Background

Trade/Stock Loan

THE PROS & CONS: TRADE/STOCK LOAN

A trade or stock loan is finance arranged with a bank, specialist lender, or can even be negotiated with a customer or supplier in some cases.

These loans are most appropriate for a bigger, seasonal campaign e.g. Christmas, where a large stock build is required months in advance.

These loans are repayable on an agreed date or event e.g. 30 days after raising an invoice, or in the case of Christmas stock – 27th December!

PROS

CONS

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The borrower can be sure of having enough stock to satisfy demand at busy periods

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Eases cash flow pressure at busy times of production or stock piling. E.g. pre Christmas

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Repayment comes directly from the sale of goods

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Built in discipline - can only be used for clearly agreed purpose

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It often requires more paperwork and evidence than an overdraft

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Pay interest for the full duration of the loan

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