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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.

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

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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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