You can apply for inventory financing through a traditional bank, a credit union, or through an online lender. Because inventory financing can be a recurring loan, it is especially important to do your due diligence and find the best financing company for your business.
Inventory loans for small businesses hinge on the liquidation value of the inventory and its sale in the near future. During the application process, lenders will want to see the documentation that proves that you have excellent inventory turnover and are able to actually sell the inventory, such as:
- Balance sheet, including sales history
- P&L statements
- Sales projections
- Cash flow statement
- Business plan
Lenders will also want to see that you have an excellent inventory management system in place so they don’t have to worry that you might be buying more inventory than you really need and are able to sell.
Other Financing Options
If you don’t have a high volume of inventory, inventory financing may not be right for your business. In that case, there are many other types of financing that may provide a more flexible funding option, such as:
Working Capital Loan: These short-term loans can help to cover any cash flow gaps with flexible and unsecured capital. Working capital loans can be used for any business need, from purchasing inventory to hiring more staff. The choice is yours as the owner.
Equipment Loan: If an unsecured loan isn’t the best option, an equipment loan can enable you to purchase new equipment and pay it off over time. As a secured loan option, you may be able to qualify even if you don’t have a stellar credit history.
Find out more about which best small business loan option is right for you.