Securing startup finance is one of the most critical aspects of launching a business. I’m sure you’re eager to figure out how to get a loan for your ice cream business. I got you covered.
You can follow these steps to secure a loan for opening an ice cream shop:
- Identify Which Type of Loan You Need
- Check Your Personal and Business Credit Scores
- Comply With All of the Requirements
- Submit Your Application
In this post, I’ll walk you through the types of loans and their terms in depth, so keep reading.
Identify Which Type of Loan You Need
The first thing you need to do is figure out what type of loan you need. You should consider which sort of financing is ideal for the type and scale of your ice cream business.
To give you an idea, here are 6 types of loans that are suitable for your venture:
- Online Term Loans -Term loans provide borrowers with a large amount of cash upfront in exchange for particular borrowing terms. They are ideal for small enterprises looking to buy fixed assets.
- SBA Micro Loans – Small Business Administration’s microloan program offers loans of up to $50,000 to help small businesses get started and grow. This loan is ideal for the overall improvement of a small business. However, the proceeds of this loan cannot be utilized to pay off current obligations or to buy real estate.
- Asset-based Financing – This provides working capital and term loans to businesses. It is typically used to cover expenditures when there are unexpected gaps in cash flows, but it can also be used to fund a startup.
- Personal Loans for Business – This is an excellent substitute for a business loan. Personal loans are ideal for new businesses since they are easier to qualify for, especially for startups with little to no business experience.
- Business Lines of Credit – A line of credit allows businesses to borrow up to a specified sum of money and only pay interest on the amount borrowed. It is perfect for unforeseen expenses, cash flow problems, and significant expenditures.
- Equipment Loans – It is a typical funding option for businesses that require new equipment but lack the financial resources to pay cash. This is a more prudent financial option since quick profits from newly bought equipment can be utilized to fund the loan’s monthly installments.
These loans are tailored to specific needs. Equipment loans, for example, are ideal if you need to purchase an ice cream maker machine. If you don’t have enough money for a down payment, you can pick the SBA Microloan, which doesn’t demand one.
How To Start An Ice Cream Business From Home
Check Your Personal and Business Credit Scores
Banks will use your credit score to assess your capacity to repay them on time. So, once you’ve determined the loan you need, the next step is verifying your personal and business credit scores.
You can accomplish this by requesting copies of your credit reports or checking your credit score with your credit card provider. This can help you to understand your chances of approval and the interest rate you’ll qualify for.
To give you an idea, a personal credit score of 600-640 can indicate you’re disqualified for most bank business loans.. In comparison, credit ratings of 700 or above can qualify you for almost any business loan.
Key Goals And Objectives Of An Ice Cream Business
Comply With All of the Requirements
After you’ve checked your personal and corporate credit ratings, the following step is to gather all of the prerequisites or required documentation.
The requirements for securing a loan will differ among lenders. To give you an idea, these are some of the typical loan requirements for each type of loan:
1. Online Term Loans
- Bank Statements
- Personal Documents
- Collateral Documents
- Excellent Credit Score
2. SBA Micro Loans
- For-Profit Small Business
- An Average of 575 Credit Score
- Business Plan
- Collateral and Personal Guarantee
- Good Personal and Business Character
3. Asset-based Financing
- Liquid Collateral
- Well-balanced Accounts
- Personal Documents
4. Personal Loans for Business
- Minimum Credit Score of 600
- Debt-to-income Ratio
- Collateral
- Proof of Identity and Address
Five Job Positions In An Ice Cream Shop
5. Business Lines of Credit
- Collateral
- Business Operating Time
- Financial Statements and Reports
- Profit and Revenue
- Economic Ratios
6. Equipment Loans
- Excellent Credit Score
- Good Financial Record
- Business Plan
- Cash Flow Statement
Submit Your Application
You can now submit an application after compiling all the requirements. Do take note that application procedures may differ based on the lender and loan type.
In most cases, applications can be submitted online, over the phone, or in person at a branch. After applying, a lender representative will reach you for more information or documents.
To apply for an SBA microloan, you need to find an SBA-approved intermediary in your region. All credit decisions and loan terms are made by SBA-approved lenders.
Conclusion
All in all, these are the steps to secure a loan for opening an ice cream shop:
- Identify Which Type of Loan You Need – Identify what is most suited for the type and scale of your ice cream shop. You can choose from Online Term Loans, SBA Microloans, Asset-Based Financing, Personal Loans, Business Lines of Credit, and Equipment Loans.
- Check Your Personal and Business Credit Scores – Examine your credit scores. This can be accomplished by acquiring credit score reports and consulting with your credit card issuer.
- Comply With All of the Requirements – Compile all the requirements, which can vary depending on the lender. In most cases, you need an excellent credit score, collateral, and personal documents.
- Submit Your Application – Submit your application once you have completed all the steps. The process varies based on the lender, but in most situations, applications can be completed over the phone, online, or in person.
Frequently Asked Questions
You can start an ice cream business by doing the following: 1) creating a plan, 2) discovering earning potential, 3) setting a budget, 4) deciding which products to offer, 5) deciding on a location, 6) finding suppliers, 7) creating a staffing plan, 8) deciding on a design, and 9) marketing your business.
The yearly revenue of an ice cream shop varies from $19,900 to $49,000. This is determined by the shop’s location and product selection. Furthermore, with the right vision and determination, entrepreneurs have the ability to earn much more than that.
Typically, the cost of operating an ice cream business range from $20,000 to $50,000. However, this sum can change depending on whether you opt to buy or rent a place, as well as if you acquire new or old equipment.
To learn more on how to start your own ice cream/gelato business check out my startup documents here
This blog post is provided for informational purposes only. The information contained is not intended to constitute legal advice or to substitute for obtaining legal advice from a qualified attorney.
Hi! I am Shawn and I am a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online ice cream/gelato business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a ice cream/gelato business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Ice Cream Business Boss: I want to help ice cream and gelato business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.