How Online Loans Support the Retail Industry

Small retail businesses have unique financial needs and face specific challenges when borrowing money or raising working capital. Retailers often need to borrow money to buy inventory, pay the costs of expanding a business or moving to a new brick-and-mortar location, invest in new technology or marketing campaigns, and otherwise deal with seasonal fluctuations in income and the various costs of daily operations. There are several ways that retail business loans help small retailers keep their shelves fully stocked and compete with bigger companies. Online loans in particular are opening up new possibilities for small retailers to quickly access working capital.

Here are a few ways that online loans can help small retail business owners:

Buy Inventory Just in Time

Small retailers do not have the big budgets and extensive logistics operations of a larger company – but they do have an advantage that stems from knowing how to find just the right inventory for their customers’ needs. But, sometimes, small retailers will discover an opportunity to buy inventory at a great price on short notice. This short notice can lead to financing trouble as the short time period can make it difficult to get approved for a loan in time to buy the inventory. This is where online loans can make a big difference for small retailers – the online loan approval process is typically much faster than a traditional bank. This gives small retailers the advantage of being able to buy great inventory as soon as they spot an opportunity, without having to miss out due to lack of funds.
Flexible Loan Amounts

Another challenge for small retailers is that they often want to borrow money in amounts less than $100,000. These smaller loan amounts are often harder to get from traditional banks, which tend to focus their small business lending on larger amounts (of more than $100,000 or $200,000). This is another way that online loans can be a great solution – online loans are typically revolving loans, where the business can borrow as much or as little money each month as needed, and then repay the money over time on a flexible basis. Small retailers often need this flexibility to be able to invest in new inventory when the time is right, and then repay the loan over time to accommodate cash flow issues and address other business needs.

Investing in New Technology

Small retailers tend to face unique challenges when selling online. Whether you sell on Amazon or eBay or have your own retail website (or all three), you might occasionally need to upgrade your technology with new eCommerce capabilities. Although there are many excellent online tools to help small business owners get the right technology to suit their needs, sometimes these technology investments need to be made at an inconvenient time – during a slow season of sales, or during a time of cash flow challenges. This is another opportunity where online loans can help small retailers as online loans can provide a quick influx of cash to make necessary upgrades in technology – whether it’s a redesigned website, a new eCommerce system, or specialized IT consulting to help solve problems with your company’s overall technology situation.

Marketing: Spend Money to Make Money

Marketing is another category of business expenses – like inventory – that often presents short-term opportunities. Sometimes your business might need to advertise a seasonal promotion, or you might want to experiment with new marketing platforms or tactics. An online loan can help your business by giving you a flexible source of cash to try to get bigger results from your marketing budget. Whether it’s hiring an SEO firm to boost your website traffic or buying PPC ads or even redesigning your website to be more conducive to mobile marketing, you have to spend money to make money – and online loans give you an added source of cash (aside from your regular business revenue) to invest in helping your business grow.

Seasonal Ups and Downs

Many small retailers are familiar with the seasonal ups and downs of the business year – especially if your business is related to a tourist destination or if you make a lot of sales during the holiday season. But even if you make a bulk of your revenue during a few months per year, you still have to pay your bills during the rest of the months. This is where online loans can help: they give your business a flexible source of revolving credit to help you overcome cash flow shortfalls and bridge the gap in revenue during the slow seasons of the fiscal year.

Small retail businesses survive and thrive with speed, flexibility, and knowing how to give customers a better experience than the big players can offer. These same traits are also evident with online lenders. Online retail business loans can be faster, more flexible, and better suited to what business owners need today than traditional bank loans. These are just a few of the reasons why online loans are making, and will continue to make, a difference in the retail industry.

About the Author

Financial professional and online entrepreneur, I'm best known as The Financial Blogger. I want to make money because I like enjoying life the way it should be; with a lot of great food and wine! I also love to spend time with my lovely wife and 3 kids!