Liquor Store Financing

Liquor stores are retail businesses that stock a variety of everyday items such as liquor, snacks, beverages, newspapers and magazines, tobacco products, beer, groceries, and some household items. More than just selling alcohol, liquor stores provide for on-the-go needs as a faster alternative to supermarkets when consumers need to make limited purchases for immediate use. Lottery ticket sales help to increase the liquor store revenue base as well.

What makes a liquor store successful is primarily their location, inventory and extended hours of operation, hence the term “convenience.” In addition to providing ready-to-use consumer products, liquor stores also sell services such as money transfers, phone cards, and limited-use cellular phone plans. Many convenience stores also sell lottery ticket, tobacco products, packaged beverages, prepared foods and regional or vacation supplies.

The appeal for many entrepreneurs interested in owning a convenience store is that these businesses tend to be recession proof, lucrative and require a relatively short training period to get up and running as an owner. Still, it does require good skills or skill development in terms of management, accurately maintaining books and records, inventory control, marketing and customer service. For those convenience store buyers interested in investing their time, money and resources in acquiring this type of business, the results are promising for success.

Liquor Store Loans

liquor store financing

Acquiring a well-established business offers advantages in applying for a liquor store loan. Lenders seek to lend to qualified borrowers with relevant experience when the business in question is established, consistently profitable and with good books and records to document excellent business performance. The more profitable, the more likely lenders will finance a liquor business transaction since their risk is low and their chances of repayment and making a profit are high.

To buy a liquor store, the buyer needs to secure financing to acquire the business. If the liquor seller failed to maintain good books and records, traditional bank funding will be impossible to obtain. Lenders are highly selective about who they offer business acquisition loans to and approve only about 25% of the applications they receive. For the 75% of businesses barred from traditional bank financing, alternatives are available especially when working with a liquor store loan broker.

SBA Loan Calculator

Options For Business Opportunity Financing

Liquor Store Financing

liquor store financing

The SBA is a US government administrative department that offers commercial funding. The SBA is not a lender. While the government does not provide commercial liquor store funding, the SBA offers its network of approved lenders a guarantee of repayment in the case of the borrower’s default. The SBA offers the most favorable rates and terms for commercial financing. The SBA guarantees up to 85% of a loan, permitting lenders to offer higher loan amounts on more favorable terms to the borrower.

For liquor stores with long-term time in business, high profitability along with the borrower’s extensive relevant liquor store management experience operating a liquor store, a conventional bank business loan might be feasible to secure funding. Traditional bank terms, however, are not as favorable as SBA loans for funding loans for liquor stores.

Retirement Funds

Retirement Funds: A qualified retirement account, such as an IRA or a 401(k), can be rolled into a convenience store business acquisition investment. Technically, since it’s already the borrower’s money it’s not like a traditional loan. Yet, it is borrowing from one’s retirement account. Borrowing against retirement allows entrepreneurs to use their business as a tax-deferred investment as opposed to investing in the stock market or real estate. The process usually runs rather quickly and funds can be secured within 30 days for liquor store financing.

Seller Financing

Seller Financing For those liquor stores with inadequate books and records, they may very be shut out of traditional and SBA loans. A borrower’s less than stellar credit history may also pose as a hindrance to third-party lending. Where this is the case, a very common alternative to traditional liquor store loans is seller financing. In lieu of receiving the full purchase amount, a liquor store seller might be willing to finance all or part of the acquisition price. The transaction is collateralized by the convenience store business. Usually the seller will want a 25-40% down-payment.

Business Line of Credit

For borrowers already in business, another option is to get a business line of credit and use those proceeds to purchase a liquor store. These credit lines are usually unsecured and can be used for general business expenses.

Home Equity Line of Credit

For liquor store buyers who have equity in residential properties, a HELOC might be an excellent option for borrowing against that realty to finance the liquor store acquisition.

Unsecured Business Loan

For liquor store buyers with exceptional credit, an unsecured business loan may be obtained based solely on the borrower’s creditworthiness. Usually the borrower has substantial cash assets. Unsecured business loans do not require the borrower to pledge collateral like inventory, equipment, or real estate.

Alternative Financing Sources

Hard money loans are another option for financing a liquor store purchase. While not on the top of the list, this type of loan might be used as a bridge loan to a future SBA loans that may not be available now for the borrower. These types of loans usually involve very high interest rates for short terms. If a borrower has poor credit or the liquor store seller did not maintain good books and records, getting a hard money loan for a few years while the borrower successfully operates the business and maintains good records, could permit securing SBA financing for the liquor store at a later date.


Investors/Partners: Though not a loan, a borrower with good connections and experience might be able to solicit capital investment or partnership in order to lower the amount that they need produce to acquire the business. By spreading the risk and sharing the rewards, the liquor store buyers can facilitate the business acquisition with or without financing.

SBA Acquisition Loans For Liquor Store Financing

In the United States, the Small Business Administration offers two primary loan options for liquor store financing of business acquisitions. The 2 liquor store loan options are the SBA 7 a loan program and the SBA 504 Loan.

Liquor store SBA loans are one of the very  methods ways to finance the business acquisition of a convenience store.  With reasonable interest rates, long-term loan periods, and numerous lenders, securing funds to buy a liquor store has never been easier.

The SBA 7a loan program is used for convenience store business acquisitions or working capital. The borrower usually has to come up with a 20% down payment. The loan term is 7 years.

The SBA 504 loan option is used for financing the purchase of liquor stores with commercial real estate. The down payment is 10-20% with a loan term of 30 years. The small business owner must occupy at least 51% of the commercial property.

In terms of collateral, the 7 a business loans may require the borrower to post outside collateral such as unrelated real estate to the gas station acquisition. For a 504 loan, no outside collateral is necessary for funding.

liquor store sba loans

What initial documentation is necessary for an SBA Liquor Store loan?

  • A completed, signed loan application
  • Provide the past 3 to 5 years of complete personal tax returns.
  • One page resume of the borrower's work experience & education
  • A Personal Financial Statement detailing the borrower's personal income, assets, and liabilities.
  • Provide an explanation of any past bankruptcies either personal or business related.
  • Borrower's financial statements to verify the funds used for the down payment/cash injection.
  • The liquor store business purchase agreement and related documentation.

What Additional Documentation Is Commonly
Requested In A Liquor Store Acquisition?

For SBA loan underwriting of a liquor store business acquisition, the borrower also needs so submit all appropriate inspection and registration documents for the business . Additionally, the borrower will need to produce to the lender these common documents:

  • Financial documents pertaining to the liquor store business showing cash flow
  • Balance sheet for three years, including current year and year-to-date
  • Escrow instructions, including closing date, bank agent or escrow agent contact information
  • Copies of all tax returns filed for the entity for 3-5 years
  • Details of all capital assets to be transferred including: equipment, inventory, receivables, etc.
  • Profit and loss (P&L) statements for business for the last 3 years.
  • Business operational documentation
  • 3 years of contracts for all current and past fuel providers, equipment leases and vendors
  • All current and previous vendor agreements and contracts for past 3 years
  • Contracts for any current and past equipment leases, etc.
  • Third-party and regulatory documents
  • The buyer/borrower's proforma business plan with 2-3 years of financial projections projections
  • Existing lease & related documents including any options to renew or additional riders
  • If realty is involved, the existing deed, environmental impact reports, etc.

The lender will order a third party market appraisal to determine comparable sale prices for similar businesses to justify the sales amount of the contract for sale. If realty is involved in the deal, then the lender will also order a market valuation of the real estate in addition to the small business to ascertain the total amount of value involved in the transaction.

Why liquor store business loan
applications are declined

  1. Seller’s financial records fail to fully reflect the business’ financial performance because of high cash sales which may prove fully documenting and proving total business income difficult.
  2. Seller’s business records demonstrate decreasing sales, low cash flow, lack of outside collateral or the borrower’s lack of relevant or management experience.
  3. Borrower’s poor credit score may negatively impact approval.
  4. Incomplete or inadequate application, documentation, records, etc.

Working Capital SBA Loans For Liquor Store Owners

liquor store financing

One of the biggest errors convenience store business owners make is failing to maintain sufficient working capital. Cash flow is essential to operating a successful liquor store. Where funds are tight, SBA 7a funds can be used to fund capital expenditures, new or expanded inventory, hire additional staff, etc.

Smart liquor store owners know that securing working capital for their small business, while the business is thriving, is the best time to get approval. Waiting until the business is cash poor puts the liquor store owner and business in financial jeopardy. Establishing credit lines via an SBA loan, as early as possible, for business security is a must.

Maintaining working capital also helps convenience store owners navigate complications that may arise. Having enough inventory during peak demand is critical. Many liquor stores sell perishable food items. Where the business owner loses inventory due to spoilage, they need to quickly replenish supplies to avoid risking lost revenue due to low inventory.

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