A business that has a lot of inventory on hand can help keep customers happy and attract new ones. However, it can be difficult to balance this inventory with cash flow. That’s where inventory financing comes in. It’s a way for businesses to use the value of their current stock as collateral on a loan or line of credit that will allow them to buy more inventory.

Lenders usually only lend up to a percentage of the total inventory value, so there’s some risk involved in this type of financing. But, the process is generally much faster than conventional loans. Conventional lenders often take weeks to vet an application thoroughly, while alternative lenders can approve a loan within days of receiving all required documentation.

One benefit of this type of financing is that your credit scores don’t have as much of an impact on whether you get approved for the loan or line of credit. Lenders look more at your business’s sales history and profitability, as well as the amount of inventory you currently have on hand, before approving you for inventory financing.

Using inventory as collateral is also a great way to reduce the amount of paperwork and meetings that you’ll need to complete when applying for an inventory loan. Typically, you’ll need to provide invoices and proof of income, as well as the details about the inventory that you wish to purchase. You can use online applications to gather these documents, which makes the process even easier and more streamlined than it is with conventional loan applications.

This type of financing is ideal for a number of situations. For example, suppose you have an opportunity to expand your company, but don’t have the funds in your budget. You can purchase the additional inventory using an inventory loan or line of credit, and then sell it at a later date to recoup your costs.

Whether you choose to go with an inventory loan or line of credit, it’s important that you consider all the fees and interest rates before choosing. These can vary wildly, depending on your business’s financials and your personal and business credit scores. Taking the time to carefully compare your options can ensure that you’re getting the best possible deal on inventory financing, which will help your company grow more quickly.