|
Do you have significant high-priced finished-goods inventory?
Items included in this category include:
-
Trucks or Cars
-
Refrigerators
-
Washing machines
-
Televisions
-
Digital Home Theaters
-
Riding Lawn Mowers
-
Office Equipment and Furniture
-
Computer Systems
-
Design items that decorate your headquarters, such as
o Art work
o Security Systems
When retailers have high-priced items such as the above, the products are financed and given extended credit terms. This financing is referred to as Floor Plan Financing.
What are the advantages of Floor Plan Financing?
Few retailers have the funds to make outright purchases of expensive inventory. Instead, the items are purchased by a financing company or a lender who provides the ‘paid’ inventory for the retailer to sell – and the retailer makes the loan and interest payments.
The loan is secured by the actual inventory the lender has purchased and supplied to the retailer.
Because ‘fixed assets’ are tangible and, if necessary, can be seized and sold if loan payments aren’t made, it is typically easier to get a loan based on the value of this type of collateral.
A helpful hint:
If you use art work, security equipment and other fixed assets for Floor Plan Financing, be sure to have them tagged and tracked in a software package.
You don’t want them walking away, especially if they are being used as loan collateral.
If you think Floor Plan Financing can enhance your Cash Flow, or if you feel there are other ways Floor Plan Financing would benefit your business, e-mail us at
CashFlow@NowFinancing.com.
A more detailed explanation of Floor Plan Financing is provided in the book,
The Entrepreneur’s Guide to Prosperity -- Financing Your Small
Business, by Morris Bocian. |
