Let’s say you own a sporting goods store, and spring has just begun. Your customers are thinking about all the warm-weather sports they can play again—golf, baseball, soccer.
You want to make sure you’re prepared to take advantage of the seasonal shift to restock your shelves with new equipment for the upcoming sports seasons. If you don’t have enough golf balls, baseballs, and soccer balls in stock, then you’re going to miss out on key profits.So even if you’re running low on cash flow needed to make these purchases, you can still find ways, using inventory financing, to borrow the funds to get the merchandise you want.
Inventory financing, of course, is for businesses that need inventory. If you’re not selling a physical product, then inventory financing isn’t for you. But if you own a store and you need goods on the shelf for your customers to buy, then inventory financing could be a great way for you to get the money you need. Whether you’re a retailer, wholesaler, or specialty shop, you can use inventory financing to get the money needed to buy the product you sell.
It can be difficult for brand new businesses to use inventory financing. Lenders are more likely to work with you if they can see at least one year of proven success selling a product to an established customer base. Startup businesses, unfortunately, aren’t typically eligible for inventory financing for this reason.
In addition to having a strong sales record, sometimes you also need to be looking to borrow a large sum of money. The minimum amount many lenders are willing to let you borrow could be around $500,000.
To make the agreements financially viable for lenders, they often require businesses to take out large quantities of money. So if you’re looking to borrow only a small amount, again, inventory financing might not be for you.
This said, not all lenders have these strict requirements. For example, Camino Financial is an alternative lender that offers microloans that range from as little as $5,000 to $75,000 to adapt to your inventory financing needs or any investment plan you have for your business.The best way to decide if inventory financing is your best option is to know how much it will actually cost you. We recommend you use this loan calculator: [business_loan_calculator]
Inventory financing loans are easy to apply for, simple to get approved, and efficient at getting you the money you need to buy the merchandise your customers want. Because you can get the loan money quickly, you can act fast to take advantage of opportunities as they present themselves, like a limited time-sale.
Lots of lenders and institutions offer inventory financing options. So if this strategy makes sense for your business, the chances are good that you’ll find an institution with terms and conditions that work for you. There’s no need to pass up the opportunity to make a profit just because you’re short on cash at the particular moment you need to purchase the merchandise.
Because inventory financing options are most often short-term loans, as opposed to long-term loans, they give you more flexibility to act fast instead of planning ahead. Sometimes, loans with a longer repayment period can cause long-term complications. In addition to running your business, you also have to concern yourself with making monthly loan payments over a period of months or years. The agreements for most short-term loans can be completed within a few months. The idea is that you pay off the loan quickly while you sell out the inventory, and then you can move on to other matters. Getting a loan with Camino Financial isn’t meant to be a burden—it’s meant to help your business in a moment of need without creating added stress down the road.
Businesses are more likely to default on inventory financing loans than standard personal or business loans because there’s no guarantee that all of the inventory acquired will be successfully sold. As a safeguard against that potential outcome, lenders often charge higher interest rates for these types of loans.
While processing the loan application and getting the money can be a quick and easy process, it could come at a cost. Bond Street says lenders will often charge a fee of as high as 5% to finalize the loan agreement, adding other costs like processing fees, late-payment fees, etc. Getting the loan might be worth the cost, but it’s something to be aware of before beginning the application process.
Some lenders require that you, as the business owner, also add a personal guarantee to the loan agreement. If that’s the case, then not only is your business liable for paying back the loan but so are you as a private individual. If you can’t pay back the loan, your personal property may be at risk.
#DidYouKnow These strict features don’t apply to every lender! Keep reading to discover the flexible terms and fewer requirements that make Camino Financial different and true to their motto: No business Left Behind.
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