What is Inventory Financing?
Inventory financing advances up to 85% of the liquidation value of finished goods or raw materials, with facilities from $500K to $20M and pricing typically at Prime + 6–12%. As of 2026, it's the right product when growth is being held back by stock you can't afford to hold — particularly for e-commerce and direct-to-consumer businesses that don't have B2B invoices to factor against.
How It Works
Inventory financing is for companies whose growth is being held back by stock they cannot afford to hold. The classic example is an e-commerce or direct-to-consumer brand pre-stocking inventory two months before the holiday season but without commercial invoices to borrow against. Their customers are consumers, not businesses, so there are no unpaid B2B invoices to use. The inventory itself becomes the asset.
Mechanically, most inventory lenders pay your supplier directly. They might front $100K of product against an approved vendor, ship it into your warehouse or fulfillment center, then give you a cycle — usually 90 days — to sell through and repay. Your operating cash stays intact, and you only pay for the capital against goods that are actually moving.
As of 2026, advance rates run up to 85% of liquidation value, sometimes 40–50% on cost, at pricing of Prime plus 6–12%. Standalone inventory facilities run higher.
A few practical considerations. Most lenders require a first-priority claim on the inventory, which means coordinating with any existing bank line or factoring facility that already covers it. True standalone inventory facilities exist but require a 13-week cash flow forecast and a clear, math-based explanation for why the inventory will turn into cash before the loan term ends.
For e-commerce specifically, one of our partner lenders offers a revolving line built around direct-to-consumer inventory at roughly Prime plus 2% — unusually attractive pricing for inventory — but it requires that same first-priority claim and clean reporting. For owners with real estate, drawing working capital against the property at single-digit rates is often cheaper. When real estate is not available, inventory financing is the realistic answer.
Quick Facts
| Facility / Loan Size | Facility sizes $500K to $20M as of 2026 |
|---|---|
| Cost of Capital | Advance rates up to 85% of liquidation value; standalone deals often closer to 40%–60% of cost |
| Funding Timeline | Can be layered with PO funding and working capital loans for a complete cycle solution |
| Best For |
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Key Features & Benefits
Facility sizes $500K to $20M as of 2026
Revolving line structure available with most lenders
Advance rates up to 85% of liquidation value; standalone deals often closer to 40%–60% of cost
Pricing typically Prime + 6%–12%; specialty e-commerce inventory programs as low as Prime + 2%
Lender usually pays your vendors directly rather than wiring cash to you
90-day repayment cycle is the common shape, lender-dependent
Inventory audit, count, or third-party verification required
Senior lien on inventory typically required (works around existing AR or bank facilities with planning)
13-week cash flow forecast and math-driven sell-through analysis required for standalone deals
Strong fit for e-commerce, DTC, CPG, and seasonal retail with no factorable B2B AR
Can be layered with PO funding and working capital loans for a complete cycle solution
Pairs naturally with seasonal pre-stocking ahead of holiday or peak periods
Inventory Financing - Common Questions
Get answers to the most common questions about inventory financing
See It In Action
Real companies using Inventory Financing to solve their capital challenges
Other Funding Solutions
Working Capital Loans & Lines of Credit
A working capital loan is short-term, revenue-based financing of $100K to $10M+ that funds in 2 to 10 business days, priced at 1.25%–4% per month. As of 2026, it's the fastest way to cover payroll, inventory, or growth-driven cash gaps when a bank can't move quickly enough — and at the same speed as a merchant cash advance it costs roughly half as much because the payment is monthly rather than a daily extraction from sales.
Learn more about Working Capital Loans & Lines of Credit →Invoice Financing
Invoice factoring is the practice of selling unpaid B2B invoices to a factor for 75%–95% of face value within 24–48 hours, then receiving the balance (minus a 0.25%–1% fee per invoice) when the customer pays. As of 2026, pricing typically runs Prime + 1–6%, facility sizes range from $250K to $100MM, and the facility scales automatically with sales. Approval looks at your customers' credit rather than your tax return — which is why it works for growing companies whose financials don't yet tell the full story.
Learn more about Invoice Financing →Equipment Leasing
& Financing
Equipment leasing and financing covers $100K to $50MM+ of machinery, vehicles, or technology over 3–7 year terms, with advance rates of 70%–85% of liquidation value and pricing of Prime + 3–10%. As of 2026, financing the asset directly is almost always cheaper than drawing on a working-capital line for the same purchase. Sale-leaseback structures let you extract 50%–70% of the equity from equipment you already own without adding a new debt covenant.
Learn more about Equipment Leasing & Financing →