A secured short-term loan to purchase inventory. The three basic forms are a blanket inventory lien, a trust receipt, and field warehousing financing.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A loan or line of credit available to a business secured by its own inventory. That is, a business places its inventory as collateral in exchange for an operating loan. Inventory financing is advantageous for businesses with a large amount of physical inventory ready to ship. Inventory financing is used as a stop-gap against temporary cash flow problems resulting from inventory ready to sell but not sold. It is not recommended as a long-term financing tool.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved