Coffee shop financing?

cwest

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Dec 24, 2019
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Hi everyone,

I was curious how common financing was for coffee shops. I know that some many take out small business loans to get things up and running, but is it common to take out micro-loans for getting access to supplies and equipment when operating or growing the business?
 
Well - financing of some type always happens. SBA/Bank loans are hard and harder to get after the mid 2000's recession. Most use credit card or short term lines of credit for fluctuations in business when you need more capital for inventory, etc.
 
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Great insight. Would you happen to know how often people use short term lines of credit or credit cards? I know it may vary greatly.
 
Great insight. Would you happen to know how often people use short term lines of credit or credit cards? I know it may vary greatly.

Short term lines of credit may have a reasonable interest rate depending upon what the collateral is. If it an unsecured line of credit then it will have a high interest rate. If it's a lien against your house, the rate will be substantially lower. Credit cards will carry the highest interest rate. Well, actually that's not entirely true. Vinnie Bag of Donuts will have the highest interest rate. I don't recommend that lender.
 
I'm not too sure, I have never looked into it because I am able to apply for special grants and contributions as well as interest free loans through a specific organization due to my cultural status.. Sorry I don't have much for ya!
 
I would say go friends and family route first. In terms of equipment either find it used or lease it. At least for the
first year or two. It will be hard to get a small business loan with anything less than two years of tax returns, you
will probably need three. If you go to a hard money lender you will pay interest in the teens.

**I am not a certified accountant or money manager**

Also, if you have financial discipline and a good credit maybe open a new credit card with a no interest period.
For the first couple of years of your business it will be easy to draw credit from your personal finances since
the business will have no track record.
 
Bank term loans and lines-of-credit are by far the best financing options for new and existing coffee shops. Banks are able to offer financing to coffee shops at such low rates because the traditional lenders are unwilling to take much risk.
 

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