Financing stock is a lending facility which allows businesses to access working capital that is tied up, by borrowing against the value of the stock owned by your company. This stock can be comprised of both finished goods and raw materials. Examples are: car, woods, cloths.
Stock finance is a type of funding whereby the borrower uses a lender’s funds in order to purchase product to sell. It is a professional credit that allows the company to develop by buying the necessary stock to be able to launch an activity.
Stock finance is a mechanism which releases working capital from stock such as finished goods or raw materials, which works by lenders purchasing stock from a seller on behalf of the buyer. Stock finance is different from invoice finance, and tends to be used as a 30-90 day revolving facility to enable access to cash as and when a business needs it.
Stock finance covers a huge variety of financial services designed to make cross-border and domestic trade easier. Due to the number of products available and variety of industries and goods covered, there are a wide range of tools used.
It is important to know that financing stock is different from investing.
The advantages of Stock Financing
- Stock financing releases money that is caught up in warehouse stocks
- Exchange of information becomes more operative by offering you the opportunity to gain an overview of all transactions via internet bank and signing documents.
- You are able to combine different financing solutions (letter of credit, factoring).
Reasons why you need to finance stock
- Protect reputation by not being under-stocked
- Hedge out risk
- Having stock to provide for seasonal fluctuations
- Demand adjustment in certain products
- Requirements for buyers and suppliers
Types of stocks for financing
Blue chip stocks
These are organizations with solid foundations and centuries of record. These are low development companies, but they will provide you with stable returns. These have reliable results and spending history. Blue chip companies have reduced and stable development but they are safe places to park your hard earned cash and can provide surprising compound annual returns over several years.
Growth stocks
These companies show high increase in their turnover as well as share price. These companies are in the buzzing areas of the economy. Generally, they are not as old as the blue chip companies. The stocks can be very expensive in comparison with more stable companies. Negative news related to these corporations can set back the price of these stocks by a vast amount.
Speculative stocks
These are companies with no actual fundamental logic. Their stock principles do not abide by conventional reasoning. The stock prices of these types of companies rise and drop a lot during single trading sessions. The stock prices are influenced by the information mill and can be manipulated by buying and selling the TLS share price rather than by the fundamentals.
Range bound shares
The prices of these stocks don’t drop or rise by much. They remain variety bound within a -5% range. These types of companies have stagnant growth in profits. These stocks are used in trading on the technical basis. These stocks are used by investors to buy at the reduced support of the product range and are sold off by participants at the higher end of the product range.
What type of financing is stock?
Stock is being categorized under Equity financing.
Equity financing is the process of raising capital through the sale of shares. Companies raise money because they might have a short-term need to pay bills or need funds for a long-term project that promotes growth. By selling shares, a business effectively sells ownership in its company in return for cash.
Requirements needed for financing stock
- Company’s financial statement
- Audited annual accounts of the previous financial year.
- Attest quarterly balance sheets and income statements.
- Application.
Applying for stock financing
It is very easy and convenient to apply for stock financing. You submit the required documents along with your application and you will be contacted regarding entering into an agreement.
Once all of these documents have been presented and the terms and conditions of the contract have been agreed, then you will be informed of the place and time at which to sign the contract.
The factoring agreement establishes the terms and conditions regarding the contract and advance limits, the payment deadline, interest, contract fees and invoice commission fees. You should bring a personal identity document with you when you come to sign the contract.
Visit the website to apply and partner with the best company for stock financing.