Why Inventory Financing May Not be Your Best Option

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If you’re a retailer, you’re probably already thinking ahead and planning for the Fall and Winter holiday seasons. If not, you’d better start preparing soon!

How can inventory financing help your business?

Regardless of whether you have an ecommerce or storefront business model, you’ll almost certainly need to increase your inventory levels to meet the holiday demand for your products. For most retailers, finding business funding to achieve their inventory goals will be necessary.

Many retail businesses have products and promotional sales to take advantage of the opportunities that this time of year brings. Being short on inventory could result in a huge drop in sales, and even losing a customer for life if they find the product they want elsewhere.

When your inventory is under stocked or sold-out and potential customers can’t find an item that they’re ready and willing to buy, it translates into lost sales for your business and more sales for one of your competitors!

And don’t forget frustrated customers are less likely to return and more likely to give your business a bad review online. In addition to losing those sales, the last thing you want is a reputation management problem!

Most of us would agree that bumping up your levels of inventory is essential, but the real question is what’s the best way to accomplish that goal?

What types of inventory financing are available?

Some of the more common options for business funding include bank loans, business lines of credit, working capital loans, credit card financing, inventory financing, and accounts receivable factoring.

Inventory financing may provide you with the working capital that you need to stock your warehouse and shelves but the money comes with some serious limitations.
Inventory financing is asset based lending, either in the form of a line of credit or a short-term loan specifically designed to help small business owners buy inventory. 

  • It’s important to note that these type of business loans can only be used for inventory. So, if you have multiple needs for a business loan such as payroll, taxes, repairs or expansion, the funds cannot be used for those purposes.
  • With this type of loan, the business’ current and future inventory is used as collateral against the loan. Because the loan is secured, the inventory can be surrendered to the lender if the business is unable to repay the loan according to the terms of the loan.
  • Another potential negative with this type of loan is that the lender usually retains the right to make surprise inspections to check on your inventory which is the collateral for their investment.

Why working capital loans may be a better alternative

Getting access to fast business funding is a crucial aspect of running a small business. And one of the most common needs for working capital is for inventory. But there are a number of fast and easy options available for businesses to get access to business funding through Mulligan Funding without the limitations of an inventory loan.

Obtaining unsecured business funding without collateral requirements is easily obtainable if you’re dealing with the right lending provider. Mulligan Funding has provided access to over $100 Million dollars in working capital to over 50,000 business owners without requiring any collateral assignment to their loans.

Mulligan Funding offers access to working capital loans that can be used to accomplish your inventory goals with no limitations on the use of funds from the loan.

You as the business owner have full discretion how you want to use the money to grow or strengthen your business. Use your loan for payroll, taxes, repairs, expansion or any other reason that enhances your business.

“We are a family owned business that understands the unique needs of small business owners.”

See what our clients say and how we’ve helped them to succeed at Mulligan Funding Reviews.

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.