As a Business Owner, You May Not Have Access to Enough Working Capital at Any Given Moment to Finance Your Inventory Needs, Whether Due to a Traditional Bank’s Unwillingness to Loan or a Seasonal Deficiency in Sales to Your Clientele.
What Can You Do You Get a Business Inventory Loan?
This can be a critical problem when either suppliers or employees want to receive payment before you can sell a product and generate cash flow. Alternatively, your clients demand more inventories, you cannot pay your suppliers for crucial raw materials and orders go unfulfilled.
Banks may not offer you inventory financing for a myriad number of reasons. Whether it is due to a lack of financial history, personal credit issues, an unstable cash flow or insufficient credit in general compared to their minimum standards. Banks may even turn away a business if they feel their management is not up to banks’ strict underwriting standards.
How is a small or medium-sized business suppose to magically gain years of financial history and experience? Or miraculously obtain a steady cash-influx, especially when customers only seasonally buy the product? For a young, struggling business, obtaining a loan from a bank can be nearly impossible. Yet you still need a working capital to ensure your business survives and thrives. What can an entrepreneur do?
From these frustrations comes a unique option for businesses and their stakeholders- Inventory Financing. This form of asset-based lending allows businesses to receive a credit facility from an alternative lender like WIP Funding. WIP Funding is transaction driven Inventory Financing Company. If we see you have solid purchase orders from a creditworthy customer with good gross profit margins, we will fund or purchase your inventories. This allows you and your company to use what precious working capital you have for labor and overhead.
Advantages of WIP Funding
WIP Funding is paid back when your clients pay for your provided product. Typically in 30-75 days from when your client receives the goods. Because of the higher risk involved and immediate need for cash, the cost for this type of funding is more expensive than bank financing. However, compared to selling equity or the lost opportunity costs, the cost of funds should be worth it for a business that has solid gross margins. Also, those that need an almost unlimited source of working capital.
The monies to fund a company’s sales opportunity can foster business growth, as you are able to pay your suppliers for new inventory. Also to pay your hard-working employees on time and cover fixed costs during the slow-season. In addition, your vendors may offer quick pay discounts to help mitigate the cost of funds.
Through the Inventory Financing process from WIP Funding, a business can bypass slow, unwilling banks and instead focus on sales growth opportunities, while nurturing good relations between suppliers, employees, and customers.