funding Your Flower Shop With a Business Loan

Managing a flower shop, like any business, can be a challenging financial task. As the proprietor of your florist shop, chances are you have lots of different expenses to consider. From paying your employees to managing your rent, you also have to make sure neither your inventory nor business begins to wilt. Thankfully, a business loan can help you strengthen your finances and take care of all your tough expenses.

Market Your Flower Shop

As a small business, you’ll need to create some brand awareness to help boost sales. To do so, you may start a website to build an online presence or create print ads to hand out in your neighbourhood.  Marketing is typically very expensive, but with a business loan, you can help spread out the cost. 

Florist Equipment

If your florist shop offers delivery, you’ll need some funds to buy a delivery van or truck, and customize it with your company logo. You’ll also need to purchase and install a credit/debit card processor and digital cash register to process customer payments. Other equipment you may need to finance include:

  • Large standing display coolers and shelving units 
  • Blooming gardens with hydration and preservative dosing systems
  • A temperature-controlled greenhouse

Florist Supplies

There are a number of smaller flower shop items and materials you’ll need to properly offer your services. While these costs may be small individually, they can quickly add up. A business loan can help finance packaging tools such as pots/containers, floral foam, ribbon/string, greeting cards/envelopes, and wrapping material. It can also help finance florist tools such as pruners, shears, wire cutters, floral snips, spades, trowels, and more. 

Check how you can reduce common expenses to boost profits.

Flowers and Flower Related Inventory 

If you’re not planning to grow your own flowers, you’ll need enough funds to buy your inventory from a reputable grower, farmer, or wholesaler. If you are growing part of your inventory, you’ll need enough funds to purchase planting supplies such as soil, seeds, plant food, fertilizer, and more. Flower businesses are quite seasonal, so you’ll also need to have enough funds to maintain extra inventory for busy seasons such as Mother’s Day, Valentine’s Day, and wedding season. 

Best Business Lenders For Florist Shops

AmountAPRTerm (months)
SharpShooter Funding1k-300kFee-Based: Starting at 9%12- 60 Learn more
OnDeck5k-300k8% – 29% 6-18Learn more
Lending Loop1k-500k+5.9%3-60Learn more
Thinking CapitalUp to 300k8%-22%6-12 Learn more
Merchant Growth5k-500k-6-18Learn more
BDC100K +6.05% +60Learn more
IOU Financial5K-100k15%+12-18Learn more

Cost of Using a Business Loan For Your Flower Shop Expenses 

As mentioned, a business loan can help you finance a number of your flower shop expenses. But, it comes at a price. There are a number of costs involved when borrowing, understanding these costs and budgeting, is key to managing your debt and business.

Loan Amount  The amount you borrow will unquestionably affect the interest and fees you pay. Moreover, it will also impact your repayment terms. The more you borrow, the more likely you’ll need more time to repay, which will result in a longer repayment period. As such, it is important that you only borrow what you need. 

Interest Rate – The interest rate you’re charged has the biggest impact on the cost of your loan. The higher the rate you’re charged, the more you’ll pay in interest. It’s smart to check and improve your credit before applying for a business loan

Fees – Depending on your lender, they may charge you a number of fees including administrative fees, origination fees, maintenance fees, and other miscellaneous fees. When dealing with a lender, it’s essential you address these fees as well as potential fees such as NSF fees, late payment fees, and prepayment fees. For example, origination fees alone can easily cost you a few hundred to a couple of thousand dollars. Costs typically range between 0.5% to 8% of your loan, so if you take out a loan of 35,000, that can cost you between $175 to $2,800. 

Term Length – The length of your loan term is another factor to consider when calculating the cost of your loan. While long terms provide affordable monthly payments, they end up costing more in the long run due to the cumulation in interest. As seen in the table below, the long-term business loan has a monthly payment that is approximately $475 dollars lower than the short-term loan, but the interest paid is around $4,320 dollars more. 

 Short-Term LoanLong-Term Loan
Loan Amount30,00030,000
Interest Rate6.5%6.5%
Term3 years7 years
Monthly Payment$919.47$445.48
Total Paid$33,100.92$37,420.57
Total Interest Paid $3,100.92$7,420.57

Florist Business Loan Requirements

Depending on the lender you apply with, the requirements to qualify will vary as each lender has their own set of qualification standards. However, there are a few factors that most lenders evaluate when approving an applicant for a business loan.  

  • Credit Score – Lenders will use both your personal and business credit score to check if you are creditworthy. The higher your score, the higher your chances of approval and ability to qualify for a lower rate. 
  • Time in Business – It is a well-known fact that most new businesses fail. According to a report by the Government of Canada, more than 57% of businesses fail after 10 years. As such, lenders will consider your time in business when reviewing your application. The longer you’ve been in business, the less likely you’ll fail which means you’re less likely to default on the loan. 
  • Business Assets – If you decide to put up collateral to secure the business loan, the lender will require proof to verify the value of your business asset
  • Business Revenue – Many lenders will check your monthly and yearly sales to evaluate your ability to repay debt. Even if you have bad credit, lenders may still lend to you if you have consistent revenue.
  • Business Cash Flow – Cash flow is another factor lenders may evaluate to determine your ability to repay debt. Cash flow represents the cash in your business available to pay expenses, suppliers, and debts. So, if you have a lot of cash flow problems, lenders may reject your application.   
  • Business Plan – A business plan may be required by your lender. In particular, many young and small businesses are asked for a business plan as they have little financial information to offer. A business plan helps validate the business’s viability and ability to repay the loan. 

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Alternative Ways To Cover Your Flower Shop Expenses

Merchant Cash Advance

Credit cards and debit cards are some of the most common forms of payments at a flower shop. This means you can easily take advantage of a merchant cash advance when you’re in urgent need of cash. It works by providing you with a lump sum of cash in exchange for a portion of your future card sales. Whether it’s to hire more help or stock up your flower inventory due to a surplus in demand, a merchant cash advance is a fast way to get extra funds. 

Invoice Factoring 

Providing flower arrangements for weddings, bridal showers, birthdays, and other big events is one of the most lucrative services many flower shops offer. However, with such events, payments are often delayed which can lead to cash flow shortages. In such a situation, invoice factoring can help bridge the gap. Invoice factoring works by selling your unpaid invoices to a lender at a discount. This form of lending is very expensive but fast and easy to qualify for.

Business Line of Credit 

Flowers are the main product for Florists. Problem is, flowers are very delicate and can quickly spoil due to improper temperatures or mishandling during shipping. If your flower inventory is impacted due to spoilage, you’ll need to restock quickly. A business line of credit is a great way to help cover such costs as it’s easily accessible and interest is only paid on the amount that you use. 

Frequently Asked Questions

Where can I get a business loan for my flower shop? 

You can get a business loan from most financial institutions including banks, credit unions and online lenders. Depending on your personal and business credit, you’ll have better chances with one over the other. In general, banks offer better rates and terms but have very strict lending standards. On the other hand, online lenders have flexible lending standards but charge higher rates as a result. 

Can I get a business loan if I have bad credit? 

Yes, you can still qualify for a business loan if you have bad credit. However, you’ll have to apply with an alternative lender as banks have strict lending standards. Alternative lenders are willing to lend to businesses even if they have bad credit. In lieu of your credit, they will base your approval on your business’s review, cash flow, assets, time in business and business plan. 

Do I need a business license to start my flower shop? 

There are many different types of business licenses in Canada. Depending on what kind of business you’re running and in which location, the licenses and permits you need will vary. In general, you’ll require a General Business License. It is a license that the government uses to identify your business, record your taxes, and ensure your business is adhering to public health and safety standards. 

Grow Your Business With a Business Loan

Whether you’re a small business or a  big business, the need for funds is the same. All businesses require funding to operate and grow. If you’re in need of some funding, apply with Loans Canada for: 

  • Competitive financing and interest rates that are suited to your financial status.
  • Practical repayment schedules that work for you.
  • A fast, unbiased approval process that you won’t receive with a typical bank ( funds received in as little as 2 days). 
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