Inventory Financing
Definition
A loan or credit line secured by your inventory, used to buy stock before you have the sales cash to pay for it.
Want a deeper explanation?
Inventory financing fits the core problem of product businesses: paying for stock months before customers pay you. Costs and terms vary a lot by lender.
Lenders will look at inventory reports, aging and turnover, so clean data improves your terms. Watch for: borrowing against slow-moving inventory, which can leave you paying interest on stock that will not sell.
Example
A lender advances 50% of your $400,000 inventory value, giving you $200,000 to pay for the holiday purchase order.