Finance

An easy guide to retail inventory financing

Are you looking for a loan for working capital, restructuring, and other needs of your business? You may consider the option of retail inventory financing. For the unversed, retail inventory financing is a form of secured loan, which allows retail companies to pledge their existing inventory as an asset/collateral to secure the loan. Options like Accord Financial retail inventory financing have helped hundreds of retail businesses in getting advance on time, as and when needed. In this post, we are discussing retail inventory financing in detail. 

How much can a business borrow?

In case of asset-based financing, businesses are allowed to borrow a percentage of the actual value of assets. In retail inventory financing, a percentage of existing inventory can be borrowed as required. Lenders typically work with appraisers to find the value of inventory, and factors that impact prices of inventory will be considered. 

What about the term and interest rates?

With asset-based funding, the term is usually one year. However, many lenders allow for easy retail inventory financing when your expected loan amount is less than a certain figure. In such cases, you can get a retail inventory-based loan with no minimum term. There are also specific loan and financing options for companies that need money for supply chain financing. As for the interest rates, it is dependent on many factors, including type and value of inventory, risks involved for the lender, and overall market credibility and performance of the retail business. 

Can a company get retail inventory-based loans on poor credit?

Yes, retail inventory financing is one of the few options available to companies that don’t have a stellar credit score. In other words, while the performance of a company is important for the lender, that isn’t the only reason to reject an application for retail inventory financing. Depending on the value of inventory, a loan can be approved, and in most cases, the terms & conditions are pretty flexible. 

Things to understand

If your company needs a small loan and wants to use existing assets to secure the amount, retail inventory financing may work for you. This kind of lending is common in the retail sector, where inventory is often the biggest asset for a business. Of course, do your homework, check the terms & conditions, and don’t shy away from asking questions related to process and facts related to retail inventory financing. 

Any form of financing should be used responsibly, with the intention to repay back in time.