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What is the best source for an inventory loan for a new business?

Congratulations on the new business! It is small business owners like you who will turn this economy around. Also, great to hear that you are looking to grow your business with a new line of products!

Based on the information that you have provided, I’m not sure if obtaining an inventory loan is in your best interest at this time. An inventory loan can be a great financing tool for well established companies with short-term inventory shortages.

Given that you are a new business, it might be difficult to obtain an inventory loan since you don’t have extensive sales history and the loan is for a new product line.

Typically, lenders prefer to give an inventory loan to companies with consistent sales history on a proven product to avoid the scenario of a company defaulting on its loan.

In your case, even though the loan will be secured by the hot tubs and spas and you seem to be a growing business, there is risk in financing a new product line. The economy is still struggling and the demand for hot tubs and spas may be very difficult to project–even for the business owner.

From your perspective, getting stuck with unsold inventory that is secured by the bank is no fun–especially the high interest payments due.

I think what may make sense is to test the product out this upcoming season with a small inventory order and use your working capital to fund the operation. After testing the product out on a small scale then reassess if the inventory loan makes sense for your business–sometimes it is about taking baby steps.

To read the full article – Click Here – Ryan Himmel – Entrepreneur.com

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