The best type of business loan to buy a new store will depend on several factors, such as the borrower’s creditworthiness, the amount of funding needed, the repayment terms, and the purpose of the loan. Here are a few options that could be suitable for purchasing a new store:
Commercial real estate loans:
A commercial real estate loan is a type of long-term financing used to purchase commercial property, such as a store. These loans are usually secured by the property being purchased and typically have lower interest rates than unsecured loans. The repayment term can range from five to twenty-five years, and the loan amount may be up to 75% of the property’s value.
SBA 7(a) loans:
The Small Business Administration (SBA) offers a variety of loan programs, including the 7(a) loan program, which can be used to purchase real estate or existing businesses. These loans are partially guaranteed by the SBA and have longer repayment terms and lower interest rates than many other types of loans. The maximum loan amount is $5 million, and the repayment term can be up to 25 years.
Equipment financing:
If the store requires a significant amount of equipment, such as cash registers, shelving, and displays, an equipment financing loan may be a good option. This type of loan allows the borrower to purchase the equipment they need and use it as collateral for the loan. Equipment financing loans may be secured or unsecured, and the repayment term typically ranges from one to ten years.
Lines of credit:
A line of credit could be a good option for a borrower who wants to have access to funds as needed. With a line of credit, the borrower can draw on the available funds and only pay interest on the amount borrowed. Lines of credit may be secured or unsecured, and the repayment terms are usually more flexible than those of traditional loans.
It’s important to consider the terms and conditions of each type of loan, as well as the costs associated with each, before choosing the best option for purchasing a new store.