Hey there, Vendpreneur!

Welcome to Becoming a Vendpreneur—where every week I help you navigate the challenges of running a vending machine business, whether you’re just starting out or looking to expand your operation.

This week I want to talk about 5 ways you can finance your vending machine business, complete with pros and cons.

• Option 1: Vendor Financing

• Option 2: Business Line of Credit

• Option 3: SBA Microloan

• Option 4: Peer-to-Peer Lending

• Option 5: Personal Networks

But before we jump into more details, I want to share a few quick updates on my vending business, Pod Plug:

Business Updates

• 🎁 Mystery bag brainstorming in full swing! We've got some name ideas and we want your input. Click here to vote and help us choose the perfect names! Warning: some names are rated R.

• 🏷️ Got creative juices flowing and came up with names for our machine models. Some names: The Bouncer, The Shot Glass, The Spotlight, The Hotspot. Reply to this email with your ideas!

• 👋 Had an incredible week onboarding our first marketing hire, Pat. She's already diving into some exciting projects that'll take us to the next level.

• 🎨 Teamed up with a talented 3D renderer to create stunning digital product images for our smart machines. Can't wait to show you how sleek these babies look!

• 🏭 On the hunt for a rockstar warehouse manager in DFW. Know anyone who'd be perfect for the role? Send 'em our way!

• 🤝 Exciting partnership update: Joined forces with operator Luke, offering him 25% of the route's profit in Oxford, MS. Three machines, training complete. Let's crush it, Luke! Plus, there’s already proof of concept the franchise model will work!!

• 💻 Ramping up our sales game – we're 60% through implementing Hubspot for our sales pipeline. Streamlined deals and better customer management on the horizon!

• 🎥 Big news: I’m partnering with Jaime Ibanez, the largest vending machine YouTuber to launch a private coaching community. Stay tuned – it's dropping in the next 8 weeks! Reply to this email if you’re interested!

P.S. Want in on the Pod Plug franchise action? Hit the button below to get on our franchisee waiting list!

Now, let’s jump into this week’s newsletter!

One of the rookie mistakes to avoid in the vending business is paying full price for a machine.

Financing is a smarter move.

I’ve grown my vending business from zero to 100 machines in 5 years, spanning 20 cities.

Here’s a tip if you aim to scale your business to $100,000+ a year:

💡 Finance your machines with $0 down, then pay them off using the revenue they generate.

Here’s how it typically works:

1. First, secure your location. This is your foundation.

2. Next, finance a machine. You can start with $0 down.

3. Then, use the profits from sales to make monthly payments on the machine.

This approach significantly reduces your financial risk.

Curious about other best financing options for your vending business? Keep reading. 👇

Option 1: Vendor Financing

Think financing is just for houses or cars? Think again.

You can finance vending machines, too.

Many manufacturers offer $0 upfront options. Here are a few:

• Cantaloupe

• Vending.com

• Evending.com

• Vending Connection

Prices range from $2,000 to $6,000.

Why do I love this approach?

I’d just use the profits from my machines each month to pay them off. It puts far less pressure on cash flow.

Let's talk pros and cons:

✅ Pros:

• No Upfront Capital Required: Kickstart your business without draining your wallet. Ideal for newcomers.

• Competitive Interest Rates: Often better than banks, these rates make your investment go further.

• Streamlined Financing Process: Quick and easy. Get your machines and start earning without the red tape.

❌ Cons:

• Model or Brand Limitations: You might be stuck with certain models, which can limit your market adaptability.

• Long Contractual Obligations: Long-term commitments might trap you as your business needs change.

• Dependency on Supplier: Any trouble on the supplier’s end could ripple back to you.

By the way, if $0 down financing catches your eye, be sure to check out my guide below. It's all about turning this approach into big earnings.

Option 2: Business Line of Credit

A business line of credit gives you the flexibility to manage varying expenses—think inventory, maintenance, and those unexpected costs.

It's like a credit card but designed for businesses, offering lower interest rates and higher limits.

Why it matters?

Vending businesses face fluctuating cash flows due to sales cycles, seasonal shifts, and machine updates.

With this flexibility, you keep operations smooth without needing a new loan for every expense.

✅ Pros:

• Lower Interest Rates: Save money on borrowing. It’s economical for continuous financial needs.

• Targeted Cash Flow Management: Borrow what you need, when you need it. Perfect for precise financial handling.

• Cost-Effective Financing: The lower the interest rates, the lower your total borrowing cost (duh).

• Credit Building: Use it wisely, pay on time, and boost your business’s credit standing.

❌ Cons:

• Credit Requirements: Strong business credit is a must. This can be a barrier for new or struggling businesses.

• Fee Structure: Watch out for fees! Mismanagement can lead to high costs, and some lines come with annual fees or inactivity charges.

Option 3: SBA Microloan

Designed for small businesses and startups, this program offers up to $50,000 in loans.

Interest rates? Between 5-11%.

For vending machine operators, the SBA Microloan's lower rates and extended terms are a game changer, easing cash flow concerns when you're just getting off the ground.

✅ Pros:

• Favorable Financial Terms: Enjoy lower interest rates and longer repayment periods. This means less monthly strain on your finances, freeing up cash for business growth.

• Tailored Loan Amounts: Borrow exactly what you need—no more, no less. This helps avoid unnecessary debt.

• Supportive Services: Beyond money, expect business training and advising.

❌ Cons:

• Paperwork and Time Investment: Getting this loan isn't quick. Expect a lot of paperwork and some waiting, which might delay seizing new business opportunities.

• Limited Funding: $50,000 might not stretch far, especially for high-end smart machines and rapid growth.

To secure a microloan, connect with an SBA-approved intermediary in your area.

They’ll manage all credit decisions and set the terms, simplifying your borrowing experience.

Option 4: Peer-to-Peer Lending

Traditional banks often put up hurdles that can slow you down.

P2P platforms eliminate these barriers by connecting you directly with lenders online.

Why should vending machine operators get excited about P2P lending?

These platforms are perfect for those just starting out or those with less-than-perfect credit histories.

They offer relaxed borrowing requirements and quick approval processes, making them an excellent choice for quick expansion or startup financing.

Top P2P Platforms to try:

• LendingClub

• OnDeck

• Prosper

• Kiva

P.S. Haven’t tried these platforms myself, but they come highly recommended across various reviews.

✅ Pros:

• Competitive Interest Rates: Often better than what banks offer, making your borrowing cost-effective.

• Flexible Lending Criteria: Even if your credit isn't perfect, you've got a shot. Great for new business owners.

• Speed of Funding: Need cash fast? P2P loans process quickly, often in just a few days. Ideal for expanding or upgrading fast.

❌ Cons:

• Variable Interest Rates: Rates can climb high if your credit score is low, which might bump up your borrowing costs.

• Regulatory Risks: Less oversight than banks. This means less standardized terms and potentially fewer safeguards if things go south.

Option 5: Personal Networks

Using your personal savings means you can start today.

But what if you need more funds?

Consider borrowing from friends and family, but keep it professional. Use formal agreements to clear up the terms.

This keeps things transparent and avoids misunderstandings.

✅ Pros:

• No or Low Interest Costs: Using your own money cuts out interest. Loans from friends and family? Usually very low interest, making them among the cheapest rates.

• Flexible Repayment Terms: You can often set up flexible payments based on how your business is doing.

• Strengthened Relationships: Handling loans well can boost trust and support within your network, opening doors for more backing as your business grows.

❌ Cons:

• Risk of Strained Relationships: Money issues can ruin personal relationships. If your business struggles, it might be hard to meet loan terms with friends or family.

• Lack of Formal Structure: Informal loans aren’t always well-documented. This can lead to confusion over repayments and make financial management tricky, especially if several people are involved.

And That’s a Wrap!

There are many ways to finance your vending machine business, but you can start with these:

• Vendor Financing

• Business Line of Credit

• SBA Microloan

• Peer-to-Peer Lending

• Personal Networks

Thanks for reading this week’s newsletter.

Hit reply and let me know what you found most helpful this week—I read every single reply and I’d love to hear from you!

See you next Saturday!

-Ethan

Whenever you're ready, here are 3 free resources that can help you:

1. Cold Call Scripts: Get the confidence to cold call like a pro. My guide provides you with tried-and-true scripts to approach potential vending locations and turn conversations into contracts.

2. Cold Email Scripts: Break the ice with decision-makers using our effective cold email template. It’s designed to capture attention and spark interest, helping you start valuable conversations and grow your business.

3. Location Contract Template: Nail down the best spots for your vending machines with a rock-solid contract template. This easy-to-use template covers all the bases, so you can secure prime locations without the hassle.