SBA 7(a) Loans for Liquor Stores

There are nearly 50,000 wine, beer, and liquor stores througout the United States, generating an annual revenue of approximately $58 billion. Between 2006 and 2015, liquor stores took out more than $2.3 billion in SBA 7(a) loans, with an average loan size of $366,000. If you’re looking to purchase, expand, or refinance business debt on a liquor store, SBA 7(a) financing could be a fantastic option— and since borrowers can use these loans for working capital, owner-occupied commercial real estate, and equipment, they’re the perfect choice for the needs of many wine, beer, and liquor sales businesses.

SBA 7(a) Loans for Liquor Stores: What You Need to Know

The alcohol sales industry is changing quickly, and with a greater emphasis on craft beers, whiskeys, and hard sodas, local liquor stores need to keep up with trends if they want to stay competitive. Fortunately, the SBA 7(a) loan can provide liquor businesses the capital they need to survive— and thrive in a constantly changing market.

Common SBA 7(a) loan uses for liquor stores include:

  • Buying merchandise Liquor stores are constantly in need of new merchandise— and that can get expensive, especially when sales can often be cyclical. Fortunately, SBA 7(a) loans can fund working capital, including merchandise, employee salaries, and even marketing materials for a liquor retail business.

  • Buying out a partner: If one or more of your business partners wants to move, retire, or go into a different business, an SBA 7(a) loan can be an effective way to buy them out.

  • Refinancing debt: SBA 7(a) loans can be used to refinance SBA-eligible business debts offered to the borrower on unreasonable terms, significantly reducing interest rates and improving cash flow for liquor retailers.

  • Buying or expanding a liquor store:  If you’re considering purchasing an existing liquor store or expanding a liquor store you currently own, an SBA 7(a) loan might be able to help you achieve your goals.

The Importance of Getting a Liquor License

One of the most complex (and most expensive) aspects of opening a new liquor store is obtaining a new liquor license. Liquor license prices can vary by state and by city, with some licenses costing only a few thousand dollars, while others costing hundreds of thousands. There can also be differences based on how the license was obtained; some states have lotteries that grant a certain number of lucky businesses a license at a discounted rate, while charging a much higher price to directly purchase a new license from the government.

Unfortunately for aspiring liquor store owners, SBA loans cannot typically be used to purchase a liquor license. The main reason for this is simply that doing so would be too risky for both the lender and the SBA; if the license was not approved, the borrower would not be able to start the business, and would have no way to repay the loan.

Be Careful With Liquor Store Acquisitions

If you’re seriously considering purchasing an existing liquor store, you’ll want to be extremely careful when it comes to the price you pay for the business. Many liquor store owners are notorious for poor bookkeeping and large amounts of unrecorded cash sales (often to avoid paying taxes). So, while the seller of a liquor store might only show $400,000 in revenue on their tax documents, they may tell you they bring in more than $1 million a year; but that doesn’t mean you should necessarily believe them. A good rule of thumb is to purchase a liquor store only on the value of revenues/profits that can be recorded— not on the word of a seller (especially if you don’t know or trust them.)

SBA 504 Loans May Be Better for Larger Stores

While SBA 7(a) loans are often the best financing option for many liquor retailers, others may actually find that the SBA 504 loan is a better choice. This is especially the case if the business only want funds to purchase commercial real estate to build a new store, or, for larger liquor businesses, to build a new distribution facility. While 504 loans can’t be used for working capital, they do have slightly lower interest rates and can finance commercial real estate construction/acquisition deals up to $5.5 million.


We’re here to help you get the commercial financing you need. Contact SBA7(a).Loans today to arrange your risk-free, personal consultation, or, simply Click the button below to apply with our partners at lendio!