How Biz2Credit Helped Pradeep Saini Get Funding For His Liquor Store

It was 2006 and Pradeep Saini was bankrupt. He'd been working in real estate investing, and the bottom had dropped out for him, as it had for so many others.

"At that time, everyone was struggling, including ourselves. Not that many businesses were surviving that recession," he remembered. "A lot of businesses were closing down, cutting labor. People without jobs couldn't pay mortgages; mortgages were upside down, banks foreclosing."

He knew he needed to find a secure business, one that would be recession-proof. After some research, he settled on alcohol: "Everybody drinks, whether they are sad or happy; it sounded like a good business to be in," he said.

Crucially, Pradeep didn't have to look that far from his corner of Maryland. In Frederick County, laws worked in his favor - he would be able to get a license to sell all three of the most popular drinks: beer, wine, and liquor. This may not sound unusual. However, liquor laws in other parts of the state, as well as in all three surrounding states - Pennsylvania, Virginia, and West Virginia - range from strict to prohibitive. Live in the wrong town, and your desire to kick back on your couch with a beer means you can only buy that bottle at a bar . . . and you have to buy it with 23 others, since that bar can only sell by the case.

"We're in a unique spot," Pradeep observed.

Still, there were more hurdles to launching his business, and the biggest one was financing. He recalled, "At the time I needed a loan to buy a business, nobody was lending. There was no bank, no SBA, no private loans."

And then there was lenders' resistance to his business model itself: "People don't lend to liquor stores unless [the stores] own real estate. Real estate means skin in the game. This business is nothing more than a license to sell, which is worth a tremendous amount of money - but that has no value to a lender," he said.

He explained that the liquor itself is no collateral; a shop owner could sell it all in one fell swoop, get on a plane, and disappear overnight. He commented that most liquor store businesses are not incorporated but rather LLCs with just 1 - 3 owners behind the company. Saini said that lenders put all these factors together and see a "very unsecured, nontangible business."

So Pradeep and his family pooled their funds. They had enough to open a store, Emmitsburg Liquors. But they still needed money for inventory.

Yet another hurdle

At the time, wholesalers had started offering quantity discounts, which worked strongly in favor of giant liquor store chains - the kinds of places that can afford to buy 50 cases at a time, while reaping the benefits of a fat price break. Mom-and-pop sized stores like Saini's were in danger of being priced out of the market, forced to pay $4 more per bottle since they were buying lower quantities.

That's where Biz2Credit stepped in.

Biz2Credit understood Pradeep's business model. "We owe a lot to Biz2Credit," he said. "They believed in us when nobody else did; it felt like they were a partner indeed. That played a crucial role in our survival."

Pradeep and family stocked the shelves with funding help from Biz2Credit, even accessing some of those multi-case quantity discounts. For the first 3 years, they all worked at that store open to close, 7 days a week, 365 days a year. His research about the location paid off - they started getting lots of customers from across state borders, and regular foot traffic on Sundays.s

The business grew to 2, 3, 4 stores, with 14 employees between family and non-family. Each time they opened a store it was with repeat financing help from Biz2Credit.

"I would be lying to say that I don't . . . approach banks; I do. Bank of America, Capital One, Sandy Spring. It just baffled me with the amount of paperwork. The red tape, "Saini observed. He did the math and figured it was worth it to pay a bit more to come back to Biz2Credit. Banks are "not worth the hassle to get a slightly lower interest rate," he commented, especially since all of his financial information is already on file with Biz2Credit underwriters.

He's recommended Biz2Credit to other entrepreneurs and considers the company "a great partner in my expansion."

And there's more expansion to come. Pradeep is growing the square footage of his first store - and he's bought the land next to it, where he's developing a 10-unit shopping strip. "This is going to be my retirement, and this is going to be the biggest project I have ever worked on," he said.

His thoughts on building out that first store? "Biz2Credit will help me stock it."

Cheers to that!

Are you an owner of a liquor store looking for additional financing? Check out this helpful guide from Biz2Credit on the best financing for buying or starting a liquor store.