How Does Inventory Finance Work?

1
HOW DOES INVENTORY FINANCE WORK?
avonriverventures.com
2
Inventory finance provides small and medium-sized
businesses with loans to purchase inventory,
securing the loan against the value of that
inventory. Also called an inventory business
loan, it provides working capital to maintain
sufficient stock levels to meet customer demand.
In this ppt, we will talk about how inventory
finance works and important considerations
regarding these loans.
3
WHAT IS INVENTORY FINANCING?
Inventory financing is a type of short-term
working capital loan. The key feature of
inventory financing that sets it apart is its
distinct purpose. While traditional business
loans may be used for multiple general business
expenses, inventory financing is a dedicated line
of credit for purchasing tangible goods for sale.
Amounts borrowed are expected to be repaid
quickly upon the sale of those specific inventory
items.
4
FUNDS USED TO PURCHASE INVENTORY
Rather than waiting weeks for revenue from
inventory sales to start flowing in, inventory
financing accelerates access to capital when you
need to make large wholesale stock orders. The
loan provides immediate working funds that must,
in turn, be used to increase your on-hand
inventory volumes.
INVENTORY AS COLLATERAL
To secure inventory loans, the products you
purchase serve as collateral until sold. If sales
underperform, the unsold stock can cover your
obligation. Financing decisions evaluate both
existing inventory value and expected turnover
rates. Higher inventory turnover means faster
repayment capacity.
5
HOW DOES INVENTORY FINANCING WORK?
Inventory financing provides access to dedicated
working capital for wholesale inventory purchases
based on the value of a companys existing stock.
Qualifying businesses first submit an inventory
appraisal and records of historical inventory
turnover rates. Financiers then assess lending
limits aligned with the liquidation timeframes
the current inventory supports.
ELIGIBILITY
To qualify for inventory financing, some key
eligibility criteria commonly include
6
Application process
Providers evaluate applications to assess
borrowing needs against risk factors and
determine suitable lending amounts. Submitting
documents outlining the key requirements below
allows financiers to promptly assess inventory
financing requests.
Requirements

• 1 Years in Operation Established companies with
  a trading history demonstrate market viability
  and reorder demand.
• Minimum Annual Revenue of 100,000 Sufficient
  scale to utilize inventory financing and reliably
  forecast stock turnover rates.
• Good Business Credit Standing No major credit
  violations or non-payments in existing vendor and
  lender relationships
• Steady Sales History Stable historical revenues
  indicate reliable ongoing demand to sell financed
  inventory
• No major credit violation Good standing allows
  building cooperative inventory financing
  partnerships and growth
• Meeting these criteria displays the capacity to
  utilize inventory business loans from capital
  venture firms and mutually benefit from the
  arrangement.

7
BENEFITS OF INVENTORY FINANCE
CAN LEVERAGE THE FULL POTENTIAL OF UNSOLD
INVENTORY
Inventory is essential for companies that sell
retail products but is often overlooked as
collateral. Inventory financing lets you tap into
current unsold stock value to fuel further
inventory investments. This optimizes the use of
one of the largest assets many operations own to
accelerate cash access.
FAVORABLE PAYMENT OPTIONS
Since repayment obligations align directly with
inventory turnover into sales, financing allows
matching cash outflow to inflow timing. Payments
only become due as the collateral items sell.
This means avoiding lump sum payment shocks
ill-suited to the inherent unevenness of retail
revenues over weeks and months.
8
PREPARATION FOR BUSY SEASON
Forecasting sales demand and then purchasing
sufficient inventory is crucial yet challenging,
especially for smaller firms lacking data
analytics. Inventory financing helps smooth
uneven cash flows to build stocks when needed,
not just when excess working capital exists. This
helps mitigate lost sales from stock-outs during
forecasting errors or suppliers with minimum
order quantities. With capital secured in
advance, businesses can plan and pace inventory
growth aligned with sales expectations.
9
CONCLUSION
Looking for inventory finance? Choose Avon River
Ventures. At Avon River Ventures, we specialize
in inventory business loans and working capital
solutions. Our customized financing helps unlock
cash from your existing inventory assets. This
allows you to have the right stock on hand to
meet customer demand without long wait times. We
understand how difficult it gets for any business
to access adequate retail inventory financing. We
take pride in our due diligence, underwriting,
and appraisal. Our process could be as short as
3-6 weeks from submission of the required
documents to appraisal and disbursement of the
capital as a trusted venture firm. We also
provide asset-based lending, invoice factoring,
and more! Contact us today!
10
CONTACT US
Phone [phone]
Website www.avonriverventures.com
Email connect_at_avonriverventures.com