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You may heard of it as vendor financing. Maybe you know it as supplier credit. We’re talking about supplier financing – essentially a short term credit extension from your suppliers for the equipment or goods you need today. While you may not view this as a type of loan, technically it is a way to help temporarily help fund your business.

Starting Up From Scratch
Supplier financing can be especially handy for those just beginning their small businesses. When there is virtually no money available, entrepreneurs can sometimes find suppliers eager to earn new clients. These suppliers can be persuaded to stock the shelves or provide initial inventory for a fledgling company when there is the promise of a long-term business relationship.

Freeing Up Working Capital
For young firms struggling to keep up with cash demands, applying for supplier financing can help provide a little cushion between paying bills and receiving payments. Suppliers most commonly extend credit for between 30 and 90 days. That amount of time could allow your business to maximize its slim resources.

Expanding Into New Markets
Some firms ask for supplier financing simply to have the capital to begin new ventures, update their company technology or expand their business into new markets. All of these plans take a considerable amount of money and it can sometimes be simpler to ask for credit extensions from suppliers than to go through the process of applying for a bank loan.

Words of Caution
Of course supplier financing is not a permanent solution to working capital. It should only be used as a temporary funding solution. Business owners should also be careful not to take advantage of a supplier’s trust or ask a particular supplier too often for financing. The result could be a severed supplier contract and a damaged business image. When exercised in moderation though, supplier financing can be a very helpful way to get your business through its most cash-strapped periods.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources