Inventory Financing

Benefits of inventory financing that meets your needs.

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Inventory management is a cornerstone of success in business operations. Controlling cash flow and ensuring your inventory is well-stocked can be a delicate balancing act — that’s where inventory-based financing comes in.

Inventory financing is a valuable financial tool that empowers your business to foster growth while navigating the complexities of inventory management. It frees up your working capital for other operational needs.

Is your business ready to reap the benefits of fulfilling customer demands without financial strain? Learn more about the benefits of inventory financing that meets your needs.

What Is Inventory Financing?

Inventory financing, aka inventory loans or inventory financing loans, is a form of asset-based financing. Businesses often use this lending service during times of higher production alongside lower cash flow. Essentially, this is a short-term loan business owners can use to buy stock. It is valuable for organizations that need extra capital to manage their inventory better or restock shelves. The value of the loan or credit line depends on the collateral your business offers.

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How Does Inventory Financing Work?

The premise is straightforward. You offer the value of the stock you already have as collateral to get a loan you use to buy more stock. Your financing provider assesses your inventory’s value and offers you credit based on a percentage of its worth. As your inventory levels fluctuate, so will your available credit and repayment. Your repayments are periodic, allowing you to repay the loan with interest during an agreed-upon schedule.

In some cases where inventory is running low, you can also list the following as collateral.

  • Real estate: If you own real estate, you may be able to put this up as collateral for your inventory financing. Your lender will order a property appraisal to determine its value and whether it can be collateral for the loan.
  • Accounts receivables: Receivables due for 30 to 90 days can also be collateral. As with inventory, the more you have invoiced, the more you may be able to qualify for.
  • Equipment: You can ask your loan officer about putting up high-value equipment and machinery as collateral.

Benefits of Inventory Financing

Inventory financing may be more cost-effective than raising equity capital. It is a dynamic system that provides you with the necessary funds while aligning with inventory turnover cycles. This type of funding comes with the following benefits.

  • Cash flow benefits: Your business maintains a healthy cash flow by using funds set aside for your inventory purchases.
  • Seasonal flexibility: If your business experiences seasonal fluctuations, inventory financing helps secure the capital you need to stock up during peak seasons.
Seasonal flexibility
  • Better inventory capacity: Businesses wanting to expand or diversify product lines have access to the capital they need to buy new inventory. It helps your operations grow and meet customer demands.
  • More accessible: Even newly formed startups can access inventory financing. 

How to Finance Inventory

When you partner with Porter Capital, our team works to give you quick access to the funds you need to buy more inventory and grow your business. It only takes a few simple steps to manage your inventory financing.