Compare inventory financing options

Make sure your suppliers get paid without putting a strain on your cash flow.

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Relying on your cash flow to obtain products from suppliers can cause financial strain and stress if you have a growing business that relies on lots of inventory to keep going. This is where inventory financing comes in.

Inventory financing is designed to pay your supplier directly on your behalf, allowing you to meet your financial obligations while keeping your shelves stocked and your business’s reputation intact.

Our top pick: National Business Capital Business Loans

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
  • Approvals within 24 hours
  • No industry restrictions

Our top pick: National Business Capital Business Loans

Get a large business loan to cover your financing needs, no matter what the purpose is.

  • Min. Loan Amount: $10,000
  • Max. Loan Amount: $5,000,000
  • Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
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How does inventory financing work?

Inventory financing is a line of credit or short-term loan that a business can use to buy the products it sells. Any inventory that you purchase becomes collateral for the loan, protecting the lender against default. If you’re not able to repay the loan, the lender can seize and sell the products to satisfy the debt.

Here’s a breakdown of how it works:

  1. The lender pays your supplier.
  2. The supplier ships the goods and you restock your inventory.
  3. You sell your goods and repay the lender.

Depending on the lender, you can apply for up to $1 million. The repayment period is determined by how long it would take to sell your inventory.

A shorter repayment term may mean a higher interest rate, but if it’s usually a small increase. It could make financial sense to choose the shortest term you could afford because paying interest on a small loan over a longer period will eat away at your cash flow.

Which businesses could benefit from inventory financing?

Generally, inventory financing is used by manufacturers of consumer products and auto dealers that have large amounts of money tied up in inventory. This type of financing is especially good for businesses with international suppliers because sometimes the there are delays between paying the supplier and receiving the goods.

Compare lenders you can apply with to get inventory financing

Updated January 28th, 2020
Name Product Filter Values Min. Amount Max. Amount Requirements
LoanBuilder, A PayPal Service Business Loans
$5,000
$500,000
Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
Customizable loans with no origination fee for business owners in a hurry.
National Business Capital Business Loans
$10,000
$5,000,000
Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Get a large business loan to cover your financing needs, no matter what the purpose is.
OnDeck Small Business Loans
$5,000
$500,000
600+ personal credit score, 1+ years in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
First Union Lending Unsecured Long-Term Business Loan
$5,000
$5,000,000
450+ credit score, 3+ months in business, $15,000+ monthly revenue, no open bankruptcies
Unsecured funding and more for all credit types.
Sheer Funding Business Loans
$5,000
$2,000,000
6+ months in business, 550+ credit score, $150,000+ annual revenue, eligible industry
Multiple financing options available for business owners with less-than-perfect credit scores.
Efundex long-term business loans
$50,000
$1,000,000
2+ years in business, 620+ credit score, not a sole proprietorship or nonprofit, strong financial history
Financing for high-risk industries with transparent rates and terms.
Kabbage Small Business Line of Credit
$500
$250,000
1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
A simple, convenient online application could securely get the funds you need to grow your business.
LendingTree Business Loans
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but many require good personal credit, minimum annual revenue and minimum time in business
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Lendio Business Loan Marketplace
$500
$5,000,000
Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.

Compare up to 4 providers

What are the benefits of inventory financing?

  • Ideal for overseas suppliers. Shipping inventory from overseas can mean significant delays, especially if you have to put off paying your supplier. An unsecured inventory loan can expedite shipping, helping to eliminate unnecessary delays. You may also want to consider trade finance for international business transactions.
  • Avoid using working capital. You don’t have to dig into your working capital to unlock cash flow.
  • Enhance your business reputation. This solution can also help boost your business reputation because you’re able to take on bigger orders, which will increase your business capacity and maximize turnover.

What should I keep in mind before applying?

There are a few questions you can ask yourself before applying to ensure it’s the right decision:

  • What is the nature of your inventory? Slow-selling inventory may not be ideal for this type of finance as you may not find a lender who’ll approve you.
  • What is your credit like? You will generally need good credit to be eligible for inventory financing.
  • Are you confident in your inventory? Remember the lender has the right to inspect the inventory to ensure it’s maintained its value and that you keep track of all your inventory.

How to qualify for inventory financing

Lenders want to see that you’re able to make repayments, so you need to prove that your business is in decent shape financially. While you don’t have to put up collateral if applying for an unsecured inventory loan, your business must meet some standard eligibility requirements:

  • Time in the industry. Lenders like to see that your business has been operating for at least few years.
  • Minimum annual revenue. You must show your annual earnings. Minimum earning requirements differ from lender to lender but are typically at least $100,000 a year.
  • No credit defaults. Defaulting on existing financial commitments shows lenders that your business is not in a position to take on another loan.
  • Industry type. Whether or not a lender will approve a loan depends on your industry. If your business is in an industry considered to be volatile or unpredictable, your application might be rejected.

Bottom line

Inventory financing can be a useful option to keep your business moving if your cash flow relies on maintaining lots of inventory at once. Make sure you compare your loan options before you selecting a lender to ensure you get the right terms for your business’s needs.

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