This page from Sableport Capital Group in DeLand, Florida explains inventory financing for shops, grocers, pharmacies and online sellers: how funders value stock, the main structures, what an inventory request asks, and a worked order with invented figures. Partners decide every advance rate and price.
At a glance
- Retail trade employers, Volusia County, FL
2,026 (County Business Patterns 2023)
- Wholesale trade employers
455 (County Business Patterns 2023)
- Retail businesses without paid employees
4,234 (Nonemployer Statistics 2024)
What Is Inventory Financing, in Plain Terms?
Inventory financing is money advanced against goods a business holds or is about to buy. The funder counts the stock at a value below its cost, advances part of that value, and is paid back as the goods sell. It differs from a general working capital loan because the money is tied to specific goods, and the goods can be pledged.
Retail trade had more employer establishments than any other sector in Volusia County, FL in 2023, 2,026, with 29,543 employees (County Business Patterns 2023). Wholesale trade counted 455 more. Both carry stock bought before it is sold.
Inventory Financing Lenders and How They Value Stock
Funders value inventory by how easily it could be sold if the business stopped. Packaged goods with a steady market count for more than custom or perishable items. Finished goods count for more than raw materials or work in progress. The advance rate is the share of that value a funder is willing to lend against.
- Turnover: how many times a year the stock sells through.
- Shelf life and perishability.
- Concentration: how much of the stock is one product or one supplier.
- Records: whether counts and costs are tracked in a point-of-sale or inventory system.
Inventory Financing for Ecommerce Sellers and Shops With Online Orders
Online sellers can hold stock in a warehouse or a fulfillment center and are paid by a marketplace on its own payout schedule. Some funders read the marketplace sales history and payout reports directly. A shop selling both in store and online can show both channels; partners read each one.
Clothing and accessories stores counted 222 employer establishments in Volusia County, FL in 2023 and furniture and home furnishings stores 97 (County Business Patterns 2023). Stores like these buy collections months ahead, which is the gap inventory financing is built for.
The Inventory Loan Form: What a Partner Asks About the Goods
- A current inventory count, with cost and retail value by category.
- Twelve months of sales, ideally by month, to show sell-through.
- Supplier invoices or the purchase order for the goods being financed.
- Statements for the business account, plus its most recent return.
- Where the stock is kept, and whether it is insured.
Floor Plans, Purchase Order Funding and Lines Secured by Stock
Three structures turn up in inventory financing. A floor plan finances individual high-value items, such as vehicles or large equipment, each paid off when it sells. Purchase order funding pays a supplier to fill a confirmed customer order. A line of credit secured by inventory sets a limit tied to the stock on hand, re-measured each month.
Which one fits depends on what is sold and how. A boutique restocking new lines uses a different structure from a dealer holding expensive units. The line of credit page covers revolving limits in general.
Inventory Financing Explained With an Invented Order
Illustration only, invented figures: a store places a $48,000 supplier order. An invented funder advances 70% of the cost, $33,600, and the store pays the rest. If the store sells at a 42% gross margin, the order brings in about $82,759 at full price (our arithmetic). If the advance is outstanding for 75 days at an invented 14% annual rate, the interest comes to about $967 (our arithmetic).
The test is simple: the margin on the goods has to cover the cost of the money with room left over for markdowns and slow sellers. Run the same numbers with a third of the stock selling at a discount before deciding.
Stock for Grocers, Pharmacies and Building Supply Yards in Volusia County, FL
Grocery stores counted 176 employer establishments in the county in 2023, health and personal care stores, which include pharmacies, 166, and building material and garden supply dealers 136 (County Business Patterns 2023). Each carries stock with a different shelf life and turnover, and each is read differently by a funder.
The grocery store page goes further on refrigeration and supplier orders, and the retail page on fixtures and remodels.
For shelves and stockrooms, read how retail shops pay for fixtures and stock, with an invented order worked by hand.
By Sableport Capital Group ยท Updated