Pros | Cons |
You can replenish your stock as well as expand your product offerings without depleting your working capital. You don’t need to put up other business or personal assets as collateral. You can often secure funding fairly quickly, allowing you to move rapidly to take advantage of discounts or meet seasonal demand. You may be eligible if you’re a newer business – enterprises with one year or even six months of profitable operation may qualify. You may be able to secure a workable loan even with less-than-perfect personal credit. You can explore a range of online and bricks-and-mortar lenders, making it easy to comparison-shop and find the best rate and terms. |
You can use inventory loans only to purchase inventory or inventory management systems, while other options may give you the flexibility to cover payroll and other needs. You may not be able to borrow the full amount you require. You may spend time and money determining your inventory’s liquidation value. You may discover that interest rates are higher than other business borrowing options. You may have to pay back your inventory loan over a shorter term than other options, which could put a strain on your monthly cashflow. You need to be confident in your ability to sell the inventory at the needed pace and be comfortable having the lender monitor your operations. |