Supplier Inventory Financing

What is supplier financing?

Supplier financing is a loan that is used to cover supplier business expenses. Some loans can be used for general expenses while others must be used for specific expenses. In most cases, the money will need to be repaid with interest. As a supplier, you will need to stock plenty of inventory, which can be costly. Inventory funding may be a cost-effective way to fund inventory without interrupting cash flow. 

How does supplier financing work?

The specifics on how supplier financing works depends on the type of loan you use. The lender or partner can dictate exactly how the financing or funding works as well. However, in general, the first step will be to apply or create a profile or account. Next, you will need to wait for approval. Traditional financing may have long approval and waiting times and may require a lot of documentation. It’s very possible that funding from backers can get you the funds you need faster and cheaper. However, the funds may only be used for certain expenses whereas a traditional business loan can be used for any business expense. Repayment schedules can vary. Since monthly payments and budgets are important you will want to choose an option that is affordable.

What are the types of supplier business financing?

Suppliers can choose from several types of financing. Depending on your needs, the type of financing or funding that is best may vary. For example, if you only need funds for inventory, then it may be more cost effective to use an inventory loan or inventory funding. If you need access to a revolving line of credit to improve cash flow and cover a variety of business expenses then a business line of credit may be best. Make sure you educate yourself on available options, determine what you’re most likely to qualify for, and of course, find the best deal. Here are some common types of supplier financing:

Term loans: A type of installment loan that is typically offered by banks, credit unions, and online lenders.

Business line of credit: Similar to a credit card, but with much lower rates. Lines of credit are usually offered by banks, credit unions, and can be accessed online too.

Inventory loans: Inventory loans are intended for purchasing inventory only. Banks may offer inventory loans, but they can be costly. 

Inventory financing: Inventory financing leverages the resources of a financing partner to pay for inventory production. Funding can often be customized to address your business’s exact manufacturing, shipping, and sales timelines. Some providers require no payment on goods until the inventory sells. This works well with natural cash flow cycles.

The products produced typically act as the collateral for the financing, meaning that if the business reports an inability to repay the funding, the inventory can be sold to cover the debt. 

Inventory financing is especially valuable to any business experiencing a significant delay between paying for inventory and receiving payment from future sales. It is also helpful for businesses that want to receive volume-based discounts by placing larger orders to support all of their sales channels. This works best when done on a quarterly or other regular basis and can help to prevent the stock-out issues that stifle growth.

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Common costs associated with a supplier business

Here are some common costs associated with a supplier business that may require financing:

Warehouse space: Suppliers usually need a workspace to conduct business from or store products.

Equipment: Suppliers may need computers, phones, forklifts, manufacturing equipment, and more.

Inventory: If the supplier accesses their inventory from another party, they may need funding to purchase the inventory.

Staff: The company will need to hire staff for administrative needs, sales, inventory and more.

How inventory financing helps suppliers

Inventory financing provides several benefits for suppliers.

For one, it gives them the funding they need to purchase inventory. This helps them generate the revenue they require to keep their company afloat.

It also does not require a perfect credit score or extensive business history. This makes it a good option for businesses that are just starting out and/or are dealing with financial difficulties.

While inventory financing may cost money, missing out on sales due to a lack of inventory may cost you more money in the long run.

What are the requirements to qualify for supplier financing?

Most lenders will want to see a good credit score and reliable business history.

If your credit score is in the upper 600’s and above, you will be able to qualify for most loans. If your score is in the low 600’s, you may still be able to get funding, especially if you can back your score with a strong business history.

If your score is between 550 and 600, you may be limited to funding options like alternative loans, collateral loans, and merchant cash advances.

If your score is lower than that, you may want to look into other funding options.

In terms of business history, most lenders will want to see that you have been in business for 1- 2 years and that you can bring in an income of $50,000 – $250,000 a year.

To qualify for inventory funding at Kickfurther you need to sell a physical product with sales of $150,000+ over the last 12 months at a minimum.

Additional tips for obtaining supplier financing 

As a supplier, the need for financing may be a recurring theme. Connecting with a lender or funding platform and establishing a good relationship can help you get funding faster and easier. If you go the route of inventory funding, create an online account at Kickfurther that represents your company properly. Investing time into providing potential backers with information and background can pay off.

How Kickfurther can help

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.

Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.

Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.

Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

How to apply for supplier financing

At Kickfurther, you can apply for supplier inventory funding in 4 easy steps:

#1. Create your online account

Input business information and upload documentation to get started.

#2. Get funded within minutes to hours

Once approved, our community can fund you within minutes to hours.

#3. Control your payment schedule

Kickfurther pays your manufacturer for inventory. 

#4. Complete and repeat

Once you’ve reached your goal, you can repeat the funding process.

As a business owner, you will be faced with decisions every day. The decision to use financing or funding is a big decision. However, once you figure out the best way to obtain funds, you will realize that it does not have to be complicated or expensive. Financing can help your business grow and become more profitable than you ever imagined. 

Access affordable inventory funding. . . create an online account today!