Short-term inventory loan

What is a Short-Term Inventory Loan?

posted in: Blog

Every business has opportunities to grow and build its clientele. Often, that requires an investment of capital, but having access to that necessary capital means finding the right sources to fit the needs of your business.

One such option is a short-term inventory loan. Here is a guide to a short-term inventory loan and how it can benefit your business.

What Is A Short-Term Inventory Loan?

A short-term inventory loan is obtained to provide a temporary business capital need. It involves paying a principal amount with interest by a specific due date, typically within a year of the initial loan. Inventory financing provides the collateral for this type of short-term loan. Your physical inventory essentially allows you to get the financing that provides a stop-gap measure when you have inventory ready to sell that has not yet been sold.

Short-term inventory loans are paid out in one lump sum. Interest, fees, and principal are typically paid off over a period of three months to one year. The inventory can serve as collateral, but only well-established businesses with good credit will typically qualify.

Benefits of a Short-Term Inventory Loan

There are multiple benefits to a short-term inventory loan, including the following:

Pay less interest – There is a shorter time for incurring interest because the loan typically has to be paid off within a year or less.

Quick funding time – These loans are considered less risky because of their shorter maturity date, simply because your ability to repay the loan is unlikely to change in such a short period. The lender’s underwriting process is also typically much faster than it would be for a long-term loan. That means a decision is reached quicker, and funding can happen in a short period. Depending on the lender, it can be a week or less.

Easier to acquire – These short-term loans can be a great way to get funding for smaller businesses since the requirements are generally easier to meet. Since these loans are for smaller amounts, they tend to be simpler for businesses to access and assist with cash-flow or capital needs.

Close loans fast – With many short-term lenders, the goal is to close the loan within a short period, typically 30 days or less.

Multiple benefits come with a short-term inventory loan, but you also need to remember that these loans will depend on how much inventory you have available.

What You Should Consider

Several short-term loans are available to small businesses, including short-term inventory loans. However, your business might need something different, such as a working capital loan. Our team can provide the right funding to fit your needs. Our loans can also be tailored to fit the needs of your specific industry, helping you to meet new challenges or explore new opportunities.

Contact our team to learn more about the options available for you to get the right financing to fit the needs of your business today.