FAQ’s – Inventory Financing

What kind of companies can use Inventory Financing?

This form of financing is generally intended for retail, wholesale, and manufacturing companies. Basically, any form of business that maintains and keeps an inventory is likely to be eligible.

When would Inventory Financing make sense for me?

There are three different situations that Inventory Financing works to fix.  Your company has a high turnover in sales, but currently doesn’t have enough money to replenish stock. Inventory Financing can make it possible for you to keep your shelves stocked.  Your company constantly has to maintain a high level of inventory, and it’s starting to eat up your cash. Inventory financing can create a very good financial buffer in these cases.  You are a manufacturer or warehouse, and you have a bunch of items that are ready to ship, but you don’t have enough funding to start your next batch of production. A revolving line of credit can make this a nonissue.

Are there any situations in which Inventory Financing is unadvisable?

Yes. If you have inventory that is difficult to move, or obsolete, this is not a good solution.

How do I get approved?

Aside from having enough inventory, it’s important to ensure that the inventory that you’re using as collateral is safe, intact, and actually selling. Lenders may want to give your inventory a look-see from time to time, and they actually will have the right to do so. You also will want to have a very accurate report detailing the value of your inventory. Showing lenders positive sales orders, and showing lenders that you’re responsible by keeping the bare minimum of your inventory on stock is also wise.

Okay. What do I need to provide in order to show them that my inventory is good?

In order to get financing through this route, you will need to provide lenders with a sheet showing an accounting of your inventory. Lenders might also require a 3rd party appraisal in some cases. An updated business plan and a basic financial package will also be required for bigger accounts. In most cases, proofs of sales orders and additional collateral may also be required.

Are there any important caveats I should be aware of?

Most banks aren’t very well-versed in Inventory Financing, so the amount of lenders you are able to work with will be limited. In some cases, the line of credit may need to be paid in full at the end of the year, then left unused for an entire month before it refreshes itself. (This is a rare occurrence, though.)

What determines how much money I can receive?

Your company’s monthly revenue, and the value of your inventory will determine it.

Do I need an attorney’s assistance?

It’s never harmful to speak with an attorney regarding personal and business matters, and often times, it may be the best thing you can do if you think that an attorney’s advice can help you. Although we aren’t a law firm and we cannot provide anyone with any legal advice, you are more than welcome to speak with an attorney that we use for our company. We truly want to get familiar with our clients, and help them in any way we can. Simply send an email to info@thecreditexpress.org and we’ll be sure to forward it.

Still need help?  If you have a question that isn’t answered here, or if you feel like you could use advice when it comes to the best route of financing for your business, we are here to help you make the best choice for your company!  You may call us at (678) 983-4555 or email: info@thecreditexpress.org.  You’re also more than welcome to visit our office.  Evening and weekend appointments are available.