Inventory Management

Inventory Management - How to Get a Loan with Inventory Financing?

November 22, 2022 • 357 views

Businesses are dynamic in nature, which demands entrepreneurs to constantly work towards running operations efficiently. Several factors help a business to run smoothly. Operating a business involves factors such as assets, capital, inventory, liabilities etc, which require sufficient capital. Financing helps in dealing with issues such as making small payments, buying inventory, office renovation, and others.     

What is inventory?

For any business, the term inventory is used for goods and products that are sold by the business. Also, the raw material which is used for producing goods is considered inventory. Inventory includes goods, products, items, materials, and products that a business uses for making a profit. 

What is inventory management?

Running a business can be a daunting task. The nature of business is such that entrepreneurs always need to be on their toes. Inventory is critical part of working capital and hence inventory management requires a lot of planning to manage the inventory in such a manner that there is no remaining dead stock or unsold stock. Using inventory management, you will have a clear idea about the timing of ordering the stock. It helps you to identify which and how much stock needs to be ordered. 

Also Read: Reasons to Lease Vs. Buy Healthcare Equipment

What is inventory financing? 

As the name suggests, inventory financing is a short-term financing solution generally used by MSMEs. Lenders provide financing keeping the inventory of the business as collateral. Inventory financing is opted to deal with any temporary financial crisis. In case of failure in repayment, the lender uses the inventory that is kept as collateral to recover the remaining amount. Inventory financing can be further categorized into two types- inventory loans and inventory lines of credit. 

Type of inventory financing

Inventory loan

An inventory loan can be availed on the value of the inventory that is available with the company. 

Inventory line of credit

In the inventory line of credit, the lender provides credit to the borrowers up to a certain sanctioned limit. Using an inventory line of credit, the borrower can withdraw cash at any time against the pre-approved limit.

Importance of inventory financing 

  • Leveraging the inventory: Inventory financing provides an added advantage to the company by using the existing stock for short-term financial requirements. 
  • Fast finance option: Inventory financing is perfect for short-term as well as urgent financing. 
  • Solves cashflow issues: By using inventory financing, you have easy and quick access to funds which allows companies to improve cash flow. 
  • Company Sales: With additional capital, companies can use those funds to improve sales as it adds more cash to the business. Also, it can be used for expanding the business. 

Why should you apply for Business Loan for MSME with Poonawalla Fincorp?

As mentioned above, inventory financing is short-term financing opted for by businesses to cover urgent financial requirements. Also, inventory financing is popular amongst MSME companies as it helps them with easy capital access specially for the size and nature of the business. MSMEs can also look for Business Loan to address their capital needs, Poonawalla Fincorp is the perfect place to fulfil all their financial requirements. 
There are numerous features and benefits that Poonawalla Fincorp offers to its customers that include minimal documentation, simple loan eligibility criteria, attractive interest rate, hassle-free loan approval, flexible repayment tenure, and most important no collateral requirement.  

Also Read: Common Mistakes done in Medical Equipment Planning in a Hospital

Eligibility Criteria for Business Loan for MSME 

Before applying for Business Loan for MSME, you should know the below-mentioned eligibility criteria:

  • Age: You should be between 22 and 65 years of age
  • Business Vintage: At least 2 years 
  • Annual Turnover: Minimum of Rs.9 Lakh

Documentation Required for Business Loan for MSME 

•    Company PAN
•    Address proof
•    Business Address Proof
•    Bank Statements 

Conclusion 

Today, numerous lenders offer Business Loans with attractive features. And with so many options available, borrowers tend to get confused to choose the best for them. Features such as online Business Loan application, minimal documentation, attractive interest rate, etc. make Poonawalla Fincorp a favourable option. You can apply for Business Loan and use it to tackle any urgent expenses, upgrading business infrastructure, pay overhead costs and salaries of the staff. 

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