Articles
How to Fund Your First Coffee Shop Business
by Henry S. Growing Your Business Has Never Been EasierWhether you’re planning to start a business from scratch, buying an existing one, or opening a franchise, starting a coffee shop business can be an exciting way to earn a living while actively participating in your surrounding community.
People meet at coffee shops not only for enjoying espresso or lattes but also for connections, enjoying the company of friends, going on a first date, business meetings, and a lot of other purposes. Serving quality coffees and providing a relaxing atmosphere in the coffee shop can be a lucrative opportunity for local business owners who want to start a new small business.
But starting a coffee shop business is not as easy as it seems. From creating a business plan to targeting the market, defining the brand, and taking care of day-to-day operations, you’ll need to do a lot of research and hard work to successfully establish your coffee shop business. Perhaps, one of the most important tasks among all is to figure out how you’ll fund your brand new coffee shop business.
If you have a stellar credit score, a solid business plan, and have been in business for at least two years, you’ll find many traditional lenders who are willing to lend you. Though small business owners with good financials will have the most options, there are also options for aspiring entrepreneurs with bad credit.
Short-Term Small Business Loans
If you apply for a term loan through a traditional bank or credit union, you may have to go through a complicated loan approval process. Business owners with good credit scores and business experience will only get these loan products. However, today several online alternative lenders are offering short-term loans to startups having bad credit.
If you are struggling to find an easy and quick financing option to start your coffee shop, a short-term loan could be your viable option. Though you may have to pay higher interest rates and get only a few months to repay the borrowed amount, short-term loans provide immediate access to cash to successfully start and run your coffee shop business. Most alternative lenders don’t require you to provide collateral to apply for a short-term loan. Even if you have bad credit, you can still apply.
Common Qualification Requirements for Short-Term Loans
Time in Business - 6 months
Annual Revenue- $120K
Credit Score - 550
Business Lines of Credit
Like short-term loans, business lines of credit are also available for aspiring entrepreneurs who want to start their first coffee shop business. A business line of credit is a revolving loan that allows you to access a fixed amount of funds that can be used when needed.
Similar to a business credit card, you’ll have to pay interest only on the amount you’ve used. Once you pay the borrowed amount plus interest, the whole amount will be available again. Even a business line of credit is a good source of working capital to fund your coffee shop business, it’s also a smart choice if you’re confused about exactly how much you’ll need.
Whether you want to purchase inventory, hire staff, make payroll, pay utilities, and bridge cash flow gaps in your coffee shop business, a short-term line of credit has got you covered. You can borrow up to $500 with repayment terms of up to 2 years.
Typically, there are mainly two types of short-term lines of credit - secured and unsecured. A secured line of credit requires you to pledge specific assets and collateral to secure the loan. Because it’s a short-term liability, lenders generally ask for short-term assets such as inventory or accounts receivables. If you default on your loan, the lender will seize the asset to repay the debt. However, unsecured lines of credit don’t require any type of collateral to secure the loan. Though interest rates may be slightly higher when obtaining an unsecured line of credit.
Common Qualification Requirements for Business Lines of Credit
Credit Score - 630
Annual Revenue - $180K
Time in Business - 1 year
Other Sought -After Funding Options for Coffee Shop Business
Personal loan
Time in Business - N/A
Credit Score - 600
Income - $20k/year
Startup Loan
Time in Business - N/A
Credit Score - 620
Income - $N/A
Family and Friends and Business Credit card - You don’t need to have a good credit score or provide collateral to get the benefit of these financing options.
Need fast and easy funding for your coffee shop business? Smansha is an innovative online funding marketplace where you can apply for and compare multiple coffee shop loans at once - potentially up to $500K. Smansha offers repayment terms up to 3 years, which is longer than many of its short-term lending counterparts. If you’re going to launch for your first coffee shop and wondering what business loan you might qualify for, Smansha is a great place to start. You can compare a variety of loan offers from multiple lenders and choose one that best fits your current financial needs and budget.
Sponsor Ads
About Henry S. 
Growing Your Business Has Never Been Easier
125 connections, 6 recommendations, 377 honor points.Joined APSense since, December 3rd, 2020, From New Jersey, United States.
Created on Feb 8th 2021 05:10. Viewed 283 times.
