4 Common Reasons to Borrow Funds for Inventory

Inventory is a major expense for almost any business. Whether you started a bar, opened a clothing store, or recently started a beauty salon, having the right amount of inventory on-hand is crucial. Sometimes you may need additional cash to stock up for busier seasons or to take advantage of better pricing from vendors.

Many times, businesses get loans and use those funds to purchase inventory. Here are some of the ways borrowing to purchase inventory can help your business:

1. Stock up for an event or special occasion

In many cases, having excess inventory lying around is a bad thing - but before a special event, like Small Business Saturday or the Holidays, extra inventory can support more sales to meet a spike in demand. Whether you’re expecting more traffic or want to customize inventory that is tailored to a specific celebration, taking a loan can give you the flexibility to address those needs and make the most of the opportunity.

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2. Launch a new product

You know the new product you’re set to introduce will be a must-have item - but do you have enough inventory to meet expected demand? If you need the upfront cash to buy all that inventory, consider a loan to help give your new product the launch it deserves.

3. Prepare for busier seasons

Your business may make more of its income during certain busier periods (think of a toy store that sells more during the holidays), but the uptick in cash from those months may not stretch through to cover costs all year. Using loan proceeds during less busy times to buy inventory or support overall business operations may allow you to meet demand when sales heat up.

4. Access discounts on inventory

Cash flow constraints can often prevent a business from buying inventory at the most efficient and cost-effective moment. A loan to finance inventory purchases can allow you to access larger volumes or pay up-front discounts, avoid last minute shipping costs and capitalize on any number of time-sensitive opportunities (such as a going out of business sale).

About Square Capital

Square Capital offers easy access to fast, flexible and simply-priced small business loans to help you grow your business.

This communication is for informational purposes only and is not intended as financial or legal advice.

Square Capital, LLC and Square Financial Services, Inc. are both wholly owned subsidiaries of Square, Inc. Square Capital, LLC d/b/a Square Capital of California, LLC in FL, GA, MT, and NY. All loans are issued by either Celtic Bank or Square Financial Services, Inc. Square Financial Services, Inc. and Celtic Bank are both Utah-Chartered Industrial Banks. Members FDIC, located in Salt Lake City, UT. The bank issuing your loan will be identified in your loan agreement. The individual authorized to act on behalf of the business must be a U.S. citizen or permanent resident and at least 18 years old. Loan eligibility is not guaranteed. All loans are subject to approval.