
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

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

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

Repayment comes directly from the sale of goods

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

It often requires more paperwork and evidence than an overdraft

Pay interest for the full duration of the loan

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