Stock Finance

Stock finance is available for businesses who do not have enough working capital, enabling them to buy the goods they need to continue trading.

Cash flow problems can quickly cripple companies which are otherwise viable and profitable. If you cannot obtain supplier credit or a regular bank loan, stock finance could be an option to allow your business to fulfil its orders and carry on making sales.

How does it work?

There are a couple of different ways in which stock finance agreements can work, but in practice they are very simple. The lender can pay for the goods or raw materials needed on either a one-off or ongoing basis, depending on the requirements of the business.

Once the goods have been purchased by the lender they are usually sold on to the business on extended credit terms. Alternatively, if the company already possesses the stock but needs to ease their cash flow situation, goods can be bought by the lender before being sold back on credit terms.

Stock finance is often an excellent short-term ‘revolving’ option where other forms of credit are unavailable. However, depending on the lender you may need to provide evidence of a sound trading history or have a third party stock valuation carried out.

Advantages

The major advantage is that your business is able to carry on without the kind of interruptions and production bottlenecks that might threaten its continued operation – banks can be notoriously unhelpful when their clients suffer unexpected cash flow crises.

Another benefit is that stock finance agreements, by their nature, tend to be arranged quickly. Once their lending criteria are satisfied, finance houses can promptly set about securing the goods or raw materials a business needs.

For example, we recently had a retailer who had adverse credit and could not obtain sufficient credit from his bathroom supplier. The business had no other visible assets and had been refused a loan from the bank. We introduced them to a lender who purchased the goods on their behalf, allowing the company to keep trading.

To speak to us about the stock finance deals available and to be put in touch with finance houses offering them, please contact us.