How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 7 inventory financing options
Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
---|---|---|---|---|
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA financing | $5,000,000 | 650 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Established businesses | $500,000 | 660 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Lines of credit | $250,000 | 625 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 4.7/5 Best for Short-term loans | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit | 4.9/5 Best for Startups | $150,000 | 600 | Read Review |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Bad credit | $1,500,000 | 570 | with Fundera by NerdWallet |
American Express® Business Line of Credit | 4.6/5 Best for Low-revenue businesses | $250,000 | 660 | Read Review |
Here are 7 inventory financing options
Best for SBA financing
Best for Established businesses
Best for Lines of credit
Best for Short-term loans
Best for Startups
Best for Bad credit
Best for Low-revenue businesses
I'M INTERESTED IN:
Our pick for
SBA financing
SBA 7(a) loans can be used to purchase inventory, among other purposes. These loans offer low interest rates and long repayment terms.
SBA 7(a) loan
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Established businesses
Funding Circle offers a longer-term loan with repayment terms up to seven years. To qualify, however, you must have a minimum credit score of 660 and at least two years in business.
Funding Circle - Online term loan
Max loan
$500,000
Min. Credit score
660
Apr range
15.22-45.00%
Our pick for
Lines of credit
Bluevine offers a fast and flexible revolving line of credit that can be used to pay for ongoing inventory or general working capital needs.
Bluevine - Line of credit
Max loan
$250,000
Min. Credit score
625
Apr range
20.00-50.00%
Our pick for
Short-term loans
OnDeck’s short-term loan is available up to $250,000 with a maximum term of 24 months. This can be a good option if you’re looking for a lump sum inventory loan to repay relatively quickly.
OnDeck - Online term loan
Max loan
$250,000
Min. Credit score
625
Apr range
27.20-99.90%
Our pick for
Startups
Fundbox offers a revolving line of credit with short repayment terms — 12 or 24 weeks. You may be able to qualify with just six months in business.
Fundbox - Line of credit
Max loan
$150,000
Min. Credit score
600
Apr range
36.00-99.00%
Our pick for
Bad credit
Fora Financial offers a short-term loan with flexible qualifications. You may be able to qualify with a minimum credit score of 570. These loans also have large maximum funding amounts — up to $1.5 million — but repayment terms max out at 18 months.
Fora Financial - Online term loan
Max loan
$1,500,000
Min. Credit score
570
Our pick for
Low-revenue businesses
You may be able to get a business line of credit from American Express with an average monthly revenue of at least $3,000. This can also be a good option for existing American Express customers, who can use their accounts to find out if they prequalify for this credit line.
American Express® Business Line of Credit
Max loan
$250,000
Min. Credit score
660
What is inventory financing?
- Purchase inventory to prepare for your busy season.
- Cover short-term cash flow gaps.
- Buy additional stock to meet increased customer demand.
- Update product offerings or launch products.
- Purchase products in bulk at a discount.
How does inventory financing work?
Types of inventory financing
- Inventory loans. These loans function like traditional business term loans, in which you receive a specific amount of capital and pay it back, with interest, over a period of time. Term loans may have higher borrowing amounts and longer repayment periods, making them a better choice for financing large, one-time inventory purchases.
- Inventory lines of credit. An inventory line of credit gives you access to a set amount of money that you can tap into as needed — and you pay back only what you’ve borrowed. These business credit lines are often revolving, meaning once you’ve paid back what you’ve borrowed, you again have access to the maximum approved amount and don’t need to continuously reapply for funding. An inventory line of credit offers more flexibility than a term loan and can be a good option for financing ongoing inventory purchases.
Pros and cons of inventory financing
Pros | Cons |
✅ Flexible qualification requirements. Because inventory financing is self-collateralizing, you may not need to rely as heavily on your personal credit or time in business to qualify for funding. You may also be able to avoid putting up additional assets as collateral. | ❌ Limited loan amounts. Lenders will typically offer only a percentage of the total cost of the inventory you’re looking to purchase. |
✅ Can benefit sales. This type of financing can help you meet increased customer demand, prepare for a busy season or upgrade a product line — without having to pull from cash reserves to purchase inventory. | ❌ Can be expensive. Business loan rates can be high on this type of financing compared to more traditional loan options. Although newer businesses and those with bad credit can qualify, they may receive particularly high rates. |
✅ Fast and simple application process. If your inventory records are organized, it can be quick and easy to apply for this type of loan, especially when working with an online lender. | ❌ Not all inventory is eligible. To qualify for inventory financing, the products you plan to buy need to be nonperishable, and should hold value for at least the length of your loan. |
How to get inventory financing
1. Review your qualifications
2. Compare inventory financing options
- Repayment terms. Inventory loans often have short repayment terms and may require frequent (daily or weekly) payments. You should make sure that you can afford to repay any potential debt before taking it on.
- Interest rates and fees. Inventory financing may be more expensive than traditional bank or SBA loans. You’ll want to ensure that you understand what the rates and fees are and how they’re charged. If a lender quotes interest as a factor rate, it’s helpful to calculate it into an annual percentage rate to get a better sense of the loan cost.
- Collateral requirements. Some lenders may require you to secure your loan with additional business assets. You’ll want to double check these types of requirements — and determine if you can meet them — before you apply.
- Funding speed. You may be able to get inventory financing from an online lender within 24 hours of approval. Some of these lenders charge higher rates, however, so consider if speed is worth the additional cost.
3. Gather documentation and apply
- Business and personal bank statements.
- Business and personal tax returns.
- Business financial statements (e.g., profit and loss statement, balance sheet).
- Current inventory list.
- Sales records and projections.
Alternatives to inventory financing
- Invoice financing or factoring: Both invoice financing and invoice factoring can help cover gaps in cash flow by advancing money on your unpaid customer invoices. With invoice financing, your unpaid invoices serve as collateral on a loan until your customer pays you. With factoring, a company purchases your unpaid invoices at a discount, and takes over collecting the money from your customers.
- Business credit card: Similar to a line of credit, a business credit card is a revolving line that only charges interest on money you have spent on the card. As you pay down the card, you can spend money on it again.
- Purchase order (PO) financing: Similar to inventory financing, purchase order financing is a lump sum of money that can be used to cover cash flow gaps. While inventory financing can be used for general inventory needs, however, PO financing is tied to the needs of a specific purchase order.
- Equipment financing. If your business is not inventory-heavy, but you want a self-collateralizing loan option, equipment financing allows you to purchase business equipment and use it to secure your loan.
Methodology
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.