Customized financing to consolidate high-interest debt or fund major purchases or expenses.
WAYS TO USE YOUR LOAN
Tailored commercial financing that supports all your business needs to help you grow quickly.
Tailored for entrepreneurs that want to establish additional active and passive income streams.
Customized financing to consolidate high-interest debt or fund major purchases or expenses.
Inventory financing, also known as warehouse financing, is a loan or line of credit used to purchase new inventory or get cash from existing inventory, which then serves as collateral for the loan. This type of financing can benefit companies that need to stockpile inventory before selling or shipping it to customers or that want to unlock capital tied up in existing inventory. It is a usefultool for managing working capital effectively, as it allows businesses to maintain necessary stock levels without depleting cash reserves. For businesses seeking broader financial flexibility, working capital loans can provide additional funding to support daily operations and growth initiatives.
There are two main types of inventory financing: loans and lines of credit.
Inventory financing offers several advantages for growing businesses looking to secure sufficient inventory to meet customer demands.
Inventory financing is typically used by established companies like wholesalers, retailers, and seasonal businesses that can prove that their products are selling in the market. Lenders generally won’t lend to a brand-new business that wants the loan to purchase the first round of inventory. Companies in the startup phase may have better luck applying for startup loans instead.
Applying for inventory financing involves several steps, similar to other types of loans.
There are several alternatives to consider if you do not qualify for inventory financing or want to explore other options.
What collateral is required for inventory funding?
Inventory financing primarily requires your inventory as collateral. Lenders will evaluate the inventory's value and quality to determine the loan amount. In some cases, additional collateral or personal guarantees might be needed, depending on the lender's requirements and your business's financial condition.
What are the risks of inventory financing?
Inventory financing comes with risks such as high costs, with potentially higher interest rates and fees. Approval can be challenging if lenders view your inventory or business as risky. Additionally, if your inventory doesn’t sell or becomes obsolete, repaying the loan can strain your cash flow.
How does inventory financing impact a business's financial statements?
On the balance sheet, the inventory loan increases your liabilities as it represents a financial obligation. The inventory used as collateral will appear as an asset, potentially boosting your current assets. On the income statement, interest and fees from the financing will be recorded as expenses, impacting your net profit. Additionally, the increased inventory can lead to higher sales, which may improve revenue, but this depends on how well you manage and sell the stock. Understanding these impacts can help with your financial planning and reporting.
Not all solutions, loan amounts, rates or terms are available in all states.
1 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.
2 BHG Financial business loans typically range from $20,000 to $250,000; however, well-qualified borrowers may be eligible for business loans up to $500,000.
Business Loan Repayment Example: A $94,695 commercial loan with a 9-year term and an APR of 14.8% would require monthly payments of $1,591.
No application fees, commitment, or impact on personal credit to estimate your payment.
For California Residents: BHG Financial loans made or arranged pursuant to a California Financing Law license - Number 603G493.
IMPORTANT INFORMATION ABOUT ESTABLISHING A NEW CUSTOMER RELATIONSHIP
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies every customer. What this means for you: When you apply for a loan, we will ask for your name, address, date of birth, social security number and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents. If all required documentation is not provided, we may be unable to establish a customer relationship with you.