Asset-based lenders are a great place for businesses to turn that need financing but don't have the ability to obtain a loan from a bank.
However, smaller businesses are often ignored by larger lenders because they don't have the means to qualify, so what can a company do in this situation?
Inventory financing can be beneficial for small- and medium-sized retailers and wholesalers. When companies of this size run low on inventory, it can be difficult to purchase more on their own dime, as available capital may be tied up in other areas.
With inventory financing, businesses use current product as collateral to obtain a revolving line of credit, which, in turn, can be utilized to purchase additional inventory. This form of asset-based lending enables retailers and wholesalers to continue to grow without tying up too much capital.
Manufacturers and wholesalers are able to take advantage of purchase order financing, which allows them to fill orders larger than they usually handle. This type of lending agreement enables small- and medium-sized businesses to obtain up to 100 percent of the funds needed to fill an order.
One of the main benefits of purchase order financing is that it allows owners of these companies to avoid having to get funds to fill an order through selling equity. It also enables manufacturers and wholesalers to take advantage of game-changing orders from big-box retailers such as Target or Walmart without having to tie up available capital.