SBA lenders approved 306 7(a) loans to hardware retailers (NAICS 444140) from October 2023 to June 2026, $256,548,000 from 93 lenders. The median loan was $350,000, more than twice the national $150,300, at a median rate of 9.5% against 10.25% nationally. Acquisitions were 23.9% of loans, well above the national 10.4%, with a median of $900,000, and SBA's data marks a third of loans as franchises, which in hardware often means a cooperative or wholesaler program store. Lenders focus on inventory quality, seasonal cash swings, the brand or buying-program agreement, and whether the store's real estate is part of the deal.
| Measure | Hardware Retailers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 306 | 162,355 |
| Median loan | $350,000 | $150,300 |
| Middle half of loans | $100,000 – $1,000,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 25.5% | 12.9% |
| Median rate at approval | 9.5% | 10.25% |
| Middle half of rates | 8.15% – 10.75% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 73 (23.9%) | 16,849 (10.4%) |
| Median acquisition loan | $900,000 | $693,000 |
| Lenders that made these loans | 93 | 1,648 |
| SBA 504 loans (real estate, equipment) | 36 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 306 (Oct 2023 – Jun 2026), from 93 lenders
- Median loan
- $350,000 (national $150,300)
- Median rate at approval
- 9.5% (national 10.25%)
- Acquisitions
- 73 loans (23.9%), median $900,000 at 8.75%
- Franchise loans
- 33.3% of loans
- SBA 504 loans
- 36, median $907,000
The figures against the national picture
| Figure | Hardware retailers | National | Reading |
|---|---|---|---|
| Median loan | $350,000 | $150,300 | Stores carry inventory and often real estate, so loans run larger |
| Middle half of loans | $100,000 to $1,000,000 | — | A wide spread: restocking loans at one end, store purchases at the other |
| Median rate | 9.5% | 10.25% | Three-quarters of a point lower; middle half 8.15% to 10.75% |
| Acquisition share | 23.9% | 10.4% | More than twice the national rate of purchases |
| Loans of $1 million or more | 78 (25.5%) | — | One in four; the 90th percentile was $2,510,000 |
| SBA Express share | 28.8% | — | Under three loans in ten |
| Fixed-rate share | 19% | — | About one loan in five fixed; the rest float |
Size explains much of the lower rate. SBA caps variable rates at the base rate plus 4.5% for loans from $250,001 to $350,000 and plus 3% above $350,000. The hardware median sits exactly at the top of the first band, and roughly half the industry's loans are in the tighter band above it. Larger loans with real collateral behind them tend to price well under the cap; see SBA loan rates and SBA's maximum interest rate.
The median store supported 7 jobs. That tells a lender something useful: a hardware store with a counter staff that knows plumbing and electrical parts is less dependent on the owner being on the floor every day than a two-person shop, and the file should show who does what.
A third of the loans carry a brand
SBA's data marks 33.3% of hardware loans as franchises. Few hardware stores are franchises in the fast-food sense; many belong to a dealer-owned cooperative or a wholesaler's retail program: the store keeps its owner and its name, buys through the program, and carries its brand. SBA lenders review that agreement the way they review any franchise agreement, for eligibility and for what happens to the store if the relationship ends.
- Rebates and patronage. Programs often return part of the year's purchases to the member after year-end. A lender will count it in earnings only if it recurs and is paid in cash; a rebate paid in program stock or store credit is worth less to a loan that has to be repaid in dollars.
- Member equity. A store may own shares or an equity account in its cooperative. Whether that carries value, and whether it can be pledged or transfers to a buyer, is a question for the program agreement.
- Transfer consent. In a purchase, the program has to approve the buyer as a member. Lenders want that approval, or a clear path to it, before closing. See change-of-control consents in an acquisition.
- Purchase terms. Supplier dating and program credit terms are a source of working capital, and a lien the supplier holds on inventory changes what the SBA lender can take as collateral.
Start-ups were 18% of hardware loans, nearly one in five. Some are new or converted stores opening with a program's support: site selection, a planned opening inventory, and a store layout. That support helps, but the lender still underwrites the owner's experience and a projection with no history behind it, and SBA requires an equity injection of at least 10% of total project costs for a start-up.
The inventory is the balance sheet
A hardware store may carry tens of thousands of items. Most of them sell slowly and predictably; some never sell at all. The lender's question is not what the inventory cost but what it would bring if the store closed, and that depends on what is on the shelves.
| Inventory type | How it behaves | How a lender reads it |
|---|---|---|
| Fasteners, plumbing, electrical, hand tools | Steady, low-ticket, bought every week | Reliable but slow; worth more in the store than out of it |
| Paint and sundries | Steady, often a store's best margin | Tinted paint and opened stock have little resale value |
| Lawn, garden and snow equipment | Seasonal, bought ahead of the season | Watch year-end counts for last season's unsold units |
| Power tools and outdoor power equipment | Higher ticket, faster turn, model-year risk | Good collateral if current; discontinued models are not |
| Special orders and discontinued lines | Bought for one customer, or no longer carried | Often valued near zero |
Where inventory backs a line of credit, lenders typically advance up to 85% of its net orderly liquidation value, or roughly half of cost, and slow-moving or obsolete items are excluded. A term loan leans on cash flow rather than a formula, but the same reading decides how much the lender believes the balance sheet. See inventory advance rates and net orderly liquidation value.
Spring, winter, and the working capital line
A hardware store buys ahead of its seasons: garden, grilling and outdoor power before spring, heat, ice melt and snow equipment before winter. Cash goes out weeks or months before it comes back, and a store with a thin balance sheet feels it every year. Lenders ask for monthly sales for at least two years, not annual totals, to see the trough and whether the store has ever bridged it with a cash advance.
The seasonal build is a job for a revolving line, not for a ten-year term loan. SBA's CAPLines program and conventional lines secured by inventory both fit; see seasonal lines of credit and SBA CAPLines. Only 28.8% of hardware loans were SBA Express, which suggests most stores borrow for the building, the purchase or the inventory base rather than for a small working-capital top-up.
Buying a hardware store
73 loans, 23.9% of the total, financed a change of ownership, at a median of $900,000 and a median rate of 8.75%. A common seller is a long-time owner retiring with no family member to take the store, which makes the handover of contractor accounts and staff the heart of the deal. The mechanics are in financing a hardware store acquisition and buying a business from a retiring owner.
- The building. Many older stores own their building. Buying it with the business lengthens the real estate share of the loan to up to 25 years, and the 36 SBA 504 loans, median $907,000, show the other route. From 1 October 2026 a change-of-ownership loan amortizes over no more than 10 years except the real estate share. See buying a business with its real estate.
- Inventory at close. The price usually separates inventory, counted at closing, from the rest. A buyer who pays cost for dead stock is financing it; the count and the valuation method belong in the purchase agreement.
- The valuation. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, SBA requires an independent business valuation, and the loan for the purchase cannot exceed it. Inventory counts in that amount. See SBA's business valuation requirement.
- The seller. A seller can consult for up to 12 months (up to 24 months under SOP 50 10 8.1 from 1 October 2026) but cannot stay as an owner, officer or employee. Contractor accounts that buy on the owner's word have to move to the buyer in that window.
The buyer brings an equity injection of at least 10% of total project costs, and a seller note counts toward half of it only on full standby for the life of the loan. From 1 October 2026 every change of ownership needs financial due diligence and must show debt service coverage of 1.25x on historical results.
What a hardware store's file should hold
The SBA list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. A purchase adds the store's latest full year of figures and the letter of intent.
For a hardware store, add an aged inventory report by department, gross margin by department, monthly sales for two years, the brand or program agreement with the last two years of rebate statements, contractor house accounts with balances owed, and the lease or the property details. Transparent turns that into a lender package that separates the durable counter business from the seasonal swings, and puts it in front of the 278 lenders in its book that write SBA 7(a) and 504. See how we underwrite.
Common questions
- How big is a typical SBA loan to a hardware store?
- The median 7(a) loan to hardware retailers from October 2023 to June 2026 was $350,000, with the middle half between $100,000 and $1,000,000. Purchases of existing stores had a median of $900,000.
- Do cooperative rebates count toward my cash flow?
- They can, if they recur year after year and are paid in cash. A rebate paid in program stock or store credit, or one that swings widely, is discounted or left out.
- Can SBA finance a new hardware store?
- Yes; start-ups were 18% of hardware loans. SBA requires an equity injection of at least 10% of total project costs, and the lender underwrites the owner's retail or trade experience and the opening inventory plan.
- Will the lender count my inventory at cost?
- Usually not. Lenders look at what inventory would bring in a liquidation, and they discount or exclude slow-moving, seasonal carryover and special-order stock. An aged inventory report is the evidence.
- Should I buy the building with the store?
- If the seller owns it and the price is supported, buying it gives the loan a longer real estate term and removes lease risk. SBA 7(a) finances real estate for up to 25 years, and SBA 504 is the other route.