How does it work? We will evaluate the liquidation value of the equipment or inventory and assign a value. You can elect to draw down on the line at will and only pay interests costs monthly, which is similar to a home equity line of credit.
Why do I need it? If you are looking for a line of credit and are sitting on significant equipment or inventory, you can leverage those assets by securing an inventory line. Proceeds can be used for acquisition, unexpected expenses or for general working capital needs.
How much does it cost? As with all asset-based lending, the cost varies for each transaction. The monthly percentage is based on:
How liquid the inventory is (liquidation value).
Where it's located (centrally vs spread out).
Whether or not it's perishable, or fad related.
Why it is useful? Inventory financing is a good way to leverage existing goods for additional purchases. Unlike AR or PO, this functions more like a traditional line with interest-only payments until maturity for only the portion of principal you draw down.
How long does it take? From the time you submit the application and due diligence materials, it takes approximately a week to underwrite, after which an appraiser is sent to value inventory. To close, the process takes approximately 3-4 weeks.