An inventory loan is a short-term loan offered to a business so it can purchase stock. Typically, you sell the inventory and use a portion of the proceeds to pay off the loan. Retailers use inventory loans to prepare for busy periods and to grow their sales.
How does inventory financing work?
When you apply for inventory financing, you’ll get a loan to purchase the stock you need. The funds might be a line of credit or a term loan. Your recent business performance will be used by the lender to assess your application.
Can inventory be used as collateral?
This depends on the lender. Some lenders will request that the inventory you purchase be used as security for the loan. If you’re looking for unsecured inventory funding, many alternative lenders, such as Lulalend, require no collateral.