Business Loans For Music Stores

Business Loans Music Store

If you’re interested in music and itching to start a new business, opening a music store might be a good route for you. Most music stores sell instruments, both new and used, varying between string instruments, wind, brass, percussion, pianos, and more modern instruments like disc DJ equipment. Music stores also carry various accessories for instruments, such as cleaning materials, sheet music, music stands, and other music paraphernalia such as books about famous musicians or composers. 

The beginning of this year was fruitful for music stores in Canada, but average retail sales dropped in the month of April, likely due to the COVID-19 pandemic. However, according to Statistics Canada, sales have increased significantly in the past few months, specifically by an increase of $764,942,000 million dollars from April to July. Given the increase in demand for musical items, it may be worth opening a music store.

Musical Instruments and Supply Stores in Canada

There are many musical stores in Canada. Some of these stores are larger, more well-known brands such as Long and McQuade and Cosmo Music. However, there are also many smaller, independent music stores with only one location. Overall, there are around 480 music stores in Canada, with major provinces like Ontario and Quebec holding the largest share. On the other hand, the Northern communities in Canada were the least musically inclined with only one store in the Northwest Territories, for example. 

Province/TerritoryNumber of Stores
British Columbia88
Nova Scotia14
New Brunswick15
Newfoundland and Labrador13
Prince Edward Island3
Northwest Territories1 (Fiddles and Stix Music)

*Statistics taken from Statista

What Kind of Costs Can a Business Loan Cover? 

Opening up a music store comes with many expenses. It’s important to consider all of them carefully to make sure you have enough capital to cover these expenses, whether the capital comes from your savings or from a business loan. Let’s take a look at some of the costs associated with opening a music store:

Rent and Utilities

Renting a commercial space for your music store will likely be more expensive than renting a residential apartment. Commercial leases also have different rules for eviction that make paying rent on time extremely important. You should account for a few thousand dollars a month for rent. It is recommended that you save at least a few months’ rent before jumping into your new music store venture. 

Utilities, that is, the cost for electricity and hydro will also be a monthly expense that you’ll need to account for in your budget. Try to set aside a couple of hundred dollars per month for utility bills. 

Learn how to cut common business expenses to increase profit

Store Fixtures, Supplies and Décor

Presentation is important, especially for higher quality musical instruments. You’ll want to make sure that your newest models are displayed properly but also to make them as appealing as possible. Store fixtures like shelves, platforms, and glass doors are all expenses that you need to consider for your music store. 

You’ll also need to account for the cost of a cash register, cash float, and POS (Point-of-Sale) system to process payments from customers. 

Buying used fixtures and cash registers can help save money on these expenses. Look out for stores that are closing, as they often will sell all of their fixtures, decor and supplies at a lower price. 

Advertising, Marketing and Signage

Organic social media tactics and word of mouth are cost-efficient ways to market your store. However, wider advertising and marketing will cost more money. You can advertise promotions on signs, which can cost anywhere from $500-$1,000. Or, you can try to partner with a radio station or marketing agency to advertise your store. Depending on the route you take, marketing can cost you up to a couple of thousand dollars per month. 


Inventory will be the biggest expense that you’ll face in your music business. Generally, music stores can carry between $50,000 and $100,000 worth of inventory at a time ⎯ speakers, instruments, paraphernalia, etc. To be safe, you should ensure you are stocked for at least four months. Finally, make sure you spend enough time researching your suppliers and wholesale costs to ensure your pricing reflects a fair sale for your customers, as well as a good profit for you.  

Buying inventory at wholesale prices to turn a profit is the main avenue for selling inventory. Another way to acquire inventory is through consignment. Some instrument manufacturers will loan music store businesses instruments on consignment, provided the business owner has good credit, of course. For business owners that don’t have as much capital to start with, consignment is a great way to get started with an inventory. 


Whether you own the building or rent the space, you’ll need to purchase either property insurance or tenant insurance, which could cover the cost of lost inventory. Since instruments have a much higher value than the average products in other retail stores, insurance is important to account for any accidents that could result in a broken instrument. Finally, you’ll need to account for insurance for your employees if you hire labour.


Some music stores are family-owned, meaning they save on labour costs. However, if you need to hire staff, you’ll need to account for wages, vacation, insurance, and taxes in your monthly budget. Furthermore, you may want to hire professional musicians to teach specialty classes from time to time to draw in new customers.

Need to hire staff? Check out our guide on setting up payroll

How Do You Get a Business Loan For Your Music Store? 

To get a business loan, your lender will look at a variety of criteria. This criteria changes in priority, however, depending on the type of lender you borrow from. Let’s take a look at your options for lenders for your business loan.


A bank is the best possible option for a business loan because they offer the lowest interest rates. However, securing a loan from a bank is not an easy endeavour. You’ll need to show this lender that you have capital, good credit, and proof of income from your business for an extended period of time. Low-interest rates in this case come with strict requirements, Furthermore, bad credit can make it more difficult to be approved for a loan from a bank.

Credit Unions

Credit unions are smaller and more personalized than banks, and offer reasonable rates that are comparable to those of a bank. Credit unions tend to be more lenient in their requirements for a loan than a bank. However, credit unions have lengthy processes for obtaining a business loan. You might have to be a client of theirs for a longer period of time so that they can establish trust before approving a loan, especially if you don’t have a strong credit score. 

Alternative Lenders 

Alternative lenders should be a last resort for your business loan, mainly because they often have the highest interest rates on their loans. However, their requirements are often less strict than a bank or credit union, and they are more willing to turn a blind eye to a bad credit score in exchange for higher interest rates on the money they lend.

Best Business Loan Providers for Music Stores

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

How Do You Qualify For a Business Loan for your Music Store?

You’ll need to compile a few documents before applying for a business loan for your music store, including:

  • Credit Score. Either your personal credit score or your business credit score. Either way,  your credit will be examined by a lender to see what your payment history looks like. 
  • Bank Statements. These will provide your lender with information about your business’ revenue flow, and your personal income. 
  • Tax Returns. This shows lenders the history of your business earnings. 
  • Sales Records. Which also show lenders the history of your business earnings if your tax returns and bank statements aren’t detailed enough for the lender’s liking; and a
  • Business Plan. A business plan documents everything there is to know about your future business, covering expenses, financing, inventory pricing, market research, sales plans, and more. 

Did you get rejected for a business loan? Check out these common business loan applications mistakes.

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Alternative Ways to Finance Your Music Store

Music stores are quite a specific kind of business. There are a few unique alternatives to a business loan that can help you finance different aspects of your business. 

Equipment Loan

Since equipment, or inventory, is such a big expense for music stores, you might want to consider an equipment loan. The same equipment loan that can help a flatbed truck business owner to purchase his fleet of trucks can likewise help a music store owner purchase his fleet of instruments, as well as materials to repair those instruments. The great part of an equipment loan is that approval is easier than a small business loan. This is because the items purchased themselves, in this case the instruments, act as collateral for the loan. If you cannot pay back the loan, the lender will seize the instruments rather than any of your personal assets. 

Business Line of Credit

Business lines of credit allows music store owners access to cash without the high interest rate of a credit card. Pulling money from your business line of credit is usually more efficient than applying for a new loan each time you need more capital. Furthermore, using your line of credit to pay off loans with a higher interest rate (like a credit card, for example), can help save you money in the long run.

Business Credit Card

A business credit card can help you pay short-term, smaller expenses for your music store. To obtain approval for a business credit card, you’ll need to show a strong credit score and minimal outstanding debts. A business credit card can sometimes come with rewards for travel or cash back. You can use your business credit card for as many expenses as possible to maximize rewards to help pay for a trip or to get cash back. 

Frequently Asked Questions

How do you start a music store? 

Before opening up your music store, you’ll want to ensure you have the following items:
  • Business Plan, accounting for all potential expenses and how to handle them.
  • Secure funding, whether it be by a bank business loan, savings, or equipment loans.
  • Have access to enough inventory

Can I get a business loan to open my music store if I have bad credit? 

Starting a music store isn’t impossible with bad credit. If you have a strong capital investment, reliable consignors, or if you consider going to an alternative lender, you can still obtain a business loan, albeit with a higher interest rate. 

How do I increase my chances of getting a business loan for my music store? 

Improving your credit score, having a strong business plan, and comparing multiple lenders’ options for loans are all great ways to increase your chances of obtaining a business loan for your music store. Additionally, it’s important to consider alternative financing options outside of a traditional business loan, as music stores can benefit from equipment loans and business lines of credit, for example. 

Final Thoughts

Starting a music business comes with many expenses and factors to consider. It’s important to research all your options, carefully organize your expenses, and create a strong business plan. With a variety of business loan and financing options, it’s more than possible to have a strong start in your music store endeavour. If you’re looking for the right type of business financing, Loans Canada can help match you with a lender in your area.

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