Can you borrow against inventory?

Yes, typically any collateral required is the inventory itself or other inventory you already have. This is similar to an equipment loan where the equipment itself acts as collateral. 

What is the difference between an inventory loan and an inventory line of credit?

An inventory loan is a lump sum of money you can use for inventory purchases. An inventory line of credit, on the other hand, is a revolving credit line, meaning you can use it multiple times once you’ve paid down your balance. 

What is the best way to finance inventory?

There is no “best” way to finance inventory, just the best way for you and your business needs. An inventory loan may be the better option for those looking for longer repayment terms and larger financing. Lines of credit may be better for those looking for smaller loans that they can use continuously. 

What does it mean to buy inventory on credit?

When you buy inventory on credit, you’re purchasing inventory with the intention of making it into a product and selling it later on in the near future. You're purchasing it on credit as if you’re paying with a credit card. You then make payments to pay down the balance of the inventory you bought. 

How much can you borrow against inventory?

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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