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Inventory Line of Credit (ILOC)

The Inventory Line of Credit (ILOC) is ideal for businesses that have recurring inventory purchases that require a significant cash outlay from the business. Rather than having to tie up your own cash in inventory, Dealstruck will finance your inventory so you can use your cash for other operating needs.

Features of the Inventory Line of Credit:

  • Each time you draw on the credit line, the draw is paid back over 24 weeks
  • Enjoy at least four weeks of interest only payments, depending on your inventory turn time
  • The last 20 payments are on an amortization schedule
  • Each draw has a fixed interest rate
  • There are no prepayment penalties
  • You can save interest by paying back early
  • Any amounts paid can be re-borrowed
  • You can take multiple advances up to the credit limit
  • The minimum advance is $5,000

Sample Credit Line Draw:

You borrow $25,000 at an APR of 18.24%, with a 1% draw fee.

  • Draw amount: $25,000
  • Draw fee (1%): $250
  • Initial balance: $25,250
  • First four weekly payments: $164.04
  • Payments 5 – 24: $1,309.38
  • Total paid: $26,843.76
  • Total interest and fees: $1,843.76

This means you will be able to purchase inventory without creating cash flow issues, and enjoy a 6 month repayment term.

Inventory Line of Credit vs. Merchant Cash Advance (MCA)

An inventory line of credit is a much more affordable option to finance inventory than a MCA. A common non-APR based MCA “buy rate” is 25%, or 1.25. Most of these loans come with a 2-3% origination fee, which is withheld from the proceeds.

Compared to the example above, a $25,000 MCA at a 1.25 buy rate would cost $31,250, with the cost of capital being $6,750 compared to $1,843.76 on the line of credit. Furthermore, prepayments on an MCA do not impact the total amount paid back.