Inventory Financing (Loan) for Small Business
Sometimes a business needs to purchase a large amount of inventory to prepare for an upcoming event or season in which they are significantly more likely to do a large portion of their yearly business. Whether it’s time for a local festival or the start of tourist season, running out of inventory during the busiest time of the year can result in a massive loss of profits.
If cash flow is tied up in current stock or working capital is low due to the low volume of current customers, small businesses may look for a fast cash business loan so that they can make the necessary purchase. While there are numerous means of financing for this type of loan, the most advantageous to business owners in this situation may be inventory financing.
Inventory financing involves using the newly purchased stock as collateral for a business loan. By using the newly purchased inventory as the guarantee of the loan, lenders are assured of being able to recoup the loan. This provides an advantage for the business owners as well; this allows them an assurance that they will be able to pay back a large portion of the loan fairly easily if the inventory doesn’t sell. Of course, the foremost advantage for business owners is that they will be able to purchase new stock without expending further working capital.
For most retailers and other small businesses, inventory is the heart of profit. Therefore, being prepared for whatever circumstances may arise regarding your inventory is monumental, and that is why it is important to understand the benefits of inventory financing.
Who should use Inventory Financing?
Inventory financing is suitable for most business owners whether they provide a service or goods. It is more common for those in retail to use inventory financing to fund the purchase of extra stock in preparation for an upcoming holiday or the holiday season. For retail business with seasonal influxes to the population like those located in shore towns or college towns, inventory financing allows them to adequately prepare for the next wave of visiting customers after several slow months.
Each business is different, where some retail stores may choose inventory financing, others may opt for the best business line of credit available to them. Service providers can also benefit from inventory financing when purchasing new equipment for an upcoming season of work.
There are numerous financing options available to business owners through Fast Capital 360. We understand that funding your business can seem like perusing a million different options. Our business advisors are on-hand six days a week to help explain every avenue to instant approval small business loans for your business.
Fast Capital 360 is proud to be a member of the Responsible Business Lending Coalition and supports small businesses across the country.
For more information on why Fast Capital 360 is the best choice for your inventory financing needs, contact us!