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Several factors regulate and administer the working of a business. One such crucial factor is funding. Requiring funds at some point is only natural while running a business, even if your business is booming. You could require funds to expand your business or get through a rough patch when your business is slow. One of the many ways to acquire financing for your business is Warehouse Financing. With no other funding options, retailers and wholesalers choose Warehouse Financing or Warehouse Loans.

What is a Warehouse Loan

Warehouse Financing is a type of inventory financing. It necessitates a loan offered to a manufacturer, processor, or company by financial institutions such as a bank. As collateral to the loan, the financial institution requires the existing goods, commodities, or inventory transferred in a warehouse. This type of financing is availed by the privately-owned firms, especially those in businesses related to commodities, who have access to no other options.

Warehouse Loan is the only available option for small-scale businesses to medium-scale business retailers or wholesalers. Although the collateral required for the Warehouse Loan can be held in warehouses near the borrower or public warehouses that the financial institution sanctions, it is managed by a separate third party. Typically, the lender assigns a manager for the collateral who also issues the warehouse receipt for the borrower. The warehouse receipt certifies the quality and quantity of the commodities.

Features of Warehouse Loans

Warehouse Loans come with several features that attract small business owners. Some of the features of Warehouse Loans are:

  • Financing of up to a maximum of Rs. 45 Lakhs and a low Business Loan interest rate.

  • With the facility of Flexi Loan, you can withdraw whenever you want with no limit, and the Business Loan interest rate is applicable only on which you have utilized. This feature can lower your EMI up to a maximum of 45%.

  • You can easily access your loan account using the online portal. All the information regarding your loan is tracked and available on the portal.

  • The Business Loan interest rate starts from as low as 18% per annum.

Benefits of Warehouse Loans

You can reap several benefits from availing a Warehouse Loan. Some of the notable benefits include:

  • If you avail of a Warehouse Loan, you will be able to acquire funding at favourable terms compared to unsecured or short-term loans.

  • The loan repayment can be scheduled to coordinate with the usage of materials or inventories.

  • Compared to other financing options, Warehouse Loans are cheap due to their secure lending procedure.

  • Your commodity business can enhance credit rating, secure a potentially larger loan, and decrease borrowing costs while availing of a Warehouse Loan.

Eligibility for Warehouse Loans

It is very convenient to avail of a Warehouse Loan. All you need to do is fall under the given eligibility criteria:

  • You must be between 25 to 60 years of age.

  • Your business must be operating for at least 3 years.

  • You must file for Income Tax Returns of your business for at least a year.

Documents Required for Warehouse Loans

The documents that are required to apply for Warehouse Loans are nominal. The documents that you need to submit are:

  • Your identity proof such as Voter ID, PAN Card, Passport, Aadhaar Card, or any other government-issued document proves your identity.

  • Your address proof such as Ration Card, telephone bill, electricity bill, Passport, trade license, lease agreement, or any other government-issued document that proves your address.

  • Financial documents: 

  1. Income Tax Returns
  1. Bank statement of past 6 months

  2. Profit and loss statements and balance sheet of past 2 years that a Chartered Accountant has audited

  • Proof of business ownership includes registration documents or other proof of business ownership, including payment receipt of municipal tax, IT returns, electricity bill, PAN Card, etc.

Warehouse Loans are specifically tailored to suit the needs of small-scale and middle-scale business owners. Given the innumerable features and benefits that are associated with it, it is for a reason why borrowers opt for Warehouse Loans. If you're looking for financing for your business, you can opt for Business Loans available on Finserv MARKETS. They come with competitive interest rates, flexible repayment, and hassle-free application procedure.