Inventory Financing

Inventory financing is bank line of credit secured by the company’s inventory as collateral.With inventory financing, the borrower receives a loan in order to purchase inventory. The purchased inventory is then used as collateral against the loan. This is a great finance option for business ownersas it provides the inventory that a business needs without tying up cash, receivables, credit cards, or bank lines.I am very familiar with this type of financing. In a previous business of copier sales and service, we needed equipment, on hand, so we could meet the demand of quick and timely installation for our customers. Inventory financing proved to be a life saver and allowed us to have the necessary units on hand to meet demand.rnThis type of financing can help to free up some of the cash you have tied up in inventory for more pressing needs.Inventory loans are perfect for businesses that enjoy a high inventory turnover rate but are short of the cash needed to replenish their supply.rnInventory financing loans are also convenient for businesses that need to keep some capital free for other interests, investments and growth.rnLenders will typically need to see: •That you have a proven sales history to approve you. •They will require you possess tangible inventory. •That you have a proper inventory management system in place, which provides accurate and timely information on your inventory size and cost. •Ensure that the inventory is protected from damage and shrinkage. Most lenders will also require sales orders to verify you are actually selling.