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Simple English definitions for legal terms
field warehousing
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A quick definition of field warehousing:
Field warehousing is a way for a business to get money by using their inventory as collateral. They give their inventory to a third party, like a warehouse, who keeps it safe. The business can still use the inventory, but the third party has control over it. This helps the business get financing for their inventory without having to physically give it to the lender.
A more thorough explanation:
Definition: Field warehousing is an inventory-financing method where a merchant pledges their inventory to a third-party warehouser. This is done when the inventory cannot be delivered to the creditor or third party. The borrower separates a part of the inventory and places it under the nominal control of a lender or third party, so that the lender has a possessory interest.
Example: A wholesaler has a large inventory of goods that they need to finance. However, they cannot deliver the goods to the lender or creditor. In this case, the wholesaler can use field warehousing. They will pledge their inventory to a third-party warehouser who will keep the goods on the wholesaler's premises. The lender will have a possessory interest in the goods, and the wholesaler can access the goods as needed.
Explanation: The example illustrates how field warehousing works. The wholesaler pledges their inventory to a third-party warehouser, who has a possessory interest in the goods. The goods remain on the wholesaler's premises, and the wholesaler can access them as needed. This allows the wholesaler to finance their inventory without having to deliver it to the lender or creditor.