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Will banks (in today's world) finance/loan against the inventory portion of a business purchase?

I realize that today, banks won't really lend money to buy a small business, but how about the inventory portion?

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Answers (3)
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The BAF Group LLC

Most of the businesses we deal with that carry large inventories have their inventories valued by an outside service, just prior or at settlement. For example, we dealt with a lot of Gas Stations with large Convenience Stores. At settlement, the business was closed for up to two hours, to permit systems to be turned over and inventories to be counted, then compared to invoices at the wholesale price. The third party provided objectivity and we never had any arguments, as a result.

Of course, that was a simplistic example. How you do it depends on the buisness, itself. You can use the Seller's Balance Sheet, as it is attached to the Tax Returns to estimate what might be needed. Whether those are accurate or not...? But in our experience, that is what the Bank normally used as its gauge.

Aug 7, 2009
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Hi, Phil. It helps if you have documentation on the worth of the inventory. Make sure you have some appraisals to show the lender on the inventory you are purchasing. If you haven't decided which business to purchase yet, I have a few with credit worthy inventories. Contact me at

Aug 7, 2009
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Small Business Underwriters

Actually, Phil, banks will lend money to purchase a small business. The difference between then and now is that the numbers need to work, and you will need to put more equity in then before.

With regards to your question, yes, banks will finance an inventory purchase. Depending on how much inventory you are talking about, you can finance that with a line of credit or a term loan. If the purchase is to finance temporary spikes in inventory (say for the Christmas season) you want a line of credit. If it's for a permanent increase to your inventory, then a term loan is the way to go.

Whether you'll qualify will largely depend on the cash flow of the business and your personal credit.

Best of luck!

Aug 6, 2009

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