What are the interest rates for inventory financing?

Several factors typically influence interest rates for inventory financing and can vary based on the financial institution or the type of agreement. While exact rates may differ, the following points provide a general understanding of how interest rates are structured:

• A lending institution, such as a bank or a Non-banking Financial Company (NBFC), sets its own interest rates in accordance with internal policies and benchmarks, while typically it can range between 12% to 24% . It is important to remember that interest rates tend to typically differ across loan providers.
• A business's creditworthiness impacts interest rates. Businesses with strong financials and good repayment histories tend to get more competitive rates based on lower perceived risk.
• The tenure of financing has an inverse correlation with the interest rate. Short-term financing usually gets lower rates compared to longer tenures.
• Prevailing market conditions also impact rates, which tend to fluctuate with economic factors like inflation and base lending rates.
• The nature and type of the inventory financed plays a role as well. Rates are better for financing fast-moving consumer goods.
• Apart from interest, additional costs like processing fees and prepayment charges contribute to overall financing expenses.

For accurate rates, it is recommended to check directly with the financial institutions or review their current offerings. Rates and terms are subject to change based on market conditions and individual agreements.