Inventory financing · Small business
Small Business Inventory Loans: How to Finance Stock Before It Sells
A small business inventory loan pays for stock now and is repaid from the sales that stock produces. Retailers, wholesalers, e-commerce sellers, restaurants and contractors all use them, but the right structure depends on how often you buy, how fast it sells and what your bank statements look like. This guide covers the five loan types that fund inventory, who qualifies for each, what they cost and how to apply.
What Is a Small Business Inventory Loan?
A small business inventory loan is short- to medium-term financing used to purchase products, materials or stock for resale, with the inventory itself usually serving as collateral. It comes as a business line of credit for repeat buys, a term loan or short-term loan for one large order, an SBA 7(a) loan for a standing stock position, revenue-based financing for businesses with weaker credit but strong deposits, or supplier and purchase-order financing. Amounts run from about $10,000 to $2 million outside the SBA and up to $5 million with it. Established businesses with 12 months of history and $20,000 or more in monthly deposits qualify for most of them.
Five Ways to Finance Inventory
| Loan type | How it works | Best for | Typical cost |
|---|---|---|---|
| Business line of credit | Draw what you need for each order, repay as it sells, draw again | Seasonal and repeat purchasing | 10% – 35% APR by credit and lender |
| Short-term loan | Lump sum repaid over 4 to 18 months in fixed weekly or monthly payments | One large order that will sell within the year | Factor 1.15 – 1.40 |
| Term loan | Lump sum over 1 to 5 years with monthly payments | Building a permanent, larger stock position | 12% – 40% APR online; 8% – 12% at a bank |
| SBA 7(a) loan | Government-guaranteed bank loan, up to 10 years | Large or long-term inventory needs with time to plan | 10.00% – 13.50% variable |
| Revenue-based financing | Advance repaid as a share of deposits or a fixed daily/weekly amount | Fast buys when credit is under 600 | Factor 1.20 – 1.45 |
Purchase-order financing is a sixth option for businesses with a confirmed order from a creditworthy customer: the funder pays the supplier directly and is repaid when the customer pays. It is useful for wholesalers and importers that need to fill an order bigger than their cash.
Who Qualifies for an Inventory Loan
Lenders look at the business first and the inventory second. Across the lenders in RAN Funding’s network the usual floors are:
- Time in business: 12 months preferred; some products from 6 months.
- Monthly deposits: $20,000 or more into a business bank account, with sales that match the stock you want to buy.
- Credit: 550+ for revenue-based products; 600+ for most online lines and term loans; 680+ for bank and SBA pricing.
- Bank statements: three recent months (four in some states) without a pattern of negative days.
- Inventory that sells: finished goods with a track record turn more easily than raw materials or custom stock. Bring sell-through numbers, a supplier quote or a purchase order.
Start-ups and businesses without deposit history are not a fit for these programs; the lenders need sales to repay from.
Inventory Loans by Type of Business
| Business | Typical need | Usual fit |
|---|---|---|
| Retail store | Holiday or back-to-school stock, 2 – 4 months before the season | Line of credit opened in advance; short-term loan if the line is not open yet |
| E-commerce and Amazon sellers | Bulk reorders of best sellers, often from overseas with 60 – 90 day lead times | Line of credit or short-term loan sized to the reorder; PO financing on large confirmed orders |
| Wholesale and distribution | Container-sized buys to hit supplier price breaks | Term loan or SBA for standing stock; line for the swings. See wholesale distribution loans |
| Restaurants and food service | Opening stock for a new location, bulk protein or beverage buys | Short-term loan or revenue-based; see restaurant business loans |
| Contractors and trades | Materials for a job that pays on completion | Line of credit; receivables financing once invoices exist. See construction business loans |
| Auto, boat and equipment dealers | Units on the lot | Manufacturer or specialist floor plan plus a line for parts and operations |
What Inventory Loans Cost
The cheapest money is bank or SBA pricing, but it takes weeks and two years of financials. The fastest money is factor-rate pricing in 24 to 48 hours. The practical test is margin: if the stock earns a 40% gross margin and sells in 90 days, even a 1.25 factor over 6 months leaves a profit; at a 12% margin only bank, SBA or a low-rate line make sense. Full ranges by product, with a $100,000 worked example, are in inventory loan rates. Avoid financing stock that takes longer to sell than the loan term, and avoid using a daily-debit product for slow-turning inventory, because the payments start before the sales do.
Mistakes That Make Inventory Loans Expensive
- Overbuying for the price break. A 10% supplier discount is not worth 30% financing on stock that sits for a year.
- Borrowing after the season starts. Fast products cost more; open a line before you need it.
- Mismatching the term. A 4-month loan on 9-month inventory means payments from cash you have not earned yet.
- Ignoring existing positions. A second daily-debit advance for inventory can push the business into negative days.
- Skipping the sell-through math. Lenders and owners alike should know how many weeks of sales the order represents.
How to Apply Through RAN Funding
- Apply once online; about five minutes, soft credit pull.
- Send three months of business bank statements and the supplier quote or purchase order if you have one.
- A specialist reviews the file the same day and matches it to the inventory-friendly lenders in the network for your size, credit and timeline.
- Compare the offers on total cost over the sell-through period and choose.
- Fund in 24 to 48 hours on fast products, or two to eight weeks for bank and SBA options.
RAN Funding is a business financing broker, not a lender, and is paid by the funding partner you choose.
Common Questions
Can a small business get a loan just to buy inventory?
Yes. Lines of credit, short-term loans, term loans, SBA loans and revenue-based financing all allow inventory purchases, and many lenders prefer them because the stock is collateral that turns into cash.
How much inventory financing can I get?
Typically one to two months of deposits on fast products, more on lines and term loans with financials, and up to $5 million on SBA loans. The order size, your margins and how fast the stock sells all factor in.
Do I need collateral for an inventory loan?
The inventory itself and a blanket lien on business assets are standard. Personal guarantees are almost universal. Extra collateral is rarely required outside bank and SBA loans.
How fast can I get an inventory loan?
Same day to 48 hours on short-term and revenue-based products, one to three days for online lines, and two to eight weeks for bank and SBA loans.
Can I get an inventory loan with bad credit?
Yes, from about 550 with strong deposits, through revenue-based and short-term funders. Expect factor-rate pricing and shorter terms.
Is RAN Funding a lender?
No. RAN Funding is a broker. It places your file with the lenders in its network that finance inventory and is paid by the lender you choose.
Sources
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks, 2026
- 7(a) loan program: terms, conditions and eligibility — U.S. Small Business Administration
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist reads your statements the same day and tells you which products fit, what each costs and how fast it funds.
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