Reviewing the relevance of inventory loans for retailers

The retail sector is often about seasonal and unexpected increase in demand. For retailers, especially small businesses, securing loan to manage their working capital and other needs can be hard, especially through traditional means. That’s precisely where an inventory loan can be handy. In Canada, services like Accord inventory financing work with small retailers and businesses, allowing them to get funds when they need the most. In this post, we are sharing more on the relevance and benefits of inventory loans. 

What exactly is an inventory loan?

In simple words, an inventory loan is a form of asset-based financing, where the inventory of the retailer is used as a collateral. In other words, this is a form of secured lending.  Now, while inventory loans are commonly available to businesses that have been in the retail sector for a while and have enough invoices, many services in Canada also offer retail inventory financing for businesses that have physical/online store and inventory worth of value. It should be noted that only a percentage of the inventory value can be obtained as a loan, and lenders will usually work with appraisers to accept, or make an offer. 

When to consider inventory loans?

There are various reasons why retailers may choose to go for an inventory loan. This could be related to getting additional stock in anticipated demand, to negotiate discounts with suppliers, or sometimes just to maintain stock. In many cases, inventory loans help retails stay afloat with operations, by offering funds in time of need. 

Interest rate and more

If you are wondering about the interest rate, keep in mind that lenders would consider every case differently. The actual interest rate also depends on the risk apparent to the lending service, performance of the business, and overall inventory value. While inventory loans are handy, this form of financing should be considered with care. It is absolutely important to check the terms & conditions in depth. The term for inventory loans is usually one year, but some lenders may agree to offer short-term loans. Once you have applied, the lending service will take a few days to get the application processed, but the whole thing doesn’t take a long time, unlike a standard loan. 

Check online to find more on inventory loans and make sure that you are capable of repaying the loan on time and have a concrete plan, as your inventory is the collateral. 

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