Grow your business with Inventory financing by purchasing products to meet customer demand. We’ve evaluated the best business loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
Inventory financing loans allow businesses to get the money they need to purchase inventory and other goods. The loan is usually secured by the inventory.
What are the requirements for inventory financing?
Inventory financing requirements vary from lender to lender, but here are the common ones:
Time in business: The business will have to be in business for a certain amount of time.
Revenue: You’ll usually need to show a track record of revenue. This revenue amount will vary based on the lender.
Credit scores and history:The lender will look at your personal and business credit history to determine whether they should lend you money or not.
Business documents: You must provide your business license, certificate of incorporation, and articles of incorporation. You may also need to provide your federal tax identification number, an Employer Identification Number (EIN), and additional information about your business, such as name and address changes or changes in the number of employees.
What are the types of inventory financing?
Here are some of the types of inventory financing:
Inventory loan: This financing takes place in one lump sum and needs to be paid back in installments over a period of time. The lender charges interest on the amount borrowed.
Inventory line of credit: You can get an operating line of credit and draw funds as needed to purchase inventory.
What are the benefits of getting inventory financing?
Here are the benefits of inventory financing:
Quick upfront cash: Inventory financing provides your business with quick upfront cash. This benefits new businesses that don’t have much money in the bank. The money you borrow can be used to purchase inventory, which you then sell later. You can repay your loan in full or every month.
Build credit history: If you don’t have much credit history or have had trouble with past payment obligations, getting an inventory loan may help build your credit, so other lenders will want to lend to you in the future.
Tax benefits: You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest and inventory related to running your business.
How to choose the best inventory financing loans
Here are some of the factors to consider when deciding on an inventory financing loan:
Compare interest rates: Like other types of financing, inventory loans have varying interest rates depending on the lender and type of account.
Qualification criteria: Most inventory lenders require that your business be in good standing with the state and federal government and have a good credit history (i.e., no bankruptcies or accounts in collections). The process also involves verifying your company’s financials and auditing your inventory at least once per year or more often if necessary. Take into consideration of your credit when applying.
Lender reputation: When looking at different lenders, make sure that you look at their reputation, as this can help you decide who you want to work with. You don’t want someone that provides unfavorable terms.
Repayment terms: The repayment period of your loan should be appropriate for your needs. A longer repayment period will result in lower monthly payments but higher interest for the life of the loan. A shorter repayment period will have the opposite effect.
