When a small business is ignored by asset-based lenders and banks, these companies can turn to inventory financing to obtain a stand-alone inventory line of credit, which can be beneficial in many ways.
Benefit No. 1 – Secure financing with limited available capital
Some small businesses might feel as though they are out of luck when a bank or asset-based lender denies them financing, but that isn't the case. Through inventory financing, smaller companies are able to obtain a stand-alone inventory line of credit using current product as collateral. This type of lending agreement can be beneficial for small businesses that have limited available capital and nowhere else to turn for financing.
Benefit No. 2 – Helps retailers keep shelves stocked
Small retailers often struggle to purchase inventory on their own dime, which leads to a need for some sort of financing. With companies often being turned away by banks and asset-based lenders, inventory financing can be utilized. By obtaining a stand-alone inventory line of credit, retailers are able have funds available to purchase product when in need, which helps them keep their shelves stocked. Without product on the shelves, sales could suffer so this can be a big help for smaller retailers.
Benefit No. 3 – Financial assistance during seasonal lulls
While larger corporations have the financial means to make it through periods of the year where business is slow, the same can't be said for some smaller companies. That being said, these businesses might need to turn to some sort of financing, and stand-alone inventory lines of credit can be beneficial during these trying times. Seasonal lulls can lead to lagging cash flow, which can put small business in jeopardy, as operation expenses likely don't change. However, stand-alone inventory lines of credit can provide funds to help out during these difficult times.