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CU System
Hampel to IBizWeekI Why inventory is hard to finance
LOS ANGELES (9/16/09)--Inventory financing will be one of the most difficult things to obtain this year, according to the Credit Union National Association’s (CUNA) chief economist. Inventory financing is hard to get because inventory is basically useless, Bill Hampel told BusinessWeek Friday. “Inventory is, by definition, self-liquidating, extinguishing collateral because if the business does not sell the vast majority of its inventory, it’s essentially worthless,” Hampel said. “For a lot of business lenders, inventory financing is essentially viewed as unsecured lending.” BusinessWeek’s article noted that Josh Lipton, owner of BikeShopHub.com, had received a $32,000 revolving line of credit from Bank of America. BofA cut the line in half this summer. Lipton said he used the credit during the slow season last fall, but paid it off in full in spring. After he paid off the line of credit, he received a note from Bank of America saying he did not qualify anymore for that large of a credit line.
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