Best Bakery Loans Explained In Detail
In this section we will describe the small business funding opportunities from the table above, going through the terms and financing needs they cover.
This loan type is a favorite among bakery owners because it offers low rates and relatively high approved amounts. Although you don't need $5 million to open a small bakery, a kick start from a governmental loan could help you expand and acquire some equipment.
While this loan expects you to have credit scores of 650 and higher, it also lets you take the time to pay it back (some loan types can last up to 25 years).
An SBA loan allows you to cover your bakery startup and operating costs, buy real estate, and renovate the premises, should you need to.
Our recommended lender for this category is Fundera. Along with the various SBA loan types, the company offers other options and is willing to work with startups. You can also apply to this credit organization with bad credit.
As we're talking about lower credit scores, it's logical to mention the less stringent requirements from alternative loan lenders. If you don’t qualify for an SBA or bank loan, taking this route can prove to be a great option for your bakery business. Although the interest rates are higher, most lenders require no minimum payments and no collateral.
You can use these loans for any need that might arise. Depending on the loan type, the amount lent, and the payout period length, these can either be short-, mid-, or long-term.
With its low minimum credit score requirement and rapid fund distribution, Fundbox is our recommended option for long- and short-term business loans. A company should have a minimum revenue of $100K, minimum business time of 6 months to qualify for a loan with Fundbox.
All bakers require professional equipment. Leasing is when the credit can fund the equipment directly from a vendor, and you repay the lender in increments. Once you close the debt, you can keep the item or lease another, newer model.
Leasing is a convenient option for bakeries, as the kitchen ovens and professional equipment can cost a lot. On the other hand, by the time you've paid off the lease, the equipment can become outdated.
Our recommended equipment leasing loan lender is National Funding. They provide funding up to $150,000 so that you can finance your new or used equipment for your business. You won’t need to put a down payment, and they have a lowest payment guarantee. National Funding also provides you with a dedicated loan specialist who will work with you to get fast approval on any sort of equipment.
A merchant cash advance is a suitable option for those bakeries that don’t qualify for a bank loan and don't have the credit score to apply for SBA. Taking a cash advance can help the business gain short-term operating cash against their future sales.
This is a lump sum of money that can have interest rates as high as 100%, a process for as short as a week, and have a three to eighteen-month payback period.
If your bakery business has been operational for over six months and makes $15,000 in monthly revenue, we recommend Credibly as a merchant cash advance loan provider. Credibly can approve and provide a cash advance in just 48 hours. You can get an advance of between $5,000 - $400,000.