Retail business loans

Business loans for retailers

Need a loan to help you start a new retail business or buy an existing one? Here’s how to find the right finance solution.

Whether you’re starting a new retail business from scratch or looking to buy an existing shop, finding the right finance is crucial. There are business loans available to help you buy retail space, fit out your premises, solve short-term cash flow problems and meet a range of other business needs, including covering the expenses associated with running an online retail store.

But how do you know which retail business loan is the right fit for you? Let’s take a closer look.

How can a business loan help me?

Australian retail businesses face a variety of challenges in the modern world. Retail business loans can provide flexible access to funding so that you can overcome those challenges. There are business loans available to help you:

  • Buy an existing business
  • Buy a vacant shop front
  • Cover the startup costs for a new retail business
  • Fit out your business premises
  • Purchase the latest point-of-sale technology
  • Purchase stock
  • Cover web design and online store setup costs
  • Upgrade your business premises with new fixtures and fittings
  • Provide working capital to help with the day-to-day management of your business
  • Fund advertising and marketing campaigns to boost sales
  • Expand to a second location
  • Hire more staff during busy periods
  • Take advantage of an urgent business opportunity

Loans you can compare for your retail business

Rates last updated August 16th, 2018
Name Product Min Loan Amount Max. Loan Amount Loan Term Application Fee Product Description
NAB QuickBiz Loan
$5,000
$100,000
1 to 3 years
$0
An unsecured business loan from $5,000 that can be processed in 1 business day.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
0.25 to 5 years
$0
A Small Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 60 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Moula Business Loan
$5,000
$250,000
0.5 to 2 years
$0
Small business loans of up to $250,000 approved and funded within 24 hours.
Transparent fees and rates. Note: Business must have been operating for at least 6 months and have monthly sales of at least $5,000.
Spotcap Loans
$10,000
$400,000
0.25 to 2 years
$0
Take advantage of a fixed interest rate and no upfront fees with this business loan, available up to $400,000. Note: Business must have been operating for at least 18 months and have turnover over $200,000.
Lending Express Business Loans
$5,000
$500,000
0.25 to 2 years
$0
Apply online for up to $500,000 and get access to over 25 lenders through Lending Express.
Ferratum Business Loan
$2,000
$150,000
0.5 to 1.5 years
2.5% origination fee
Competitive business loans from $2,000 based on your business’ cash flow.
Prospa Business Loan
$5,000
$250,000
0.25 to 2 years
$0
Apply for up to $250,000 and receive your approved funds within one business day. Note: Businesses must have a turnover of more than $6,000 per month and provide 6 months of trading history or 3 months history if you've purchased an existing business.
OnDeck Business Loans
$10,000
$250,000
0.5 to 2 years
2.5% origination fee
Apply online for up to $250,000 with OnDeck and receive approved funds in one business day. Note: Minimum annual turnover of $100,000 and must be able to demonstrate 1 year of trading history.

Compare up to 4 providers

What types of retail businesses can get a loan?

Australia’s retail sector includes a wide range of businesses selling an even more diverse range of products. The good news is that there are loans available to suit any number of retail businesses, both online and in the “real world”, including:

  • Supermarkets and grocery stores
  • Convenience stores
  • Fashion retailers
  • Footwear retailers
  • Toiletries and cosmetics stores
  • Furniture stores
  • Homewares retailers
  • Appliance retailers
  • Electronics retailers
  • Sporting goods stores
  • Gift shops
  • Book stores
  • Discount and variety stores
  • Health stores
  • Jewellery stores
  • Toy stores
  • Pet stores

Types of business loans to consider

What type of loan does your retail business need to overcome important challenges? Check out the table below for a guide to the finance options available:

Type of loan Loan amount Pros Cons
Equipment finance The cost of the equipment you need to purchase
  • Provides the funds you need to purchase major equipment, such as office equipment or anything needed to improve customer experience when visiting your store
  • The equipment you buy is used to secure the loan
  • Variety of finance options available
  • Flexible payment options
  • Fixed and variable rate options
  • Many tax deductible options available
  • Fees apply
  • Can be confusing choosing the right option from the range of equipment finance solutions available
Line of credit $10,000 to $100,000,000
  • Access funds when you need them
  • Overcome cash flow problems during periods of downturn
  • Interest charged only on the money you spend
  • Less risk exposure than a term loan
  • Freedom to negotiate fixed or ongoing terms
  • Good credit history required
  • Can’t be used to purchase an existing business or to provide long-term business financing
  • Interest charged monthly and fees also apply
Business overdraft $10,000 to $100,000,000
  • Overdraw on your business bank account up to a predetermined limit
  • Can help you manage day-to-day cash flow fluctuations in a retail business
  • Can be secured or unsecured
  • Flexible repayment schedule as long as you stay under the predetermined limit
  • Freedom to use the funds for a wide range of purposes
  • Interest usually charged monthly
  • Higher fees apply than to other loan options
  • Need to have an existing business bank account in place
Term loan $5,000 to $500,000
  • Borrow a single sum that can be paid back over time
  • Fixed and variable rates available
  • Regular repayments required
  • Can be used to fund major purchases and expenses
  • Terms of up to 15 years or more available
  • Borrowing a larger amount comes with a higher level of risk
  • You will usually need to offer an asset as security for the loan
  • Not as flexible as other finance options
Business credit card Depends on card limit
  • Spend money as and when you need to
  • Make monthly repayments to pay down your debt
  • Great for managing your business from day to day
  • Can earn rewards or frequent flyer points on your spending
  • Good credit history required
  • Interest charges can quickly accrue
  • Need to keep track of your spending so you don’t exceed the card limit
  • Annual fee applies
Unsecured business loan $5,000 to $300,000
  • Easy application process and fast approval
  • Quick access to the funds you need
  • No security required for the loan means you don’t have to risk any assets
  • Short- and long-term financing available
  • Help overcome cash flow problems
  • Early repayment often allowed
  • Higher interest rate and fees
  • Penalties if you miss a repayment
Merchant cash advance Up to $250,000
  • A lender pays your business to purchase a percentage of your future transactions
  • Suitable for businesses that receive the majority of their payments by card
  • Quick and efficient access to funds
  • Don’t need to offer an asset as security
  • Sometimes available to borrowers with less than perfect credit history
  • Repayment amounts change in line with your earnings
  • Can be more expensive than other business finance options
  • Plans usually only last for a maximum of 12 months so are not a long-term solution
  • If sales figures don’t meet expectations, you may need to find money elsewhere to pay off the advance
Commercial property loan Generally 60 to 70% of the property’s value, but up to 80% in some circumstances
  • Finance to help you purchase a commercial property
  • Wide range of loans available
  • Flexible repayment options to suit your business’s cash flow
  • There’s always risk when borrowing a large sum of money
  • Higher interest rates and fees than residential home loans
  • Security required for the loan

The best retail business loan for you from the above options will vary, depending on a range of factors such as:

  • Your finance needs. The loan you choose could vary depending on whether you want to buy a retail space, purchase equipment, manage cash flow fluctuations or satisfy a range of other financial requirements.
  • Your assets. If you have valuable assets you can offer up as collateral for a loan, this will allow you to access a wider range of finance options.
  • Your credit history. While there are finance options available for borrowers with bad credit, having a good credit history improves your chances of accessing funding.

Expenses to consider when opening a retail business

Starting a new business of any kind can be a huge undertaking, and that’s no different in the retail sector. Many businesses fail because they simply do not have enough capital to meet all the expenses associated with getting a business up and running. That’s why it’s important that you’re fully aware of all the costs you need to consider before you start comparing finance options.

Expenses to consider when opening a retail business include:

  • Purchasing or leasing retail space
  • Store fit-out and fixtures, including furniture, shelving, display cases etc.
  • Store equipment, such as computers, cash registers, point-of-sale payment systems and security cameras
  • Hiring and ongoing payment of staff
  • Initial marketing and advertising costs
  • Purchasing inventory so you have products to sell when your store opens
  • Office supplies
  • Internet/phone and power connection
  • Insurance cover, including public liability protection
  • Professional legal and accounting services

Of course, it’s also worth pointing out that many new retail businesses today operate purely in the online world and don’t manage any bricks-and-mortar shop fronts. Despite this fact, many of the expenses listed above still apply to online businesses, while you may also have an increased emphasis on other costs such as web design, SEO optimisation, and even finding suitable warehouse space to store your inventory.

The best way to wrap your head around the full cost of opening a new business is to put together a comprehensive business plan. This should outline your startup costs and operating expenses, as well as a realistic timeframe of how long it will take you to break even and start making a profit.

Expenses to consider when purchasing an existing business

If you’re buying an existing business, the good news is that the previous owners have already done some of the hard work for you. The bad news is that they may not have been running the business as successfully as possible, and you may need to incur some extra expenses to ensure that your newly purchased retail store performs to its full potential.

Expenses to consider when purchasing an existing business include:

  • The cost of buying the retail business
  • The cost of purchasing or leasing retail space
  • Improvements and upgrades to old equipment
  • Upgrade of shop fit-out and fixtures
  • Purchasing new inventory
  • Paying staff
  • Marketing and advertising costs
  • Insurance
  • Professional legal and accounting services

In the end, there may be a much greater range of expenses involved than you first anticipated, which is why it’s essential to do your due diligence before purchasing an existing business. Consider why the current owner is selling and look at the business’s sales, operating costs, profits, assets and liabilities before deciding whether or not you should buy.

How to compare business loans

Once you’ve decided on the type of business loan that’s right for your retail business, the next step is to compare a range of loans to find the best finance option. Consider the following factors when weighing the pros and cons of loans:

  • Interest rate. This is an obvious place to start, so look at the interest rate that will apply to the funds you borrow. Is the rate fixed or variable? How does it compare to the rate on other finance options.
  • Fees. Fees and charges can have a huge impact on the total cost of a retail business loan. Compare establishment fees, ongoing fees and any penalties that apply to late or missed payments.
  • Loan terms. How long will you have to repay the funds you borrow? Is it a short-term loan of less than 12 months, or will you have several years to pay off your debt? Whatever the case may be, remember to calculate how the loan term will affect your regular repayment amount and the total cost of the loan.
  • Repayment schedule. Next, take a look at the repayment schedule attached to the loan. Will you be able to comfortably afford each regular repayment? Does the finance option provide flexibility with repayments, such as tailoring repayments to match your fluctuating cash flow?
  • Loan risks. It’s also important to consider the risks attached to each loan. For example, will you need to offer any assets as security for the loan? If you’re taking on a large debt, what will the consequences be for your business if you can’t afford to make repayments?

How to maximise your chances of getting approved for a loan

Many lenders view retail businesses as higher-risk borrowers than other types of businesses, largely due to the fact that an economic downturn can have a significant financial impact on many retail operations. With this in mind, it’s important you prepare the best possible loan application to increase your chances of approval.

Keep the following tips in mind when you apply for a retail business loan:

  • Develop a comprehensive business plan. Your business plan should outline the future trajectory of the business – that is, the service you will offer to customers and how you will make a profit. Be realistic with your forecasts and goals, and include as much relevant information as possible to help the lender develop a complete picture of your business.
  • Provide comprehensive financial information. If you’re starting a new business, detailed forecasts of sales, ongoing expenses and cash flow will be essential. If you’re buying an existing retail business, you’ll need to supply information about the business’s current financial performance, including tax returns, a statement of profit and loss and a balance sheet.
  • Put up security if possible. If you have an asset that you can offer as security for a loan, for example a property you own, this won’t just strengthen your chances of approval but can also increase your borrowing power.
  • Rely on your track record. Finally, if you’ve got a prior history of successfully running a retail business, remember to include this in your application.

Frequently asked questions about retail business loans

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