Randal Ice needs a loan to purchase pet food and other pet supplies for his local pet store over the next six months.He has estimated that the maximum amount of inventory he will need in the next six months is $200,000 and he knows that he will have to use accounts receivables and the inventory he purchases as collateral for the loan.At the end of six months,he hopes he can get the loan renewed.What type of loan does Randal need?

Question

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Randal needs a working capital loan to purchase pet food and other supplies for his store. He will use his accounts receivables and purchased inventory as collateral for the loan. This type of loan is designed to finance a business's current operations and is typically paid back over a short period of time, such as six months. It is also common for businesses to renew working capital loans as needed. A self-liquidating inventory loan is similar, but is specifically designed for businesses that need to purchase inventory that will be sold quickly. Interim construction financing, security dealer financing, and retailer and equipment financing are all specialized types of loans that do not apply to Randal's needs.

Randal Ice Needs a Loan to Purchase Pet Food and Other