Inventory Financing

Enhance Liquidity and Flexibility by Leveraging Stock Assets to Access Business Capital.

Have questions about your approval odds? Book a financing call here.

Inventory Financing defined

Inventory Financing works best for resellers or distributors of products that someone else manufactures. When a reseller has a lot of inventory on hand and revenue increases, the need for cash grows. As an example, seasonal retailers need a lot of cash towards the middle of the year to buy goods for the holidays.

Generally, the banks do not lend against standalone inventory. They want multiple collateral points such as accounts receivable, fixed assets or real estate together, to provide financing for a growing enterprise. That’s where YDS comes in.

Why Inventory Financing?

If you run a business that resells or distributes someone else’s inventory, like a retailer, Inventory Financing could be the best way to feed your company’s growth. By matching financial structure with your business model, allows you to borrow and pay back as much capital as you need, when you need it.

By leveraging your existing inventory, our alternative lender partners can provide funding your bankers may not be able too. You can access the capital your firm needs to buy more products, pay salaries or fill timing gaps in cash flow.

Since inventory is constantly changing, it is considered a current asset for a company. Therefore, inventory financing is usually structured as a line of credit or a short term loan, giving the company ability to borrow when cash is needed and pay down the loan when the company is flush with cash.

Inventory Financing is a strategic lending option that enables you to navigate fluctuations in demand and maintain a healthy balance between liquidity and operational efficiency.

The Challenges of Inventory Financing

As appealing as Inventory Financing can be, there are several things to consider ahead of time:

Very few lenders in the US provide inventory financing - let alone do it well.
Lenders look for specific documentation right away. If the information provided is insufficient or it takes too long to accumulate the information, the loan can be rejected.
After collecting the information, the lender goes through a rigorous review of information supplied. If the company is underperforming, or the financial information provided is inconsistent, obtaining financing may be difficult.
The most important step in the process is inventory valuation. That takes time and involves certain costs.

The YDS Approach to Inventory Financing

While the process of applying to Inventory Financing can be difficult, we provide a specialized consultation process that help business owners throughout applying:

It’s easy to get rejected - we know what the lenders are looking for, so we can help you correct things before the application goes to the lender.
Your Deal Source has established partnerships with experienced and qualified lenders that are looking for companies like yours.
We help you assemble documentation and position your company to get the best approval odds with a lender.
When applicable, we help connect you with Subject Matter Experts to flesh out all the issues before submitting the application. This is a unique offering not typically available and can directly affect the odds of approval.

How do we get started?

FAQ

Which lender will I be working with?

It depends on a number of factors, such as the financial condition of your company, dollar amount needed and type of collateral used.

How much money can my company borrow?

We have lenders that provide financing from a hundred thousand to ten million dollars.

What is the process to get a loan?

During your initial consultation or when you fill in the required documents, your company's needs are outlined.
YDS will help you determine which lender, what structure and a range of dollars you can qualify for.

What will happen to the fees I pay if I get turned down by the YDS lenders?

In order to avoid surprises, we recommend working with our consultants and experts before you apply for a loan. Our vetted consultants can spot trouble and help you improve your chances of getting approved.

How are the lenders determining if I qualify for a loan?

Lenders go through an extensive process of verifying the value of collateral, borrowers ability to repay the loans and owners background. Sometimes the lenders hire external experts to conduct appraisals or review documents.
The lender will also look at the economic conditions and their internal process to make a final determination.

Are there any costs associated with this process?

Use of external experts, like an appraiser or an attorney, are necessary to complete many transactions. Those professionals do charge fees for supporting the funding transactions. Those costs are disclosed upfront and can be controlled by the borrower.

What documents am I going to have to provide?

To get funding, lenders require a certain set of documents. In general, all lenders ask for

2 or 3 years of business income tax returns
2 or 3 years of internal financial statements such as balance sheet, income statement and cash flow statements.
Information about the business owners
Information about the collateral provided
Information about the use of capital
Forecast for the next 2 years.

Each lender and each borrower is unique and so a company specific document set may vary.
We’ve created a data room where standard required documents can be stored ahead of time. We recommend that you prepare all required documents in advance. These documents are yours and only you can make them available to anyone else.

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