Inventory is a critical part of consumer packaged goods (CPG) brands. From properly managing it to delivering it and stocking just the right amount, you’ll want to perfect your inventory system early on. As sales grow, it can be challenging to navigate how to buy more inventory without inflicting low or negative cash flows. At some point you may need to entertain the idea of inventory financing for small businesses, or maybe you already have but got discouraged.
Small businesses often think of inventory financing as the perfect solution until they learn more about it. With strict requirements and repayment periods and high costs, it can be more harmful than helpful, even though that’s not how it should be.
Our founder, and entrepreneur, once encountered the challenge of inventory financing that actually worked to grow
What are the different small business loan options available for purchasing inventory?
Educate yourself on the various options available for purchasing inventory. Options can include the following:
- Business term loans: Funded as a lump sum, general business loans can be used for purchasing inventory.
- Business line of credit: A revolving line of credit can supply the funds you need on an ongoing basis to purchase inventory.
- SBA loans: Government backed SBA loans are intended to help businesses cover expenses and help them grow.
- Inventory financing: Designed for funding inventory, inventory financing is a top choice for businesses in need of funds to purchase inventory.
How can small businesses determine the right amount of funding they need to purchase inventory?
Guessing is not an effective solution for managing inventory. To determine how much inventory to purchase you’ll need to closely track sales, seasonal demand, and any activities that impact sales to understand how much inventory to stock and when to stock it. For example, the holiday season may cause sales to spike. Therefore, you’ll want to order more to be prepared for the season. Educating yourself about inventory management can help you get a pulse on how much inventory you need.
Once you understand how much inventory you need, you can work on determining what it will cost you. When you’re ready to gather funding, visit Kickfurther to get started.
Are there government-backed loan programs that offer favorable terms for small businesses acquiring inventory?
Under the SBA (Small Business Administration) loan program you’ll find the SBA inventory financing option. SBA loans are partially backed by the government and issued by SBA-approved lenders. Designed to provide favorable terms and funding for small businesses, you may want to consider this option. The pain points here though are usually the strict requirements and lengthy funding times. For businesses they need regular access to funding for inventory this may not be an ideal solution.
How does inventory financing work, and what are its advantages for small businesses?
Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary.
At Kickfurther, our model works as follows:
- Create an online profile
- Launch your deal to attract buyers
- Get funding within minutes to hours
- Set your ideal repayment schedule
- Sell inventory and repeat the process when you’re ready again!
After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round.
What documents and information should small businesses prepare when applying for inventory loans?
Similar to other loans, inventory loans usually require plenty of documentation. Before applying, make sure you can prove why you need the amount of inventory funding you’re requesting. Documentation that may be required can include the following.
- Bank statements
- Business plan
- Balance sheet
- Sales history
- Legal documents and licensing
- Budget
- Tax returns
Be able to prove to the source of funding that you can benefit from the funds and that you can live up to the promise of repayment.
How long does it typically take to secure a small business loan for purchasing inventory?
Getting a business loan, for inventory or anything else, can require a lot of time, patience, and energy. With traditional methods getting inventory financing can take anywhere from a few business days to a few weeks (or even months for SBA loans). When funding runs out and you need more, the cycle starts again. If you use Kickfurther for inventory funding, getting more funding when you need it is streamlined. As a business owner your business and growth actions deserve all of your attention. We recognize how hard you work and hope to make inventory funding one less thing to worry about.
Are there any alternative financing options or creative strategies to consider for inventory purchases?
As a business owner, creative strategies are probably your go to, we know they are at Kickfurther. Our platform is an idealistic example of a creative way that’s legitimate and safe to access the funds you need for inventory. Investors and alternative types of funding often prey on desperate business owners, which is wrong. Because we all deserve the opportunity to succeed, we’ve created a platform that levels the playing field.
How does inventory financing work, and what are its advantages for small businesses?
Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary.
At Kickfurther, our model works as follows:
- Create an online profile
- Launch your deal to attract buyers
- Get funding within minutes to hours
- Set your ideal repayment schedule
- Sell inventory and repeat the process when you’re ready again!
After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round.
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.
Closing thoughts
What’s best for your business is something you’ll need to decide. What we know though is that there’s no shortage in demand for affordable inventory funding in the CPG world.
Kickfurther can help small businesses obtain inventory funding for up to 30% cheaper than comparable options. Because growth mode is the only mode we know, we’ve created a platform for CPG brands to obtain the funding they need, in the manner they’ve always dreamed of. At Kickfurther you can get inventory now and pay later, all while having fun doing so. Our platform connects business owners to a community of backers that can fund up to 100% of inventory.
