Business line of credit · Stock and inventory finance
Business line of credit for Stock and inventory finance
Stock and inventory finance is funding used to buy goods for resale ahead of the season or contract that will sell them, repaid from the sales proceeds rather than from existing working capital.
How a business line of credit works for Stock and inventory finance
For businesses reordering continuously rather than in one seasonal buy, a revolving limit fits better than a term loan. Draw as supplier invoices fall due, repay as stock sells, keep the headroom for the next order. Interest applies only to what is drawn. It also gives you the capacity to act on an opportunistic buy when a supplier clears a line — a discount taken with drawn funds frequently exceeds the interest cost of the drawdown itself.
The cash-flow pattern we plan around
Cash committed to inventory two to four months before the selling season, with proceeds arriving across the season itself and slow-moving lines tying up capital longer.
What stock and inventory finance typically fund
- Seasonal stock ahead of a peak trading period
- Supplier deposits and shipment balances on imports
- Volume buys to secure a better unit price
- Inventory for a new contract or product line
Business line of credit for Stock and inventory finance: the numbers
| Typical amounts | $10,000 – $500,000 |
|---|---|
| Term | 6–24 months |
| Indicative rates | 11.5% – 24% p.a. |
| Repayments | Weekly or monthly minimums on the drawn balance |
| Speed | 1–3 business days |
| Documents stock and inventory finance usually need | ABN, GST registration and 6–12 months of bank statements · Purchase orders or supplier proforma invoices · Stock turn and sales history for the relevant lines |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Inventory finance
Inventory finance is short-term funding used to purchase goods for resale, repaid as the stock sells, and sized against expected sell-through rather than against the total value a supplier is willing to ship.
Stock turn
Stock turn is how many times inventory is sold and replaced over a period, and it determines how long a finance facility must run before the goods it funded have generated the cash to repay it.
What is a business line of credit?
A business line of credit is a revolving facility with a pre-approved limit. You borrow only what you need, pay interest only on the drawn balance and can redraw repaid funds without reapplying.
Line of credit vs business loan
A business loan pays a lump sum repaid on a fixed schedule; a line of credit is a flexible limit drawn as needed. Loans suit one-off purchases, lines of credit suit fluctuating working-capital needs.
Questions from stock and inventory finance
How does trade finance work for buying stock?
The lender pays your supplier, local or overseas, and you repay the lender 90 to 180 days later from the sales of that stock. It is revolving, so each purchase is its own transaction, and it suits importers and wholesalers with margins that cover the cost. Letters of credit and foreign currency payments can be included.
What is the best way to fund seasonal stock?
Trade finance for supplier payments, a line of credit for deposits and top-ups, and for retailers with strong card sales a merchant cash advance repaid from takings across the season. Applying two to three months before the season starts allows time for the facility to be set up before supplier deposits are due.
Can I borrow against stock I already hold?
Rarely on its own, because stock is hard for lenders to value and sell, but businesses with commercial debtors can use invoice finance to release the cash tied up in the sales cycle, and a general security agreement over the business can support a line of credit. A broker structures the combination.
What do lenders want to see for inventory finance?
Gross margin, stock turn, supplier terms, a sales history for the products and, for trade finance, supplier invoices or pro forma orders. Established importers and wholesalers with consistent sales are approved quickly; new product lines need a sales plan.