Setting Up Shop: How to Get a Business Loan for Your Vape Store

The vaping industry is one of the most successful modern industries right now.

The vape industry is expected to reach $48 billion by 2023. If you’re thinking about starting a business, consider forming a business in the profitable vaping industry.

During the business planning process, your financing options should be at the forefront. Today, small businesses have many financing options. But business loans are still popular among small business owners.

But how do you get a business loan? If you want to know how to get a business loan for your vape company, continue reading.

Calculate Your Expenses

Before you sign up for a loan, you need to prepare for your business costs.

Here are a few ways to determine your expenses.

First, understand if your business is based online or you require a physical location. Brick-and-mortar stores require more or different expenses than online-based businesses.

Here are common business expenses most businesses need:

  • Equipment and supplies
  • A storefront or office
  • Utilities
  • Communications
  • Insurance
  • Licenses and permits
  • Inventory
  • Lawyer
  • Accountant
  • Advertising
  • Marketing
  • Employees
  • Website
  • Market research

There are also vape-specific expenses, but this depends on the type of vape company you own. For example, are you a manufacturer of pens or e-juice? You’ll require different expenses than a vape store or retailer.

Know What Kind of Business Loan You Need

A business loan can provide financing for these core aspects of your business.

  • Your first business expenses (supplies, property, etc.)
  • Day-to-day operations
  • Funding your business growth
  • Providing a financial backbone

There are multiple loans that can provide these benefits. Here are the different types of business loans you can choose.

Business Term Loan

This is best known as a traditional business loan. You can borrow anywhere between $1,000 and $500,000. These loans also don’t require collateral, but this depends on the lender.

These loans can take between one and five years to pay off, but some lenders offer shorter and longer options.

Interest rates vary between 7% and 30%. Your lender will determine your interest rate based on your business’ credit score, your monthly revenue and current financial health.

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SBA Loans

Beginning vape companies will have the most luck taking a loan from the USA Small Business Administration, or SBA. You can borrow as little as $5,000 or as much as $5 million.

These loans are ideal because they come with low interest rates. They also have long repayment terms and businesses don’t have to provide any specific purpose or collateral.

However, the application process is time-consuming and it takes a long time to receive your money.

Equipment Financing

Do you only need a loan for equipment or supplies? Look into equipment financing.

These loans only give you enough to pay for equipment. The APR rates are low – usually between 8% and 30%. This option is ideal for businesses with no or bad credit scores.

Loan terms usually last around five years or even as long as you’re using the equipment.

Business Line of Credit

A business line of credit is similar to a credit card. Businesses are given a capped amount of financing for a specific period of time. You can either use it all or use what you need.

You only pay back what you spend. After you pay off your credit, you can redeem more credit.

Since businesses with low credit ratings also qualify, this option is ideal for businesses with no or bad credit.

The repayment and APR depend on your business revenue and financial help. On average, APR is between 7% and 25% and repayment lasts between six months and a year.

Personal Loan

Surprisingly, you can use a personal loan toward business expenses. Many small businesses opt for this option because personal loans give you a decent amount of capital without strict standards, collateral, and long repayment periods.

This option is ideal if your business hasn’t generated any revenue. Lenders won’t give your business a loan unless you’ve been in business for two or three years and are generating revenue.

With a personal loan, lenders only look at your personal financial situation.

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It’s easy to qualify for a personal loan and you can receive your money quickly. You can read more here.

How to Qualify

Every loan requires different qualifications and they all have different standards. Here are some core aspects to consider.

  • Your business length and success
  • Your business credit score
  • Your ability to make the payments
  • Your revenue

These are factors a lender will consider to determine your trustworthiness.

Research Lenders

When you find the best business loan for your needs, you’re going to want to find the best lender.

These days, you have several lending options. This includes banks, online lenders, and nonprofit lenders.

But make sure you don’t walk blindly into business financing. Shop around for different options. Keep APR and repayment terms in mind when shopping around.

For example, banks are one of the most reliable options but they require collateral and it can take a while for you to receive capital. Microlenders, online lenders and nonprofits are the best options for brand new businesses.

Apply and Provide Documentation

When you find the best loan for you, you can start the application process. But when you apply for a loan, you need to prove that you qualify.

Each business loan will require different documentation. Here are the basic documents you should provide:

  • Business and personal bank statements
  • Business and personal tax returns
  • Any business legal documents (lease, articles of incorporation, franchise agreements, etc.)

From here, you find a lender and apply.

How to Get a Business Loan for Your Vape Business: It’s Easy!

Does your vape business need financing? A business loan is a great option. But you need to know how to get a business loan.

Business loans let you borrow a certain amount and require a repayment period for a certain APR percentage. Use this advice and find the loan your vape business needs.

If you already own a vape store, you should consider selling e-cig kits. Read our section on the most popular e-cig kits.