Meeting the rise in demand from customers is crucial when it comes to increasing your business’s reputation and growth. Although meeting this demand is vital, it is not always financially possible. To accommodate the upsurge of business, companies will invest in an inventory loan.
An inventory loan is a short-term loan that businesses make in order to purchase more products to sell. If the business is unable to repay the loan, the inventory purchased will become collateral. Inventory loans are the most popular among smaller or medium-sized retailers or wholesalers. Unlike more established retailers or wholesalers such as Target, Walmart, or Costco, smaller businesses lack in strong financial or assets, thus making it more difficult to receive financial help.
Inventory loans can help businesses become more prepared for the demand of their customers. Below you can find why businesses turn to business loans in a time of need.
Businesses often experience a “busy” and “slow” season. The retail industry for example, often experience the most sales towards the end of the year near the holidays and will then experience a lull in the later months. Another example would be the travel industry, who would receive the most business in the spring and summer months.
While having a busy season is extremely beneficial in bringing in a higher volume of working capital it creates more demand for a higher inventory. In order no to run out of inventory, businesses often turn to inventory loans. These loans help businesses capitalize on the busy season, so it is easier to endure the slower season.
The Launch of a New Product
When launching a new product in a business, it has the potential to receive a lot of exposure. The exposure may increase the demand, leading your business to run out of stock faster. To meet the expected demand, an inventory will help your business become more prepared for the launch day of the new product.
When businesses purchase inventory, some products are only available for a limited number or for a limited time. Purchasing these limited products can be beneficial because it can give the business an advantage over competitors. In this case, business needs to act fast when purchasing these products while the product is still available.
With the assistance of an inventory loan, businesses will not have to fear on missing out on these short-term opportunities. Businesses will not only be able to keep up with their competitors but gain an advantage by obtaining a rarer product.
Inventory loans are beneficial to businesses when looking to increase their inventory to get through a busy season, launch a new product, or purchase short-term inventory. Having an inventory loan can enable a business to produce extra profits and create a happier customer base.