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• 17 May

  Stock Finance Loan Funding For Unsold Unfinished Goods

  

  Inventory or Stock finance can be a difficult type of facility to find. There are some large ABL (Asset Based Lending) lenders that offer it, but typically it is for very substantial amounts and often only as part of an overall package of funding against a variety of assets.

  This is not the case with all providers. We have found an option for standalone stock finance from a UK based finance house that is taking a very innovative view.

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  Stock Finance Against Unfinished Goods That Are Unsold

  Now there is an option for normal SMEs that are seeking stock finance. One of our panel of funders provides a stock finance facility that can stand alone, or be used in addition to most existing invoice finance facilities. This can substantially increase your purchasing power and the amount of credit that you have available to your business.

  How The Facility Works

  This facility can be used to finance either imports from abroad or supplies from UK suppliers. This can be useful in situations where companies have sought to resupply from UK based providers, in order to overcome global supply chain problems.

  The facility can operate as a revolving loan that is drawn down and repaid multiple times.

  Unfinished Goods That Are NOT Presold

  Furthermore, the facility can be used to finance:

  • Stock purchased to increase inventory, i.e., that has NOT been presold.
  • Components parts or raw materials that are NOT finished goods.
  • Payments to UK based suppliers or suppliers overseas.
  • Payments to suppliers in currency or GBP (Sterling).

  In many cases, other funders will require goods to be finished and presold, i.e., the buyer has existing orders for the goods. that are already in a finished state This is NOT the case for this particular funder. This is what makes them stand out from other inventory finance companies.

  Trade Finance

  For more information about financing finished goods against presold orders please see our guide to trade finance.

  An Example Of A Transaction That Can Be Funded

  As an example, if products such as food ingredients are being purchased from one supplier, and packing materials such as jars are purchased from another, both could be paid for. The buyer will then enjoy a period of credit before they have to repay the stock financing. Goods can either be bought to fulfil existing orders or for increased inventory.

  Typical Facility Terms

  The facility can release between £25K and £300K to a UK company. The funds can be paid away to suppliers for purchases which do NOT have to be finished goods.

  Typically, a personal guarantee from at least one homeowning director will be required although a third party guarantee may be accepted in some cases.

  Pricing And Fees

  Fees and pricing will be agreed upon on a case by case basis, but typically include interest on the amount outstanding for an initial 30 day period, with additional days charged on a pro-rata basis. There will typically be a fee to set up the facility and a transaction charge each time funds are paid away to a supplier.

  By Glenn Blackman