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Furniture Store Financing

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Article summary:

  • Furniture store financing provides funds to build or expand your business.
  • Term loans and business lines of credit are two popular options, with different perks for furniture store owners.
  • A variety of lenders provide financing options, but each has different eligibility requirements.

How to Use a Business Loan to Expand Your Furniture Store or Open a New Location

Running a furniture store business can mean catering to the unique tastes of clients in your area, restocking inventory to keep up with the latest trends, and scoping out new wholesale retailers when supply chains shift. Like most small businesses, you’re probably familiar with the hurdles that come along with business ownership. Your revenue can change month to month and seasonal trends can have an impact on your cash flow that can make it hard to stay on top of your expenses.

Data from PYMNTS Intelligence shows that 45% of small business owners in the United States go without a paycheck due to cash flow issues. A business loan can help you smooth out uneven cash flow or help you move into a phase of growth for your furniture store. Here’s how different financing options can help your furniture store thrive, or even help you open a new location.

Identify Your Financial Needs

Business loans are available for many different reasons. Whether you need help with working capital or expansion, these funds can be a lifeline to help you reach your goals. Before doing your research on types of financing, identify your business needs. For example, you might need funds for:

  • Working capital
  • Marketing
  • Ordering new inventory for the season
  • Opening a new furniture store location
  • Renovating your showroom
  • Upgrading your technology

Getting specific about how extra cash will help your business in a few ways. First, it can help you execute your vision and stay focused. Secondly, any lender will want to know what you’re using the business loan to accomplish. Lastly, it can help you calculate how much you need and create a plan for repayment.

Research Financing Options

After you identify your business needs, research financing options. Business loans can come in different forms and sizes. Some may have more flexibility, while others have a firm structure. Depending on your business needs, one option could be preferable over another. Some common business financing options include:

Term Loans

Term loans are a type of business loan that offers borrowers a lump sum of money. You can access the capital you need to grow or expand with furniture store financing. In many cases, term loans have fixed interest rates which can be helpful when budgeting for monthly payments.

If you need furniture store financing, term loans are one option to consider. Especially if you need a large sum to acquire a new space to open a second furniture store or renovate your current one.

Term loan pros:

  • Lump sum funding
  • May have a fixed rate and predictable monthly payments
  • Many lender choices, from banks, credit unions, online and alternative options

Term loan cons:

  • May require collateral
  • Some term loans may have short repayment terms (a few months to a few years)
  • Strict eligibility requirements around annual revenue and time in business

Business Line of Credit

A business line of credit is a financing option that gives you access to available credit on demand. Lenders will approve you for a specific line of credit with a limit. You can use the exact amount you need up to that limit.

So if you have a $40,000 line of credit but use only $25,000, you’d repay the $25,000. What makes this type of financing appealing is that you have financing available to you ongoing during the life of the credit line. When you pay down your balance, your available credit resets and you can borrow more.

Business line of credit pros:

  • Interest charged only on what you borrow
  • Flexibility with borrowing up to the credit limit
  • Available credit resets as you pay back the line of credit

Business line of credit cons:

  • Typically has a variable rate
  • May come with more fees
  • Lower limits compared to loans - not ideal for large financing needs

SBA Loans

The Small Business Administration offers multiple loan options to eligible business owners. As a furniture store owner you may qualify if you meet SBA eligibility requirements.

The SBA 7(a) loan program allows you to:

  • Acquire, refinance, or improve real estate. So if you need to renovate your existing furniture store or are looking to secure a new location, this can be a good option.
  • Get both short and long-term working capital. SBA 7(a) loans can support business owners with operational expenses and to manage cash flow issues.
  • Get inventory: The SBA 7(a) loan can also be used to buy furniture or supplies, which is a great fit for furniture store owners who need to replenish their inventory.

Additionally, the SBA 504 loan can go toward new facilities or buy existing buildings or land.

SBA loan pros:

  • Backed by the federal government
  • Different loan programs
  • High loan maximum (if you qualify)

SBA loan cons:

  • Strict eligibility requirements
  • Lots of paperwork
  • Slow processing and funding times

Business Credit Card

If you need fast and flexible financing, a business credit card can fill that need. As a type of revolving credit, cardholders tap available credit, pay it back, and repeat. If you show credit card issuers that you’re a responsible borrower with on-time payments, this can be a simple way to build business credit (make sure payments are reported to the major business credit bureaus).

On the other hand, business credit cards typically have much higher interest rates than other types of financing. Due to that, they’re typically only a good solution for short-term needs.

Business credit card pros:

  • Convenient
  • Fast and flexible
  • Potential to build business credit

Business credit card cons:

  • High purchase APR
  • May have a lower credit limit
  • Not ideal for long-term or large financing needs

All of these financing options will require credit approval. Plus, your time in business and furniture store revenue will come under scrutiny.

Checking your personal and business credit and getting your financial documentation in order can help streamline the process. Before applying, review the payment options, interest rates, and find out if there is a promo period you should be aware of.

How to Apply for Furniture Store Financing

To apply for furniture store financing:

  • Identify your needs: Evaluate your specific needs for your furniture store business. For example, you might need help with cash flow or to get new inventory or acquire a new space.
  • Choose the type of business loan: After determining your business needs, check the available furniture store financing options to choose the right fit. Look at the overall flexibility, repayment terms, interest rates, potential down payments, and other fees.
  • Research lenders: Business financing is available from financial institutions like banks and credit unions. Online and alternative lenders also offer term loans and sometimes have faster processing times.
  • Check eligibility requirements: Narrow down your options and check each lender’s eligibility requirements. For example, this could include a minimum credit score, time in business, and annual revenue thresholds.
  • Gather paperwork: Lenders will review your business finances and may look at your personal and business credit scores. As part of the loan application process, you’ll need to provide additional documentation such as financial and bank statements, tax returns, profit and loss statements, etc.
  • See if you can prequalify with a lender: Every lender is different, and some may allow you to get prequalified for a loan offer, to see if you’re eligible.
  • Submit application: Fill out the business loan application in its entirety and provide all the requested supporting documentation.
  • Receive funding: Upon approval, you can receive the funds. Processing and funding time depends on the loan and lender. This could range from a couple of days to a couple of weeks or months.
  • Invest in your business: Now that you have the capital needed for expansion, use your funds wisely and put the money back into your business.
  • Make minimum monthly payments or more: Start repaying the loan based on the lender’s terms. Minimum monthly payments can help you stay in good standing. If you can pay more than the minimum, you can repay the loan faster and reduce interest charges.

Final Thoughts

A business loan can bring new life and opportunities to your furniture store business. Whether you’re looking to expand your business and get new items like room sets or recliners or open a new location, furniture store financing can make it possible. You might be dealing with the day-to-day challenges of running a business. Getting the right business loan for your specific needs can give you breathing room to do more.

FAQs about Furniture Store Financing

Here is more information and frequently asked questions about furniture store financing. Be sure to research the best furniture store to finance inventory, so you don’t have to pay the full purchase amount upfront.

Do You Need a Down Payment to Get Furniture Store Financing?

You may need a down payment to get furniture store financing, depending on the type of business loan and the lender. Some retailers offer special financing and may have a promotional period where there is 0% interest. Be aware that there may also be a promo fee.

What Credit Score Do You Need for Furniture Store Financing?

Furniture store owners looking for a business loan generally need a credit score of 670. This can vary by lender and there may be low credit furniture financing available if you don’t have great credit.

What Types of Furniture Store Financing Are Available?

Business owners looking for furniture store financing can look at term loans, SBA loans, business line of credit, and business credit cards. You may also look into lease-to-own opportunities and furniture stores with no interest financing.

Is Furniture Store Financing Available to Open Multiple Store Locations?

If you want to open another furniture store at multiple locations, furniture store financing is available. You can look into term loans and SBA loans and review eligibility and maximum loan amounts.

How Can Furniture Store Financing Help Business Owners?

Furniture store financing can help business owners get new items for their showroom, like ottomans, sectionals, living room decor, sofas, dining sets, and more, without paying upfront. You may be able to use in-store financing or get a business loan to break down the cost into manageable monthly payments.

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Term Loans are made by Itria Ventures LLC or Cross River Bank, Member FDIC. This is not a deposit product. California residents: Itria Ventures LLC is licensed by the Department of Financial Protection and Innovation. Loans are made or arranged pursuant to California Financing Law License # 60DBO-35839

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