Liquor Store Loans

Liquor store owners know that buying inventory effectively is almost as important as sales. Getting quantity discounts can lower unit cost considerably. Obtaining business financing for your liquor store can help you increase your bottom line significantly over the holiday season.

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As the owner of a liquor store, you need to understand your loan options to take advantage of purchasing power. Many traditional lenders will seem unwilling to provide business funding to liquor stores and other retail businesses. However, there are plenty of small business loan solutions that a liquor store can use.


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Trends Affecting the Liquor Store Industry

Holiday trends are fairly consistent in the spirits industry. November and December are the most busy months for sales. It’s important for business owners to be prepared with plenty of inventory to meet demand during this period.

Ready-to-drink (RTD) beverages and flavored seltzer products lead the growth trend and are likely to be leaders in the holiday season. Seasonal spirits such as crème liqueurs and champagne are also popular items for the year-end holiday.

However, beer and wine sales also tend to spike during this time of year so liquor store owners may face difficult decisions when choosing which products to stock or buy in bulk. Either way, buying power is essential to getting better pricing on inventory and increasing the bottom line.

Some of the most popular alcoholic beverages include wine, whiskey, and sake. According to the Beverage Information Group, American consumers purchase 350 million wine cases each year. Whiskey sales have increased every year since 2010, with retail sales amounting to $10.3 billion in 2019. The United States accounts for 30% of international sake sales as well.

In states where spirits and beer are offered for sale in liquor stores, having large refrigerated coolers for beer, wine and seltzers can be a huge lift for sales (year-round). So if you are a startup opening a new liquor store, opening a new location, or an existing business, you may want to consider equipment financing for obtaining capital to upgrade your coolers.

Trends in distribution and delivery are changing

Also, companies like Drizly have made buying alcohol online easy. They send the order to a liquor store, an employee will pack your order, and a delivery driver will bring it to you. These apps can increase income to participating liquor stores, but those relying on old-fashioned purchases may lose capital.

Liquor store owners may wish to consider leasing for acquiring delivery vehicles. It is not uncommon for even small liquors stores to have 2-3 vehicles for delivery service. Based on the loan amount or the size of the fleet purchase, an established business may wish to consider leasing vehicles to conserve working capital.

The demand for high-end and super-premium spirits has increased. Also, more individuals want craft beer. A liquor store could drive up cash flow by diversifying its offerings to include more:

  • Non-alcoholic alternatives

  • Wine

  • Whiskey

  • Sake

  • High-end premium spirits

  • Super-premium spirits

  • Craft beers

Liquor Store Loan Type: Best Options for 2021

Here are some of the best loans for liquor stores that you may qualify for.

This is ideal for entrepreneurs whose businesses do a lot of their annual revenue in credit card sales. A lender gives a merchant cash advance when they offer a business a lump sum of cash (upfront amount) with an agreement to receive a fixed percentage of their future (credit card) sales to pay off the loan. 

Generally, liquor stores will repay on a daily or weekly basis. The lender will either take the repayments automatically from the bank account or deduct them from future card payment sales.

You can obtain a merchant cash advance fairly easily as they have flexible terms and work with those with poor credit scores. Usually, the loans get repaid in 6-18 months. However, they can have soaring interest rates.

This liquor store business loan is best for liquor store owners with subpar credit scores and clientele who use credit and debit cards.

business line of credit is another option in the loans for liquor store inventory. This funding option gives small businesses a revolving line of credit that lets them draw money and repay at any time. 

The liquor store owner will have to pay interest and principal on the outstanding balance regularly until the principle amount is repaid. One advantage of a business line of credit is that it has no fixed terms. In addition, a business owner can draw funds as needed in the amounts needed, so they only pay interest on actual amount borrowed. Also, it has lower fees than most financing options. However, the interest rates on these liquor store loans start at 5%.

If you need working capital quickly, consider getting a business line of credit.

Keep in mind that you cannot use the invoice factoring loan option.

Liquor Store Financing Trends

Small business liquor stores are struggling to compete with supersized retailers like Total Wine. In many industries, people are turning towards superstores instead of neighborhood shops, which has unfortunately lowered the cash flow for small liquor stores.

Groups of liquor store owners try to compete by pooling their working capital to match superstores by lowering inventory prices. Also, they need to seem more convenient and accessible than superstores to keep customers returning and the money flowing in.

Lenders are likely to give liquor stores loans because they are recession-proof. In the COVID-19 pandemic, liquor stores were considered an essential business. New York has introduced tax incentives for creating local alcoholic beverages, which increases revenue for the city and local business.

Also, local brewers are more likely to work with local liquor stores as they can create a personal relationship. If their drink becomes popular, you can increase customers and purchases at your liquor store.

Final Thoughts

If you need financing assistance for your liquor store, know that you have options. Two popular choices are merchant cash advances and business lines of credit.

In the meantime, you can drive up revenue by paying attention to industry trends. Offering trendy beverages and allowing for home delivery can expand your capital and help you compete against industry giants.

By taking a look at what you need and the time to pay it off, you can get back on your feet in no time.