Inventory financing is a form of asset-based lending that allows businesses to use inventory as collateral to obtain a revolving line of credit. This line of credit can be used to purchase additional inventory or to help a business get through seasonal fluctuations in cash flow, among other situations.
Retailers and wholesalers alike can experience many benefits, including:
1. Help keep shelves stocked – To continue to attract customers, and have product to sell, retailers will need to have product on the shelves. For small- to medium-sized businesses with limited available capital, this can be difficult to do. However, with inventory financing, these companies are able to use the revolving line of credit to borrow on inventory and have the funds needed to keep their shelves stocked.
2. Provide financing when a bank says “No” – Another instance where small businesses might find this type of asset-based lending beneficial is when they are turned away from a bank. Small- to medium-sized retailers, as well as wholesalers with poor credit history or inadequate cash flow, might find it difficult to obtain financing from a bank. However, this isn’t the case with Crestmont Capital’s inventory financing, as it allows a company to use current product as collateral.
3. Assistance during periods of lagging cash flow – While retailers see an influx of business during the holiday season, there are other periods during the year where sales may not be as high. During these times, cash flow could be lagging, which can make operating at normal levels difficult. Businesses that experience periods of slow cash flow can talk to Crestmont Capital for assistance.