Can I get a loan against inventory?

by a searcher

6 months ago

Hi All!

I am looking at a deal that has approximately $1,000,000 worth of inventory (non perishable goods). 
Im wondering whether I am able to get a loan against the inventory and use the proceeds towards
buying the business? Has anyone had experience doing this and are there lenders who specialize in 
this type of lending?

Thank you in advance for your help! :)

1 like
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28 comments

searcher from The University of Chicago - Booth School of Business

Yes. You can get an asset backed line of credit that gives you a percentage of inventory as your borrowing base. The same can also be done with AR. Both will have some caveats and restrictions, depending on the bank.

3 months ago | like reply | 2 likes

searcher from Duquesne University

Yes. It's fairy easy to get a collateralized inventory loan. One way would be to ask the target company's business banking relationship manager. They would probably approve a loan for at least 50% or more of the cost of inventory. Any shortfall can then be a combination of equity roll and/or seller note.

5 months ago | like reply | 1 like

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