Inventory financing is the process of securing financial assistance for the purpose of purchasing new or increased inventory capacity.
Inventory financing, also known as Asset Based Lending, provides companies with a line of credit secured against a companies’ physical assets or inventory for collateral. The advantages of this kind of loan are many, but in essence it allows a business to have easy access to working capital available in their assets, including inventory, equipment, and accounts receivable.
How does it work?
Riverpoint Capital establishes a line of credit for businesses based on their revolving asset base. In exchange, the borrower grants Riverpoint Capital a security interest in the collateral items. A value is assigned to each item and a percentage of the value of the item is made available to the borrower in credit. Typical inventory financing allows for 50% of inventory value to be made available in credit.
Borrowers can also request advances if more capital is needed. The amount of capital requested is entirely up to the borrower, which allows for greater flexibility based on the current needs of everyone. As a result, the cost of financing is more controllable, as you are only borrowing based on what you need and have available at any moment. As businesses acquire new assets, invest in more inventory, and generate sales, more capital can be included in inventory loans. The line of credit is paid down over time.
Riverpoint Capital has offices based in New York, NY and Hollywood, Florida. To learn more about qualifying for inventory financing, contact us today.