Inventory financing institutions allow you to ensure that your supplies, parts or product shelves are fully stocked. Customers expect you to deliver the best products and services . Modern business can be lightning fast, requiring you to add staff, merchandise and locations quickly to stay competitive. Inventory lenders will look at your assets as collateral for raising capital (ie, your inventory). Accounts receivable financing is one of the modern alternative retail funding mechanisms available in today’s market. Learn how you can leverage your goods or positive sales figures into a readily available line of credit. To get started, fill out our simple application form to the right and a specialist will be in touch to discuss your options.
What is Inventory Business Financing And How Does it Work?
You might have heard about financing based on inventory and wondered – “How does it work?” Investopia defines inventory finance solutions as a “line of credit or short-term loan made to a company so it can purchase products for sale.” What are the advantages and disadvantages of an financing agreement? The benefit is that you will have the capacity for financing inventory needed to grow your business and meet customer demand. If you default on your loan, then the lending company will own your inventory. Dealers will make a fair and honest appraisal of the value of your merchandise to determine the amount of money that you can be loaned.
Inventory Financing Companies
There are numerous inventory finance companies that are prepared to invest in physical assets in exchange for additional revenue streams. You can finance inventory to ensure that you have everything you need to stay in business. Inventory loans provide capital when traditional banks are not lending. Many banks have become overwhelmed with non-performing loans and heavy government regulation. Alternative lenders will provide you with cash by creating a lien against your inventory. Improve your brand with the inventory that your customers demand.
Common Rates for Inventory Loans
Inventory financing rates will depend upon a number of factors, including business history, business type, credit score and loan size. Each financial lender will have its own specific cost formula for determining the inventory financing cost. In comparison to other loan products, the cost of loans secured by inventory can be very high; such as 6% over the prime lending rate. Find associates with competitive loan rates to ensure you stay in business.
Benefits of Getting Small Business Capital from Inventory
Inventory lending for small business has a trickle-down positive effect in the community due to increased purchases from suppliers, payments to vendors and wages paid to employees. Inventory based funding is an alternative way to raise capital when a traditional bank loan is not available. There are many industries that can benefit from this. For example, the fashion industry must frequently adjust its inventory to reflect changing styles. With an inventory loan, they can raise capital using last season’s clothing line. A business might also have seasonal peaks and valleys that could be best funded by a solid and reliable inventory funding mechanism. Capital for inventory can also be used to change the product mix during mergers and acquisitions to create a more vibrant new corporate identity.
Accounts Receivable Lending vs Inventory Finance
What exactly is the meaning of “Account Receivable Lending?” Also, called “factoring,” this alternative funding method allows for a company to leverage accounts receivables into immediate commercial cash. Modern capital has become quite complicated with numerous time parameters associated with each asset value. The age of the accounts receivables claim is an important element in this funding plan. If a business has a special project, then a funds provider might provide instant capital with these alternative monetary plans.
Get started today finding an inventory loan for your business. Just fill in the form and a Halo Capital Group representative will be in contact with you.
The Small Businesses Administration has different types of general small businesses 7(a) loan programs. Micro loans are another option provided by this administration.