One staples order at an invented Tarboro, NC station store, priced three ways: 20 weekly payments on a short-term loan, five line paydowns two weeks apart, or an advance collected from card sales. A frozen beverage machine that lasts years is priced apart, on a longer equipment loan.
In this invented case the line costs least for the staples because it is paid down every two weeks, and the advance costs most. The beverage machine goes on its own 36-month schedule, and both payments are set against a week of card sales.
Short-term business loans for store stock: canned goods, rice and paper towels
An invented Tarboro, NC station store adds an aisle of shelf-stable staples, canned goods, rice, flour, cooking oil and paper towels, so a customer who stops in for one item can pick up a few groceries too. The first stock order for the aisle comes to $5,865 in this invented case.
On a short-term loan of 20 weekly payments at an invented annual rate of 15.6%, the store pays $302.57 each week, $6,051.40 in all, and $186.40 of that is interest (our arithmetic).
A short term fits because staples sell within weeks and are reordered from sales. If the aisle does not sell, the payments still fall due, so the order is sized to what the store can carry for twenty weeks without help from the aisle. Stock costs like these are one use of working capital.
Short-term loan, credit line or card-sales advance for the same staples order
Three kinds of short money can pay for the same invented order, and each takes its money back differently.
| Option | How the money goes back | Invented cost |
|---|---|---|
| Short-term loan, 15.6% | 20 weekly payments of $302.57 | $186.40 interest |
| Line of credit, 13.75% | Five paydowns of $1,173, one every 14 days | $92.80 interest |
| Merchant cash advance, factor 1.24 | 7% of each day's card sales until $7,272.60 is collected | $1,407.60 above the amount received |
In this invented comparison the line of credit costs least, $92.80, because each paydown cuts the balance two weeks at a time. The invented loan costs $186.40. The merchant cash advance, which is not a loan, costs $1,407.60: its factor fixes the total, and at invented card sales of $2,135 a day it is collected in about 49 business days without that total changing (our arithmetic).
The line works only if it has room when the order lands. The loan needs no line at all. The advance costs the most of the three here.
A partner may also look at how steady the store's card sales are from week to week before offering any of the three. An advance is sized from card sales alone, so a store that takes much of its money in cash may be offered less than the order needs.
A frozen beverage machine on an equipment loan, its water line left out
A two-barrel frozen beverage machine is counter equipment a station store keeps for years. The invented store prices one at $9,715 and asks about an equipment loan over 36 months at an invented annual rate of 12.25%.
Our arithmetic gives $323.84 a month for 36 months; the invented machine costs $11,658.24 in total, $1,943.24 above its price.
The machine is equipment. The water line and the drain it connects to, and any new circuit, are property work outside this site. Syrups and cups are weekly supply costs and stay out of the equipment request.
Coolers and the rest of the counter equipment work the same way; the station store trade page prices a register kit and a coffee machine.
Planning weekly payments against a week of card sales
A store can test both payments against one week of its own card sales before it signs. The invented store takes in $14,945 a week by card, $2,135 a day for seven days.
The staples loan takes $302.57 of that invented week. The beverage machine's monthly $323.84 works out to about $74.73 a week once spread over a year (our arithmetic). Together they take $377.30 a week, 2.5% of the invented card sales.
If the aisle does well, the staples loan ends after twenty weeks and the invented share falls to the machine alone, 0.5%. If it does not, the store still carries both for those weeks, and that is the case to plan for.
Gasoline stations in Edgecombe County, NC paid $3.9 million in annual payroll in 2023 across 25 employer establishments (County Business Patterns). In the ZIP Code file for 2023, 11 gasoline stations with paid staff carry a ZIP 27886 address. More short-schedule cases are on the articles page.
By Riverview Business Loans · Updated
