Do You Need A Point Of Sale Finance?

Yes, you need a point of sale finance. This article will outline the different types of point-of-sale finance available for traditional brick-and-mortar businesses and online retailers. With new technology emerging, banks are turning away from microloans for small business owners looking to expand their operations or get off the ground in an uncertain economy.

The article will also provide ways to find a good bank and what you should be looking for when considering a lender's characteristics and qualifications when applying for funds.

Wholesale vs. Retail Point-Of-Sale Financing

(1) Wholesale financing is a short-term loan and can be used to purchase inventory at a wholesale price. This is the most popular form of point of sale financing and is excellent for growing businesses that use inventory as the main component of their sales model. This type of lending requires a personal guarantee, minimum 1% cash down payment, and can be expected to be repaid in 45 – 60 days. The interest rates on these loans are quite competitive and you should compare lenders' rates before making your decision on which lender to work with.

(2) Retail financing is used for businesses where the product is the main component of their sales model. This type of lending can be used for either sub-prime or prime borrowers and offers benefits over wholesale financing including longer terms (6 – 24 months), more flexible repayment terms (loan amortization, a company's cash flow determines the loan repayment amount), and no personal guarantees. Lenders do require minimum 1% cash down payment, a personal guaranty, and credit verification prior to being considered for this type of financing.

Conclusion:

Knowing the differences between wholesale and retail financing is important to your decision-making process. Sometimes it is more beneficial to use wholesale financing if you are trying to buy inventory. Retail financing can be good to use if you are looking for longer-term financing or need flexible repayment terms.

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