Inventory financing allows your to use your inventory as leverage for a working capital line of credit. This can help improve your company’s cash flow, whereby you can use it as you see fit. This type of financing is useful if your customers credit terms tie up your cash flow, and you need to grow the business before your current inventory is sold. The lender funds inventory by advancing up to 80% of its appraised value.
Once one of our lenders come out and conduct an appraisal of your equipment in order to determine it’s true net value. Our lenders either use the Net Orderly Liquidation Value (OLV) or the Forced Sale Liquidation Value (FLV).
Note that the OLV and FLV are usually lower than the market value. This can affect your ability to leverage your inventory. Then your business is awarded a line of credit that is maximum 80% of that (OLD or FLV).