Warehouse funding is not a well-known form of financing because it is not used as often as the more traditional forms of lending by major financial institutions. The basics of warehouse financing see goods held in a warehouse by the lender that acts as collateral for the loan that has been secured, usually in the short-term by a business with few other options. The benefits of this form of lending include the fact the business can use unsold goods to secure a loan that should give them the time to expand on their future development.
How does Warehouse Financing work?
When a business has limited options in terms of the financing it can secure, some lenders will push forward with a warehouse funding plan to help them achieve their aims. A company selling certain goods can obtain funding if they are swilling to place certain goods in the hands of an independent warehouse manager who keeps the items safe during the course of the loan. As the loan is paid off, certain goods can be removed with some companies even structuring their loans against the sale of goods.
This is a Short-Term Option
A short-term loan is usually secured against the goods held in an independent warehouse to ensure the products used as collateral do not lower in value over the course of the loan. This option is usually only available to companies that have few other options and cannot obtain credit in the more traditional ways. Contact Rose Capital Funding to learn more about warehouse funding.
