Can I use Stock Finance to raise funds against my old stock?
Probably not – next question.
But to be serious for a moment.
Stock finance, in isolation, is not linked with a supply chain finance type of product, and it is both simple and complicated at the same time.
In simple terms, funders provide a loan, typically up to fifty percent of the cost price, against your stock holdings and take a charge over the stock as security. A finance limit will be set and move as stock is bought and sold
The complications can arise when it comes to the type of stock to be funded, so for your benefit, here are some general points funders will look for:
- Trading Record of the client
- Finished goods
- Current stock
- Non-perishable stock or having a long shelf life
- Evidence of stock turn or confirmed orders
- Decent Gross Profit Margin, probably over 20%
- Alternative markets for disposal
In this case the clue is in the question. It is described as old stock, implying a reduced market or no market, so a funder will probably be reluctant to fund it.
Of course, as with most finance, nothing is set in stone, so it is always worth asking the question and a decent broker, with experience in Stock Finance, a bit like me, should be able to tell you quickly if there is any point looking at it.
If you Need more detail, call or drop me a line, always happy to help.
How to Get Involved
Got a finance question? Ask Honest John!
Email me at askhonestjohn@sterlingcommercialfinance.co.uk, and I’ll do my best to provide answers in a way that makes sense. Expect straight talk, a bit of humour, and insights you won’t find in a Google search.
So, ask away with your question—I’m ready!
Welcome to Ask Honest John.
