Did you know that you can get a business loan to pay for your inventory? This can save many small businesses. Even if you have bad credit, you can still get a business loan.
You do not have anything to sell if you do not have any inventory. This can create a serious problem for your business. It takes money to have inventory. Your business will have a lot of inventory until you sell it. Inventory not only takes up a lot of space, but it also costs you money.
Cash is always a problem for many businesses. That is why getting a business loan can make it easier for you to run your business. It will also help you grow your business. In this post we try to answer the question : how hard is it to get a small business loan?
What is Inventory Financing?
There are two ways that inventory financing can be interpreted:
1.) Borrow money to buy new inventory
2) Use your existing inventory as collateral
According to Investopedia, inventory financing is great for businesses that have to pay their suppliers before they are able to sell the inventory. This is also a great option if banks have turned you down.
Loans That can be Used to Finance Inventory
1.) Business Line of Credit
A revolving line of credit is a lot like a credit card. There is a limit set on the amount that you can borrow. The limit will be available again after you have paid down what you have borrowed. A business line of credit is better than a business credit card because the interest rates are typically lower.
2.) Short-term Business Loan
You can borrow money that can tie you over for the next few months. You can use the funds to re-stock your inventory. You can also use it to pay for your business’s operating expenses. You can get an unsecured or secured business loan.
3.) Accounts Receivable Financing
This option will help you manage cash flow. It will make your business more predictable and stable. This loan allows you to sell the receivables at a discounted rate. You will be able to get the funds, and the other party will take care of the collection. It is similar to a merchant cash advance.
Keep in mind that using inventory as collateral is risky. If you cannot repay the loan, then the inventory will be taken. The lender will get the funds by selling the inventory.
You may be a candidate:
*Your products sell quickly
*You have a busy season coming up
*The business has a solid sales history
You may not be a good candidate if:
*Your business has a lot of debt
*You need a long-term financing option
*You do not have a verifiable sales history, but you need to purchase new products
You also need to take the type of inventory into consideration. Finished goods, works-in-progress and raw materials are all considered inventory. A repair shop and hair salon has a lot of small items that are typically inexpensive. An car dealership may have a few expensive items.
If you want to get a small business loan, then you will need to contact Certified Business Loans. Once you complete the application, we will be able to give you a response within 24 hours. You can get anywhere from $25,000 to $250,000 in funding. Keep in mind that we do not provide funding for startups.