The number one reason most Australian small businesses seek business loans is to smooth out fluctuations in cashflow – and retailers are no exception.
Fixed costs like rent, wages, insurance and taxes have to be paid regularly, even when sales volumes vary – and there are plenty of up-front expenses like stock, rent and logistics.
An at-call financing facility like an overdraft, business credit card or line of credit may be the back-up you need for these ongoing working capital needs – but this type of funding is not the only option, especially if you need money fast. Fortunately, nowadays, there are a growing number of online non-bank lenders who offer a wide array of short term financing options.
Here are the top seven reasons why Australian retailers take out an unsecured loan.
- Take advantage of end of line, liquidations and special offers
Many suppliers will offer better prices if you buy in bulk, and there may be special offers that give you the chance to save big on the cost of your stock.
You will need to think carefully before bulk buying, of course, because it’s not always a profitable move – overstocking can land you with hefty storage costs and expose you to the risk of obsolesce.
Start by doing a cost benefit analysis and work out your repayments with a business loan calculator. Using a business loan to fund this inventory will save you from having to tie up your precious working capital (and risk a cash flow crisis while you’re waiting to sell your extra inventory).
- Stocking up for the busy season
If yours is a seasonal business, you can’t afford to miss out on key holiday and retail shopping times because you’ve run out of inventory. But after a period of slower trade, you may not have the cash available to prepare and buy in the stock you need.
If your suppliers have a long lead-time, or there’s a risk that you won’t be able to lay hands on more stock when you need it (or will have to pay a premium to get it in a hurry) then buying ahead may be critical.
Having loan funds at your disposal can help you bridge the gap between purchase and sale, and keep your shelves stocked no matter how busy you get.
- Grabbing opportunities
When opportunity knocks, it’s unlikely to wait while you apply for finance.
- Close-outs or bankruptcy sales can be a great chance to acquire stock, display fittings or equipment at great prices, but the bargains will be snapped up quickly, so you need to move fast.
- Premises in prime locations with high footfall are obviously in high demand. If you’re looking to relocate or move into bigger premises and the lease comes up on the perfect store, you’ll want to be the first one on the agent’s doorstep, deposit at the ready.
Unsecured Business Loans is an Australia non bank lendery that specialises in helping SMEs get access to fast capital to take advantage of these types of opportunities.
Next week we’ll look at four more reasons an unsecured loan can benefit retail businesses, and how to go about applying for such a loan.
Brought to you by Shaun McGowan, Co-Founder, Lend Capital