Whether you own a small retailer or wholesaler, chances are you have a lot of capital tied up in your inventory. This can be a difficult problem to have, especially during down periods when sales are slow.
However, there is a way to get equity from this product – inventory financing. Through this form of asset-based lending, you are able to turn your current inventory into equity by using it as collateral to obtain a revolving line of credit.
During seasonal lulls where cash flow may be lagging, this revolving line of credit can be extremely beneficial. Just because sales aren't as high as they were during the holiday season doesn't mean that your operating costs will go down. With that said, you could struggle to keep your doors open during these times, as your sales may not be strong enough to keep cash flow strong. Luckily, your revolving line of credit obtained through inventory financing can be used to help cover operating costs.
Helping businesses stay afloat during slow periods isn't the only use of inventory financing, though, as the equity obtained can also help purchase additional product. This can come in handy when you find product flying off the shelves but still don't have enough available capital to keep them stocked. Using your remaining product as collateral, this type of lending agreement allows you to purchase additional inventory to ensure that your customer's favorite product will be in stock when they come to the store looking to purchase it.
The benefit of being able to turn your inventory into equity through asset-based lending can be of great assistance to small businesses across the country, and, sometimes, can be the difference between staying afloat and being forced to close the doors for good.