CARTOONS BY CHRIS BRITT

– VENDOR FINANCING –
If your company purchases inventory or equipment from a vendor, you may be able
to turn to vendor financing as a funding option. In its simplest form, the vendor lends
you money in order to buy their product. It may be in the form of third-party vendor
financing or in-store credit. Both let vendors offer more lenient and extended terms to
their good customers
than they could
otherwise. It is also
designed to let a
customer purchase
more materials or
products than they
could with just a
credit card or deferred
payment plan. This is
particularly effective if
the borrower has less
than stellar credit.
HOW DOES IT WORK?
There are two types of vendor financing:
A journey of a thousand miles begins
with a cash advance.
• Third party vendors. The terms can range from 60 days to 12 months, depending
on the size of the order and your relationship with the company. Vendor financing is
a great way to acquire inventory, but it usually requires a solid relationship between
the buyer and seller. Typically, financing amounts range from $5,000 up to millions
of dollars. You can then use the funds to purchase equipment, inventory or servicerelated
product from the vendor. Repayment will be in the form of fixed payments
from gross sales or a percentage of credit card sales. You will be given the loan based
on the historic performance of your business.
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