Guide to Vendor Financing

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What Is Vendor Financing?
A promise of repayment (typically with interest) Equity in your company Goods or services you provide to them
How Vendor Financing Works
Loan term: When is payment expected in full? Down payment: Does the borrowing company need to put down a minimum payment to receive the goods or services? Interest: Will there be a financing fee and what will the rate be? Collateral: Are the purchased goods to be used as collateral? Payment: Is the borrowing company expected to make regular monthly payments or one balloon payment? Fees: Are there to be any additional fees for the loan? What happens if a payment is missed?
Vendor Financing Example
Pros and Cons of Vendor Financing
Types of Vendor Financing
Debt Financing
Equity Financing
Service Swap
Alternatives to Vendor Financing
Merchant Cash Advance
Invoice Financing
Small Business Loan
Apply for a Small Business Loan Today
Frequently Asked Questions
Photo credit: iStock/Ridofranz
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About the Author
Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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