yep, good post.
Borrower needs a history of collections experience.
Loan amount is also based on "days outstanding" of the debtors list.
Inventory finance is really just a variable working capital facility. Amount lent on inventory would be quite different to amount funded for inventory, because of quality of security. ie lender can usually readily collect on a well-rated debtor --- but not necessarily on inventory security. ie a lender could collect on say inventory secured over a motor vehicle, but how might a lender realise security over Alexium's inventory of chemicals??. If AJX went bust, what value of chemicals if Lender did not have access to AJX's people to prepare and sell the chemicals in store/on hand? I imagine that lender might also need access to IP also?
So probably a higher % loan over debtors list, and lower lend on inventory.
A good example of inventory finance is Fleet Finance for car dealerships. very common.
The interest rate and margin quoted on AJX loan is high in these low interest rate climate, but reflects the nature of the finance ---> once AJX gets a cash flow positive profile, they would have access to better funders and interest rates.
Time will tell.
Hopefully this upcoming Quarterly will give us some good news ??
AJX Price at posting:
6.4¢ Sentiment: None Disclosure: Held
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