Business Finance Tips
"Save More & Earn More"
Obtaining financing for Latino Owned Businesses (LOBs), can be challenging. Most Latino Owned businesses feel that they can obtain financing with no roadblocks. In fact, this is not completely true. In realty, obtaining a small business loan can be a challenge. Inventory financing for LOBs is a great option that may require less paper work.
To point out, a business line of credit is probably the best option for inventory financing. A business line of credit is the hardest program to qualify for. Why? Banks and lenders know that if you obtain a line of credit that you may not use it for several months. Lenders must have those funds ready for you if you change your mind. Lenders make money by collecting interest. If you have a line of credit and you don’t use it, lenders will not make a profit.
Aside, from business lines of credit there is short-term financing to purchase inventory. A short-term loan is actually a great financing option to obtain new inventory. Undoubtedly, Your sales cycle plays an important role when obtaining a short-term loan. If you purchase inventory and you sell it within the next 30 days, your sales cycle is 30 days. Why would you need a 12 month loan if you can sell the inventory within 30 days? Many business owners who request long terms for inventory may not know their sales cycle. In summary, knowing your sales cycle is an important factor when obtaining a short-term loan.
Finally, ff you have short-term sales cycle you can re-utilize the funding from any loan to continue the process. Sooner or later, you will realize how this will keep your products in and out the door. In fact, there are costs associated in obtaining a loan and you need to factor that into your gross and net profit margins. To sum up, if you can figure this out you can use the lender’s money as oppose to your own money to keep pushing inventory.
Inventory financing for Latino Owned Businesses is a great option for those businesses who have short-term sales cycles.
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