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3 Aspects to Consider When Financing Your Path to Growth

As independent home improvement retailers strive to grow their operations, one of the biggest obstacles they face is financing their goals and finding the assets needed to take their operations to the next level. 

Hardware Retailing spoke with Brian Misenheimer, senior lender at Live Oak Bank, the country’s leading Small Business Administration (SBA) lender by dollar volume*. With his extensive experience in the home improvement industry, Misenheimer shared invaluable insights on how to finance growth as an independent.

Hardware Retailing (HR): What types of financing are available to independent small businesses to grow their operations?
Brian Misenheimer (BM):  The world of financing offers a variety of options for independent retailers. These include traditional bank loans, SBA expansion loans or personal loans from friends or family. However, optimizing your operation’s cash flow is one of the most effective ways to fuel growth. By managing your cash flow effectively, you can position yourself for favorable financing and create opportunities for expansion without relying solely on external loans. 

HR: How does a retailer determine how much financing they’ll need?
BM: Having a business plan is crucial in all business areas, especially when determining how much funding is needed to grow. Creating this plan starts with deciding how you want to grow. Here are a few examples to consider: Do you want to add inventory? Take on a remodel? Open an additional location? Once you have defined goals, you can meet with your trusted advisors, vendors and your wholesaler for input on the amount you’ll need to achieve those goals.

HR: What must-ask questions should a retailer bring to their lender?
BM: Before a retailer meets with a lender and asks questions, they should have their financials in order including projections and historical financials. Having a well-articulated business plan with assumptions to the projections will help paint a clear picture of what you’re trying to accomplish and how you plan to do it. 

A critical point retailers should ask about is the structure of the loan. It seems like everyone’s first question is always about interest rates, but structure beats rate almost every day of the week. Longer amortizations, interest-only draw periods, balloon payments, prepayment penalties and loan covenants are just a few items to consider when comparing loan structures. Also, working with a lender that understands your industry can also be a game changer. 

Live Oak employs industry experts in various “verticals,” with Misenheimer as the primary lender in the home improvement space. Through Live Oak’s home improvement business vertical, retailers have access to dedicated underwriters, loan closers and portfolio managers who understand the industry. For more information on business financing for independent hardware retailers, connect with Brian Misenheimer at brian.misenheimer@liveoak.bank or at 571-217-3022.

* The data supplied by the SBA reflects 7(a) highest dollar volume FY 2023.


About Lindsey Thompson

Lindsey joined the NHPA staff in 2021 as an associate editor for Hardware Retailing magazine. A native of Ohio, Lindsey earned a B.S. in journalism and minors in business and sociology from Ohio University. She loves spending time with her husband, two kids, two cats and one dog, as well as doing DIY projects around the house, going to concerts, boating and cheering on the Cleveland Indians.

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