Also known as Vendor Financing, this type of financing is when you receive capital directly from a supplier. It is one of the most popular types of alternative debt financing methods where vendors sell you a product that you do not have to pay for right away – buy now, pay later. To finalize the transaction, you have two options: to either pay the debt back in full, or pay back periodically with interest. This allows you to start generating revenue from your personal sales without having to take the monetary hit that could have tied up other financial obligations and resources.
This type of financing is utilized by suppliers so that they can mainly create a new customer base from your business. They understand the hassles of early business costs and play this to their advantage to create loyalty and commitment from their buyers.