‘Inventory financing’ describes a line of credit that utilizes a portion of a company’s existing inventory as collateral. This financing method can release cash that had been tied up in inventory for more urgent needs.
What Companies Utilize Inventory Financing?
Companies with a tangible inventory and an established sales history tend to make the best use of this financing. Those that primarily provide services rather than products will be better served by other financing programs.
Though it can be used by a great deal of businesses, those that enjoy a high inventory turnover rate but are short the cash necessary to restock for the next production or sales cycle are prime candidates for inventory financing.
What is Necessary for Approval?
Often, lenders will want to see proof of a suitable inventory management system that provides accurate information on its size and associated costs. Inventory and other assets must be in excellent condition and protected against future potential damage or shrinkage.
It is recommended the borrower demonstrate consistent maximization of inventory turnover with recent sales orders.
Most inventory financing companies will also need to provide a business plan that shows their ability to stay current with loan payments. An additional form of collateral may be also be required.
How Can I Get Started with the Right Inventory Financing Company?
Although other inventory financing companies require a proven sales history and good credit, National has zero industry restrictions, many years of experience lending to small businesses, and will usually say ‘yes’ when other lenders say ‘no.’
National offers a wide range of financing programs to bolster business earnings and prepare businesses for future opportunities.
For more information about inventory financing loans, please call us at (877) 482-3008. To get started, please fill out our 1-minute form here, and a Business Financing Advisor will get in touch with you in a few minutes to review your options.