Inventory Loans, Financing & Funding
Many businesses rely on inventory financing to order products before they sell these products. Securing inventory loans allows businesses to order and get the products in hand to ensure they have enough inventory to sell their customers.
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What is Inventory Financing or Inventory Loans?
Inventory financing is a form of short-term lending using a loan or revolving credit line. Because the inventory itself can act as collateral, companies can buy the products they need to sell at a later time. This gives them more flexibility in buying seasonal products they know will sell later, but they need to purchase it from the supplier before then.
How Inventory Loans Work
Businesses get inventory loans to buy products that they can put in the warehouse before it goes out to retailers or sells from an online store. A type of asset based financing, these loans help smaller companies especially when they need to purchase items to sell or supplies to make items to sell.
Use Cases
How To Use Inventory Financing, Funding, and Loans
Getting an inventory loan can help a business with cash flow issues that arise when they need to make big inventory purchases from suppliers. There are plenty of ways to use business inventory loans.
Learn Why Us-
Expand Product Lines
Want to add new items to your stock? Inventory loans help you expand product lines so you can offer new options to your customers.
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Meet Seasonal Demands
Having products on the shelves is critical during certain seasons. Inventory loans help you get the right products in stock before the season arrives.
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Reduce Costs From Other Areas of Your Business
It's important to keep cash flowing in the right directions so your business can run smoothly. By using inventory business loans you can keep payroll and other operations on track.
Why Apply for Inventory Financing?
Meet Customers' Needs
Businesses need to have a product on hand that meets their customers' needs. Small business inventory loans give companies the cash flow they need.
Increase Sales Channels
Selling products online, in store, and through other sales channels ensures that the inventory you buy won't go to waste. Inventory loans help you increase your sales channels.
Invest in an Inventory Management System
Managing inventory takes a lot of time and effort. The right inventory management system simplifies this process and saves you hours of time.
Minimum Eligibility Requirements for Inventory Funding
To qualify for a business inventory loan, companies need to meet certain criteria. Here are the minimum requirements to secure inventory funding.
| Time in Business | Minimum 6 Months |
|---|---|
| Business Annual Growth Revenue | $240K+ Annual Revenue |
| Business Checking Account | Yes |
| US Citizen/Based Company | Yes |
| FICO Score | 570+ |
| Other Financing | None |
| Bankruptcies | None open |
Better Your Business With Fora Financial
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Grow Your Business
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Meet Customers' Demands
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Increase Sales
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Improve Management of Inventory
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Buy New Inventory
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Pay for Necessary Tools
Case Studies
Learning Growth
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Funding Amount: $825,000
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Industry: Education
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Use of Funds: Inventory
Powering Growth in Electricity
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Funding Amount: $775,000
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Industry: Commercial & Residential Electric
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Use of Funds: Personnel and Equipment Upgrades
Featured Funding
Bridge Funding
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Funding Amount: $2,000,000
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Industry: Construction
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Use of Funds: Bridge funding
Technology and Data Services
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Funding Amount: $700,000
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Approval Amount: $1.1 Million
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Industry: Technology / Data Services
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Use of Funds: Cash Flow Liquidity
Communications Expansion
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Funding Amount: $1 Million
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Approval Amount: $1.2 Million
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Industry: Telecommunications
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Use of Funds: Expansion
Featured Funding
Stabilizing Growth
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Initial Funding Amount: $750,000
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Add-on Opportunity: $450,000
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Industry: Manufacturing
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Use of Funds: Financial Stability, Growth
Automation Growth
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Funding Amount: $300,000
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Approval Amount: $450,000
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Industry: Manufacturing / Automation
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Use of Funds: Working capital
Featured Funding
National Food and Beverage Franchise Network
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Funding Amount: $1.4 million
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Industry: Food and Beverage Franchise
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Use of Funds: Expansion and Renovation
FAQs About Inventory Financing, Funding, and Loans
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Each loan type has different terms. Typically, they must be paid back within 6 to 12 months because they are considered a short-term financing product.
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Inventory financing lenders offer a variety of loan products. Lines of credit, merchant cash advances, term loans, and traditional financing are the main types of inventory financing available.
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Most businesses that need inventory financing choose a short-term loan product that uses the inventory as collateral. These are the best types of financing to buy inventories.
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If you need to resupply your inventory for an upcoming season before you have the revenue to pay in cash or you want to add products to your selection, then an inventory loan might be the best option. With a few different loan options, you can choose what fits your business the best.
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Inventory financing is typically secured by the inventory itself, while traditional business loans may require other forms of collateral, such as real estate or personal assets.
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Retail, e-commerce, manufacturing, distribution, and wholesale businesses often benefit the most since they need to maintain inventory levels to meet customer demand.
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Some lenders require a business to be operational for at least six months before they are granted inventory loans, but certain lenders may work with startups if they have strong financials or a solid business plan.
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If you are unable to sell your inventory before the repayment period ends, you may need to explore refinancing options, extend the loan term, or liquidate excess inventory to cover repayment.
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Some lenders may require a personal guarantee, while others rely solely on the inventory as collateral. It depends on the lender’s risk assessment.
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Some lenders may have restrictions on financing perishable goods due to their limited shelf life and depreciation risks. It’s best to check with the lender regarding their specific policies about inventory loans and financing.
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Certain lenders allow businesses to use inventory financing for international suppliers, but there may be additional requirements or restrictions, such as supplier verification.
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The inventory loan amount is typically based on a percentage of the inventory’s appraised value, usually between 50% and 80%.
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Risks include overleveraging, unsold inventory, fluctuating market demand, and interest costs that could affect profitability.
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Yes, businesses often use inventory financing alongside other financing options, such as working capital loans or lines of credit, to maintain cash flow.
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