How Liquor Stores Can Ensure Growth With Merchant Cash Advances(MCAs)
Liquor stores are often considered quite a lucrative business. However, this type of business has a set of success-determining components and there are times when liquor store owners come across hurdles that need to be prudently crossed to ensure a smooth entrepreneurial journey ahead. To operate uninterruptedly, liquor store owners require to follow various government-devised liquor laws, restock inventories and offer services like home delivery etc., to provide optimum convenience to their customers. For the same, a business needs to be backed with substantial working capital and a constant cash flow. But, due to multiple political, social and seasonal factors, liquor business owners often face money constraints. In such scenarios, loans for liquor stores, especially the alternative financing options, turn out to be extremely beneficial.
There are various types of liquor store financing options, out of which, short-term loans like Merchant Cash Advances(MCAs), business credit cards, Business Line of Credits(LOCs) and Small business Administration (SBA) loans are the most popular ones.
Merchant Cash Advances(MCAs)
This type of financing option is ideal for liquor stores that accept credit card payments. In the case of MCAs, the lender offers a lump sum of cash in return for a fixed percentage of the borrower’s future daily credit card sales. The MCA lender withdraws the fixed percentage directly from the store owner’s business account every day, till the entire amount is recovered. Also, the repayment amount often gets automatically deducted from the borrower’s business account. A liquor store cash advance is one of the most easily acquirable business finances due to its low credit score requirements, hassle-free quick application and lenient underwriting process. Also, MCAs offer same-day approvals and disburse funds within 48 to 72 hours of the approval, which makes it best suited for business owners looking for quick cash but neither have enough credit scores nor long business history to get eligible for traditional bank loans. To decide the creditworthiness of the applicant, MCA providers just ask for the sales history and the profit-loss statements of the last 1 year along with certain identification documents like the borrower’s driver’s license etc. Liquor store cash advances are short-term loans that come with repayment terms of 6 to 18 months.
MCAs can be used for:
Buying additional stock
To retain its customers and market image, a liquor store needs to invest in bulk purchases to make sure it is never short of stock. But, for that, substantial capital is required. In the case of MCAs, business owners can get access to quick money that can be used to stock up their shelves. Also, the liquor store owners often enjoy sizable discounts from the suppliers, when they purchase with cash.
Developing an app
With the urban mass getting more tech-savvy, the concept of door-to-door delivery apps is gaining considerable traction. Hence, many liquor stores look to develop their delivery apps to ensure maximum customer retention and gain competitive advantages. However, to get an app developed by a reputed company, that offers a highly-responsive interface and optimum payment security, a liquor store owner often needs to pay a soaring fee. MCAs can be used to pay the fee as the lenders don’t restrict the fund usage.
Meeting the seasonal demands
People tend to purchase more liquor during the festive season. Hence, liquor store owners need to invest in extra stock before the festive season starts to ensure maximum sales during the peak season. MCAs are quite a viable financing option for business owners looking to equip themselves before the rush starts.
Hiring additional employees
Every liquor store has staff that assist customers, restock inventory, manage the register and perform other necessary tasks. But what if some of a store’s staff go on prolonged sick leaves during the peak season when the demand is high? This is when the store owner requires hiring contractual employees to cope with the emergency. MCAs can be used for hiring additional employees.
Opening another business location
Liquor store owners, who are making significant revenues from one store and looking to open more stores in other locations, can opt for MCAs. Opening multiple stores require substantial investments to pay for the utility bills, interior, payroll, and other store set-up expenses. Hence, MCAs, which can be used for multiple purposes, turn out to be quite beneficial.
Conducting impactful marketing campaigns
Marketing expenses are generally huge, in the case of newly-opened liquor stores. The store owners need to spend on online advertising, store registrations, print advertisements and local publications to acquire customers. With the help of business finances like MCAs, liquor store owners can promote their stores and conduct strategic marketing campaigns.