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INVENTORY FINANCE
Inventory financing is a short
term loan that is made to a
company so that it can purchase
products and then sell them.
These products/inventor tend to
act as collateral for the loan in
case the business fails to sell the
products and thus unable to
repay the loan.
For businesses that have to pay their suppliers in a short time
period, inventory financing happens to be quite useful.
Furthermore, inventory financing/inventory loans offers an ideal
solution for seasonal fluctuations in cash flows so that business
can increase their sales volume like getting extra
stock/inventory during the holiday season for selling.
From a lender’s point of view, inventory financing is a type of
unsecured loan because the business fails to sell its inventory
the bank will not be able to either. This could partially but clearly
explain the end results of the 2008 credit crisis. Numerous
businesses found it quite complicated to obtain inventory
financing. The inventory that has been made or bought by your
business to be sold is a worthy asset and the value of this
inventory can be used for financing of your business without
getting sold.