It’s exciting and a little nerve-wracking when you finally decide to start your own bakery. And I think it’s safe to assume you’re here because you want to get into the baking industry. When you’re just starting out, it isn’t easy, but it’s an amazing thing. And despite it being exciting, you’re here because you’re unsure of where to start or which loans are best for you.
When it comes to running your own bakery, there are quite a few possibilities as to why you may not have the finances you need. You’ll need things such as real estate, storage, supplies, appliances, baking equipment, and more to get things going. But you’ll also potentially need transportation for your bakery’s products. And when it comes down to it, you’ll need to spend cash to make cash.
And perhaps many of you have your finances in order, but for anyone who doesn’t you’ll need to pursue alternate funding.
Fortunately for you, there’s a tremendous amount of options out there when it comes to financing your bakery.
Tips and Qualifications To Finance Your Bakery
When it comes to bank loans, you think of interest rates and bad credit. Loans can be stressful, but they don’t have to be. Nowadays, there are dozens of loan options to finance your bakery. And they don’t always have to be between you and your bank. So, while they aren’t always a fun option to consider, they’re a necessary part of a business.
Banks and other traditional financial institutions typically require collateral in one way or another before you can receive financing for your bakery. These types of loans are referred to as “secured loans.” And these are the ones which can result in the loss of your home or car in the worst case scenario.
Fortunately, there are plenty of alternative lenders who provide loans without collateral. These are better known as “unsecured loans” and they’re one of the safest and quickest ways to finance your bakery.
In order to qualify for loans, Finance Factory looks at the Three Cs: Credit, Cash Flow, and Collateral. When it comes to credit, they’ll look at any score between 600 and 800; however, +660 is the ideal. As for cash flow, they’ll look at time in business, monthly and annual revenue, as well as a minimum account balance of $1,000 – $5,000. And in regard to collateral, it’s an option, but not necessary. You only need one of the Three Cs to qualify for a loan.
SBA Loans and Startup Funding To Finance Your Bakery
An SBA loan is the most common when it comes to financing a small business. But in order to qualify, you’ll need at least one guarantor with a credit score of +660. However, you also need to have an existing business with tax returns with verifiable revenue. When it comes to interest rates, you’ll be looking at 6% – 8% with payback terms ranging from 10 – 25 years. It can take two weeks to two months (14 – 60 days) to receive funding, but SBAs provide the most money at the lowest rates.
As for startup loans, you can get up to $350,000 in unsecured business and personal funding. However, once again, you’ll need one guarantor with a credit score between 600 and 800. And in regard to interest rates, they’ll be 0% for up to 21 months.
Business Lines of Credit and Equipment Financing to Finance Your Bakery
Business Express Loans, or Business Lines of Credit, are non-SBA and provide up to $500,000 within 1 – 2 weeks. In order to qualify, you must have an established business and proof of revenue. Interest rates and terms will vary.
When it comes to Equipment Financing, this type of loan is typically used for things ranging from storage, supplies, cooking equipment, transportation, and– I’m sure you get it by now. And because the equipment is the collateral, it makes it the easiest loan to receive. And once again, rates and terms will vary.
Finance Factory helps Finance Bakeries
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 660 or better, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!