What is an Inventory loan?
You just got a huge order, the largest in your company’s history!
It’s one that you’ve been working on for 6 months from one of the largest box stores in the nation. You’ve been working so hard on getting the order that you haven’t stopped to consider what happens once you get it. You know you’re going to have to increase production and labor costs, and that’s going to really tap your operating capital. Then it hits you, “what are we going to do about all the parts and components we need to produce our product?”
One of the best solutions is Inventory Financing.
This type of loan allows you to do a couple of things that will save your business money over the long haul, and save you a lot of aggravation and stress. There are times of the year where a seasonal peak in business or new product roll-out creates a high demand for product. At other times a slowdown can cause a drain on assets that can have far-reaching effects on vendors and customers alike. An inventory loan can assist in meeting these demands, and present a means to expand and grow, instead of scramble and stress.
An inventory loan allows you to use your existing inventory as collateral to obtain a line of credit that is revolving in nature. That line-of credit opens up a lot of options to you and your business that would not have been available, such as the purchase of product or parts required to maintain your production, or it can enable you to procure discounted or select components to lower your overall costs. It does all of that and more without hurting your capital reserves or hitting your line of credit.
How do I determine if I should get an Inventory loan?
This type of loan requires inventory as collateral, so one of the biggest requirements is having something to use for that purpose. Because there is often a need for ongoing capital, very often this can set up as a revolving line-of credit that allows for ongoing expenditures. A lot of lenders have pretty stiff requirements; higher rates since this is either an ongoing or short-term loan for a relatively small amount, usually between $2k – $500k amount, and significant credit scores. So, the question you have to ask yourself is; “Do I have Inventory that can be leveraged for collateral, and will I have cash flow problems that could cripple my business if I proceed with my execution?”
An inventory loan is a proactive approach to taking control of your business’ future and aggressively forestall those unforeseen speed bumps that slow your momentum and growth. Dynamic Capital has a wide array of business loans to assist you in setting the throttle to cruise with a simple “Soft Credit Pull.” It will enable us to show you the best vehicle for the road ahead. Don’t get detoured by some racy competitor that doesn’t have our years of experience, steer your attention to the link below and check under the hood for yourself!