For entrepreneurs, the most exciting times are when their small- or medium-sized businesses are growing. But with that excitement there are inevitably growing pains. One of those growing pains is most evident when you’ve just gotten a big purchase order from a major client. Suddenly, your inventory isn’t enough to fulfill your new purchase order along with your current orders. It’s times like these when an inventory loan can help your business succeed.
How Does an Inventory Loan Work?
If you need to manage a seasonal dip in business, a period of low inventory, or just keep your business’ cash flow moving, an inventory loan may be right for you. Because an inventory loan is an asset-based loan, we don’t need to go through a mountain of paperwork and dig up your credit history to approve you for a loan. Just like our other loan options, we can finance your business even when a typical bank has said no.
Who Can Benefit From an Inventory Loan?
Inventory loans can be a great tool for your business, but they aren’t right for everyone. In a recent Entrepreneur article, an expert outlined which situations are ideal for inventory loans and which aren’t.
An inventory loan may be right for you if your company:
- Has high inventory turnover rates
- Needs to keep high inventory levels to meet demand
- Easily sells inventory
- Has a mature product with a steady sales history
- Has a clean balance sheet with little debt
The following situations may not benefit from an inventory loan. If your company:
- Has obsolete or aging inventory
- Has difficulty selling inventory
- Needs to use the loan as a long-term financing tool
- Has a balance sheet with a high amount of debt
- Has a brand new product with little to no sales history
Of course, these lists are only meant to provide you with a general guide. If your situation isn’t clear cut or if you’re unsure where you fit in, get in touch with one of our loan officers at 609-800-FUND to find a solution that works.