Inventory financing unlocks cash tied up in stock — bulk purchase discounts, seasonal builds, and supplier prepayments — without selling equity or waiting on a bank line that moves at quarter-end.
Typical facilities run $250,000–$15 million for one to twelve months, secured by inventory and often accounts receivable in the same borrowing base. Repayment tracks sell-through: weekly or bi-weekly as SKUs move.
Jaken Finance Group arranges inventory-backed working capital for U.S. operating companies. We originate hard money, bridge, and DSCR on investment property separately.
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In the form notes: TTM revenue, inventory value, supplier deadline, and expected turnover in days.
Inventory financing vs PO financing vs unsecured
| Question | Inventory financing | PO financing | Unsecured term loan |
|---|---|---|---|
| What triggers the need? | Stock build, seasonal buy, warehouse fill | One confirmed customer order | Mixed business cash, no asset pledged |
| Collateral | Inventory (+ often AR) | The PO and shipment | None |
| Typical size | $250K–$15M | $250K–$15M | $50K–$500K |
| Typical term | 1–12 months | 1–12 months | 3, 5, or 7 years |
| Repayment | As inventory sells | When customer pays the PO | Fixed monthly installment |
If you only need $400,000 with no collateral and can carry a five-year payment, the unsecured path may be simpler. If you need $1.2 million in ten days against a vendor prepay, inventory or PO financing fits the clock.
When inventory financing creates upside
- Capture supplier discounts — A 10–15% prepay discount on a six-figure buy often exceeds the cost of short-term secured paper if turnover is fast enough.
- Seasonal peaks without equity — Retail and distribution businesses fund Q4 builds without diluting owners before the selling season.
- Keep the bank line clean — A separate inventory facility can fund one large buy while the revolver handles daily operations.
- Speed vs SBA — SBA working capital wins on rate when timing allows. Inventory financing wins when the truck leaves the dock Monday.
How underwriting thinks about inventory
Lenders care about turnover, not just cost.
- SKU quality — Is it finished goods with demand, or slow-moving dead stock?
- Advance rate — Lenders advance a percentage of appraised inventory value, not 100% of your cost basis.
- Borrowing base — Many files combine inventory + eligible AR and monitor the base as both move.
- Supplier terms — Net-30 vs prepay changes how long capital stays out.
Document inventory aging, top SKUs by revenue, and historical turn in the submission.
Worked illustration: bulk prepay (composite)
Illustration only — not a live quote.
A $19 million industrial supplies distributor negotiates net-10 prepay on a $1.1 million container buy. Normal terms are net-45. Historical turn on the product line is 75 days.
- Facility: $880,000 for seven months
- Collateral: The inbound container plus existing eligible inventory
- Repayment: Weekly as the SKU line sells through regional branches
- Why not unsecured? Size and speed — the unsecured box caps at $500,000 and does not attach to stock
Compare the full operating-company menu on short-term working capital loans.
Worked illustration: seasonal build (composite)
Illustration only — not a live quote.
A $14 million consumer goods importer builds Q3 inventory for holiday retail. Cash from last season’s sell-through is still in transit from big-box remittance cycles.
- Facility: $620,000 for five months
- Collateral: Finished goods in a bonded warehouse plus AR from prior season shipments
- Exit: Sell-through October–December; optional SBA CAPLine for next year’s cycle if bank timing fits
What not to do
- Do not label personal living expenses as inventory buys — business-purpose only.
- Do not assume dead stock qualifies at the same advance rate as fast movers.
- Do not mix this with equipment financing on the same machine — titled assets belong on equipment paper at 6%–14%.
Related paths
- Purchase order financing — one confirmed order, supplier paid first
- Accounts receivable financing — cash stuck after you shipped
- Short-term working capital vs SBA — when to bridge vs wait
- Unsecured vs equipment financing — when there is no stock to pledge
Request inventory financing terms → · (833) 264-7776
Jaken Finance Group arranges inventory-backed working capital for U.S. operating companies. Pricing and structure quoted per file. We do not name capital sources in marketing materials.