inventory as collateral

Using inventory as collateral means a business pledges its stock of goods—such as products or raw materials—to a lender to secure a loan or financing. If the business can't repay the debt, the lender has the right to seize and sell the inventory to recover the owed amount. This approach allows businesses to access funds without needing to provide other assets, leveraging their inventory's value. It's a common practice in industries with valuable stock, offering a way to raise capital while maintaining operations.