Getting into the wholesale business is a popular way to enter the world of being a business owner with a lot of flexibility and room for growth, but there’s one big problem the average person faces when approaching it: Getting funding.
Whether it’s your first product purchase to get started, or it’s your 1000th resupply in preparation for a major expansion in operations, getting the funding necessary to make such a large purchase is difficult even when you’re paying wholesale prices.
Because of this, most wholesalers will look for a loan to help cover that initial expense and pay it back over time as they sell off their stock.
If you’re looking for lending, here are five tips that will help you get it more effectively.
When you ask for a loan, you will be expected to provide documentation of your business’s financial state and history. This helps determine loan agreement parameters, lending amounts, and everything else because it shows what your business is capable of.
If you’ve been in business for a while and simply looking to make a big purchase you can’t afford, it’s optimal to have at least the last several years of records available.
This is more difficult if your business is new.
Regardless of why you’re getting the loan, you’ll typically need something of value to put up as collateral. Lending is a risky business, and your wholesale strategy might not pan out. The lender needs something to reassure them that they’ll get their money back one way or another.
Unfortunately, the age of your business is important to a lender. While it’s true you probably need a loan to get started properly, a lack of proof of success and ability to repay is a huge risk. Most lenders will avoid lending to brand-new businesses and expect at least a few years of operations with a history of successful growth.
That doesn’t mean it’s impossible, though. In fact, our last tip will help you bypass this unfortunate problem.
When you take out a loan, it’s about much more than just asking for whatever amount you need to make the purchase you want and then paying it back on time. You need to understand how much cash flow you consistently have. This will not only help the lender determine what they’re willing to give, but it will also help you determine what terms you can agree to while still making a real profit.
Finally, it’s important that you choose the right lender to get optimal loan terms and the amount you need when you need it. Many lenders have high-interest rates that eat up your profits, or they’re unwilling to work with the borrowers that need it most due to the on-paper risk involved.
Junegrass Lending can help. Junegrass Lending is open to working with brand-new businesses, offers optimal loan agreements, and is ready to help you kickstart your wholesale business. Apply for their transactional funding for wholesalers now!