5 benefits of working with an inventory financing company
Inventory financing has many benefits but one core purpose–to help you buy inventory and/or stock for your growing business. Inventory financing works like a revolving line of credit or a short-term loan for businesses that need to buy inventory to sell. The collateral for this short-term loan is the actual products or inventory. If you are unable to make payments on your inventory loan, the lender can seize the stock or inventory that you have not sold and use this to recoup monies outstanding on your loan. Here are 5 good reasons to consider inventory financing for your business:
1. Quick availability of liquid cash to buy stock
When a small business has accounts receivable of substantial amounts, it can wreak havoc on its cash flow. Small businesses can turn to inventory financing to secure stock for their business and to alleviate short-term cash shortages.
2. Allows businesses to use additional cash resources for other critical purposes
Inventory loans can only be used to purchase inventory. This frees up additional cash resources which can then be used on more critical issues. You can focus on growing your business instead of worrying about finding money to buy additional stock.
3. More available cash to place bigger orders
Inventory financing helps you to prepare for peak season, expand product lines, and place bulk orders. When you place bulk orders you will be able to secure a better discount.
4. Boost sales, foster business growth, and improve customer interactions
The more stock you have the better equipped you will be to meet unexpected high demands. This boosts sales, grows your business, and helps to improve customer interactions.
5. Inventory financing is easier to obtain than other loans
Inventory financing requires less paperwork than traditional loans and even newer businesses are eligible to apply for this type of loan. You will need to have been operating for about a year to qualify for an inventory loan although some businesses who have been operating for as little as 6 months will still qualify.