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How to finance your holiday inventory

Compare business loans to stock up on supplies.

This holiday season, businesses may be looking for an extra injection of capital to boost their inventory to prepare for sales. Read on to learn more about holiday inventory financing, how it works and how to apply for funding.

How does holiday inventory financing work?

Holiday inventory financing is a type of business loan provided to businesses to help them purchase products ahead of the holiday season. If your business is based on selling products, it’s a useful option to help pay for inventory without dipping into your revenue or personal savings.

Compare business loans to finance your holiday inventory

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $250,000
6 - 120 months
$10,000 /month
100 days
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.

Compare up to 4 providers

Should I get a loan to finance my holiday inventory purchases?

If you’re on the fence about seeking financing to help with your holiday inventory purchasing, here are some key questions to help you decide:

What do I need the funds for?

Make sure you have a clear cut reason for taking on more debt. You may decide you can figure out holiday expenditures without going further in the red.

How much do I need to borrow?

Do some number-crunching to determine how much financing you need to afford your holiday inventory purchases.

How will I pay this loan back?

Before any businessperson agrees to take on more debt, they need to be sure their company has the resources to make loan repayments without hurting the business in the long run.

Will my business profit from this loan?

If your interest rate is too high to make your inventory purchases, you may lose money from this loan, even if it helps you increase sales over the holidays.

Can I qualify for reasonable terms and interest rates?

If your personal or business credit score is in bad shape, it may not be worthwhile to take out another loan and further hurt your financial standing. You’ll also need to prove your business has an established financial history.

Is it too risky to put collateral on the line?

Most holiday inventory financing requires you to secure your loan with assets, such as existing inventory, office equipment or vehicles.

Types of holiday inventory financing

Businesses can get their hands on inventory financing via various options. It’s up to you to decide which route works best for your business’s needs.

  • Business term loans. Your business takes out a lump sum to cover a one-time expense. Pay it back in monthly repayments plus interest and fees. Term loans typically don’t come with many restrictions as long as you use them for business purposes.
  • Invoice financing. Invoice financing is when a lender gives you an advance on your pending invoices. Just submit your invoices to the lender, and you’ll receive the amount of the invoice minus a percentage as payment. When the client pays you, you pay back the lender.
  • Business credit cards. A credit card may be the right option if you only need to borrow a small amount to purchase your holiday inventory. Credit cards can typically come with higher interest rates than a secured business loan, so only use this option if you’re sure you can pay it off quickly.
  • Business line of credit. Similar to a credit card, opening a line of credit gives your business access to cash when it needs money. You only pay interest on what you actually borrow and have a certain time frame to pay it off.
  • Merchant cash advance. A merchant cash advance lets you borrow money in exchange for a percentage of your daily credit card and debit sales. Lenders determine the amount you can borrow by looking at your historical sales data.

What do I need to get holiday inventory financing?

Eligibility requirements vary depending on the type of holiday inventory financing you decide to go for and the lender you choose to work with. Overall, you’ll need to provide these details to meet basic requirements:

  • Personal credit score. Lenders typically examine your personal credit report when you apply, including the credit scores of the co-owners or stakeholders of your business.
  • Time in business. To qualify for most business loans with lenders, you’ll need to be in business for at least 6 months to a year.
  • Annual revenue. Lenders often require businesses to bring in a minimum monthly or annual income to show they’re lucrative and capable of making loan repayments.
  • Business cash flow and income. To be sure that you can meet repayment requirements, some lenders look for a total income that’s at least 1.25 times greater than your total expenses.
  • Collateral. If you’re applying for a secured business loan, you may need to identify an asset – equipment, inventory or real estate – to back the loan against default.
  • How you intend to use the funds. You may need to specify exactly how you plan to use the cash you borrow.

How to apply for business loans for holiday inventory

After you’ve figured out how much you need to borrow and what type of financing best suits your business’s needs, you can move ahead with the application process. Before you start an application, check that your business meets the lender’s eligibility requirements.

Once again, the application process varies depending on the lender and type of financing, but you can count on having to provide these details:

  • Your full name, contact information and Social Insurance Number (SIN).
  • Your full business name, address, phone number and email address.
  • Your industry and the date you started your business.
  • The monthly and annual sales history and revenues for your business.
  • Your personal bank account information and income earned.
  • Your business’s bank account information, balance sheets, recent bank statements, recent tax returns, inventory lists and management records.
  • Your business’s licence and information.
  • How much you’re looking to borrow and how you intend to use your loan.

Pros and cons of financing holiday inventory purchases

Before taking a loan, businesses need to carefully take stock of the advantages and disadvantages of shouldering more debt. Here’s a look at both sides of the coin:


  • Allows you to meet customer demand. The reason why you’re seeking financing is to help you earn more during the holiday season when your products are in high demand. This is a great reason to take on debt because you’re fostering long-term relationships with clients that you don’t want to disappoint.
  • No need for personal collateral. If you have business assets to leverage, you don’t have to worry about losing your home or your car. More often than not, the inventory that you purchase is used to secure your loan.
  • Fast process. Depending on the lender and the loan type, you could set up financing to buy your holiday inventory within a business day. Online lenders tend to work quickly to qualify and approve you for funding.
  • Opportunity to build credit. If your aim is to establish a credit history for your business, holiday inventory financing is a great chance to show lenders your business can manage debts responsibly.


  • Getting approved can be tough. If your business is new or it doesn’t meet revenue requirements, it’ll be difficult to secure financing.
  • Potential to hurt your business. If you struggle to keep up with repayments or default on your loan, you can cause significant damage to your business, including hurting your credit score and losing important assets.
  • High interest rates. Inventory financing typically comes with higher interest rates because lenders are using your inventory as collateral instead of a personal guarantee.

    What types of businesses should consider inventory financing?

    Overall, the need to apply for inventory financing is a good thing. It means your business needs a helping hand with preparing to fulfill large orders. Whether you’re a manufacturer that needs to stock up on a variety of materials or you’re a retailer buying ready-for-sale goods, a wide range of businesses can benefit from inventory financing, including the following:

    • Retailers. Whether you’re selling clothing, beauty products, homewares or kitchen supplies, large and small retailers could benefit from inventory financing.
    • Manufacturers. Regardless of the industry you’re in, manufacturers may need to ramp up production during busy seasons, making inventory financing an invaluable tool to help them get the resources they need to build.
    • Wholesalers. Wholesalers constantly need to bulk buy, replenish stock and store products in a warehouse to have on hand to sell to their merchants.
    • Restaurants and grocers. The food industry feels the pressure of stocking up on seasonal ingredients and extra produce over the holiday season.
    • Seasonal businesses. Seasonal businesses typically ramp up during specific parts of the year, such as the holidays, and rely on inventory financing to help them prepare for the influx of demand.

    Frequently asked questions

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