The Inventory Financing Agreement is a crucial financial instrument in South African commercial practice, designed to help businesses leverage their inventory to obtain working capital. This document is particularly relevant when companies need to finance large inventory purchases or maintain substantial stock levels but lack immediate cash resources. The agreement, governed by South African law, comprehensively addresses security interests, valuation methodologies, monitoring requirements, and risk management procedures. It incorporates key provisions required under South African legislation, including the National Credit Act and Security by Means of Movable Property Act, while establishing clear mechanisms for facility utilization, inventory management, and default remedies. The document is structured to protect both lender and borrower interests while ensuring practical operability in the South African business context.

1. Parties: Identification of the financing party (lender) and the business receiving the financing (borrower)

2. Background: Context of the agreement, including the borrower's business nature and purpose of the inventory financing

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation

4. Facility and Purpose: Details of the financing facility, including amount, purpose, and terms of availability

5. Security Arrangements: Description of security interest over inventory and other collateral

6. Conditions Precedent: Conditions that must be satisfied before the facility becomes available

7. Drawdown and Repayment: Procedures for requesting advances and making repayments

8. Interest and Fees: Interest rates, calculation methods, and applicable fees

9. Representations and Warranties: Statements of fact and assurances given by the borrower

10. Covenants: Ongoing obligations of the borrower including financial covenants and reporting requirements

11. Inventory Management: Requirements for storing, maintaining, and managing the financed inventory

12. Insurance: Required insurance coverage for the inventory and other assets

13. Events of Default: Circumstances constituting default and consequences thereof

14. Enforcement Rights: Lender's rights and remedies upon default

15. Boilerplate Clauses: Standard legal provisions including notices, amendments, governing law, etc.