Starting your own import business means joining a highly lucrative industry. In fact, in 2017, the value of imported goods exceeded $2.4 billion, according to the International Trade Center. However, just like in any other industry, import business owners will experience cash flow issues at some point. Due to the special operational/financial challenges, a traditional term loan may not be the ideal import business loan.

There are plenty of loan options for export businesses, including the SBA Export Working Capital Program or the SBA Export Express Loan. However, import businesses don’t have as many options. You have to think outside the box.

If you are an import business owner that needs a financial fusion, consider these six financing options to improve cash flow and continue bringing foreign products to the domestic market.

Why Do You Need a Business Loan for Your Import Business?

If you are a freelance import merchant, you may not have a lot of overhead/startup costs, as you can run your business from your home. Instead, your major expenses are the costs of products, packaging/shipping them into the country, and incidentals such as taxes/duty fees. You may need to hire a customs broker to assist with legal/documentation logistics, in addition to daily operational costs.

However, prepaying foreign manufacturers means that your capital and product are inaccessible for several months as products are created, packaged, and shipped. Even after selling to your customers, it may take them a few months to pay their invoices.

Due to these factors, import businesses are at risk of cash flow shortages. This can cause import business owners to be late paying suppliers, which puts the relationship in jeopardy. If you don’t have the cash to buy the goods, you can’t run your business.

Therefore, it’s important to take the time to research import business loan options before you need them, so you are prepared.

5 Options for Import Business Loans

If you need a loan for your import business, you may have difficulty showing the cash flow/profitability that most lenders look for. Therefore, you may need to use your invoices and inventory as collateral.

This gives you a safety net in case you’re not able to pay the debt. However, using your invoices does offer proof that you will be able to pay your debt- as soon as your customer pays you.

If your business is already established, you may be able to get a traditional working capital loan from your bank or an alternative lender. Here are 5 options for import business loans:

Inventory financing
Invoice financing/factoring
Purchase order financing
A business line of credit
Letter of credit

Use Import Business Loan to Grow Your Business

Running an import business is expensive and risky. Even if the goods are cheap, shipping costs can be high. Unfortunately, since importers may not be paid for several months following the sale, they may have cash flow issues. This can stall or even halt their operations. However, it is possible to get financing for your import business to help you grow. Contact Achieve Capital Advisors to learn more about your options.