Leverage Your Inventory with a Line of Credit
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Inventory financing is a type of business loans in which a business receives a short-term loan or line of credit to purchase inventory, and the inventory is in turn used as collateral. It can be particularly useful when your inventory is in high demand and you need to keep your shelves stocked, or if you are purchasing the inventory at a discount.
The terms of your inventory financing agreement will typically be determined by how quickly you expect your inventory to sell. If you expect the inventory to turn over quickly, it would make sense to have a shorter loan term. Conversely, if you expect the inventory to take a while to sell, longer loan terms make sense. Because of this variance in loan terms, it is especially important for you to take into consideration the total cost of the loan before agreeing to any inventory loan contract.
Who Can Use Inventory Financing?
Inventory financing isn’t for everyone. This type of financing is generally used by wholesalers, distributors and manufacturing companies who often have to meet requirements such as:
Another way many business owners obtain inventory financing is with a business line of credit. It can be an especially useful option for companies that don’t need as much money to borrow. Unlike a term loan, a line of credit allows the business owner to access as much funding as they need up to their available credit limit, repay it and access it again as needed. Additionally, interest is only charged on the funds that are used.