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Small Business Inventory Financing Using an SME Loan

Clix July 30, 2021


Even a successfully running business may encounter financial hardships due to late invoice payments, seasonal slumps in sales, sudden machinery breakdowns, and other situations beyond control. In such circumstances, you need to stay prepared by having extra working capital in hand to handle financially tight spots like these. Whether you are a restaurant, retail store, or another product-based business, you may take a business loan to finance your inventory and maintain the cash flow.

A small business loan is a common source of finance that business owners use to buy their inventory. Fortunately, these are short-term unsecured loans that you can use to buy your inventory so that your business does not come to a halt due to a lack of products. The best thing about these loans is that you can complete the business loan apply online procedure from the comfort of your home, and set up regular instalments to pay them back.

Read on to know more about inventory financing and other important information you need to know.

What is a Business Loan for Inventory Financing?

A business loan is a short-term loan that you can use to finance your inventory. It is usually a collateral-free loan that you can take without providing any security, collateral, or guarantor. You can buy your inventory using this loan to sustain your operations by managing the cash flow. You may use a business loan to purchase the stock and meet other business-related expenses. These include increasing working capital, expanding workplace size, adding a new physical location, building credit, buying equipment or machinery, investing in marketing, and hiring new employees.

Inventory financing with a business loan prepares you for market fluctuations and enables you to stock up to fulfil your orders.

Business Types That Can Benefit from a Business Loan for Inventory Financing

Every business has varying inventory requirements. Whether you want to purchase new products for your store or buy raw materials, a business loan can help you cover the costs. However, as far as taking a business loan for inventory financing is concerned, the different types of businesses can benefit from it.

    1. Seasonal Businesses: Seasonal businesses do not have a steady customer base year-round. However, they witness a surge in demand during holidays, summer vacations, sporting events, Diwali season, or winter months. Such businesses may take a business loan before the season starts to finance their inventory.


    1. Wholesalers: Wholesalers are warehouse retailers who have to purchase products in large quantities and resell them to retailers. Since they move their products in bulk, wholesalers need merchandise in large quantities at any given time. So, they may take a business loan to purchase the required inventory.


    1. Retailers: Retail stores dealing in clothes, shoes, jewellery, houseware, beauty products, and others can finance their inventory using a business loan. Specialty stores selling lingerie, sports equipment, toys, or gym equipment may also benefit from a business loan for inventory financing.

Benefits of Financing Inventory with a Business Loan

Before you start your business loan online apply procedure, it is best to understand how it will benefit you so that you can make an informed decision.

Helps You Meet Your Customer Demand: Times when your product demand increases may make your inventory go out of stock, and you may lose your loyal customers who may decide to purchase from somewhere else. Small businesses always try to build their reputation and never disappoint their clients. Therefore, taking a business loan and purchasing inventory can help you meet your customer demand and satisfy their needs.

No Need for Collateral: Many other types of financing require you to pledge a personal asset as collateral. With such kind of loan, you always face the risk of losing your asset if you fail to repay your loan. However, you stay worry-free by taking a collateral-free business loan from lenders like Clix Capital. These are unsecured loans that are primarily sanctioned based on your credit score. If you have a good credit history with responsible payment habits, you may have your loan approval within a matter of hours without any collateral.

Quick Loan Process: The business loan apply online process is quite convenient and fast to complete. With minimal documentation for business loan requirements, you can have your loan approved and the amount disbursed quickly without many formalities.

Who Is Eligible for a Business Loan for Inventory Financing?

Are you thinking about if you are eligible to apply for a business loan to finance your inventory? First of all, you have to determine your loan eligibility as per the criterion set by the lender. For instance, if you apply for a business loan from Clix Capital, you have to fulfil the following conditions:

    • You must be minimum 21 years of age at the time of loan application
    • You should not be more than 65 years of age at the time of loan term end
    • Your business must have a minimum turnover of ₹ 1 Crore
    • Your business must have at least 3 years of vintage in the current work area
    • The majority of your business should be routed via the banking system, reporting audited financial statements for the last two years, or capturing turnover in the previous year through GST returns

Are you interested in financing your inventory with a business loan from Clix Capital? We offer business loans of ₹5 to 50 lakhs, which you can use to fund your inventory and cover other business expenses. Use a business loan EMI calculator to choose a loan term from 12 to 36 months (12 to 48 months for self-employed) and get your funds as soon as possible to finance your inventory. Apply here and increase your business’s potential and performance without any financial worries.

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