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Short on capital? If you've got a proven plan for converting inventory into cash, inventory financing could be the option for you.

This story appears in the June 2005 issue of Entrepreneur. Subscribe »

Just over a year ago, National Direct, a sports collectibles business in Toronto, needed the funds to acquire inventory for a major sales campaign. While the $5 million company had an established track record, conventional lenders weren't convinced of its ability to turn over the inventory. When a business's need for a loan is not based on a purchase order, banks and factoring companies are often tough to deal with.

For National Direct, the solution was finding a firm specializing in inventory financing--Los Angeles-based Inventory Capital Group LLC. The financing company initially provided $400,000 to fund the sale of a pin collection licensed by World Wrestling Entertainment. Shortly thereafter, National Direct obtained an additional $1.2 million to roll out a commemorative pin collection featuring the Boston Red Sox.

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