"Say Apple made a firm order of $1m worth of IQBuds (contracts signed, etc) and told Nuheara they would pay for that $1m 60 days after receiving the goods.
Would no bank in Australia give NUH a short term line-of-credit type loan to cover them the 3-4 months they might need between paying Flex upfront and receiving Apple's payment 2 months after delivery?"
I would say the best the bank will do is lend 25-50% on a credit line ON THE CONDITION that NUH has to come up with the other 50-75% FIRST. Banks will NOT lend 100%. If they get a large purchase from a big credible buyer like Apple of course it will help NUH in negotiating a credit facility but you will not get 100% financing.
The reason would be "what collateral" does the bank have. They can take the iqbuds itself (inventory) but the bank's business is not to sell a retail product. For electronic goods, inventory decrease in value if held too long.
The Banks have their procedure in place. At times these procedures may seem rigid but Banks look at capital preservation first. Just look at a home loan, the bank keeps the title. Until all the loan is paid off the property belongs to the bank NOT the buyer.
There are of course private lenders that can come in to lend to someone like Nuheara but the terms and conditions are usually not as simple as a plain vanilla interest rate. You have convertible notes where the interest is higher than the market rate (8-10%) and usually at the lender's option, a conversion into equity based on a VWAP.
Another scenario is say Apple/Samung/BOSE (or say a large industry player) does a Joint Venture where then can provide finance/distribution to market (or a synergy play). Usually this means giving a percentage of the business away.
When you talk to negative interest rates, this is from the Reserve Bank lending to the Banks itself (approved Banks). This is not from the bank to their client.
NUH Price at posting:
9.4¢ Sentiment: Buy Disclosure: Held
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