Best Small Business Inventory Loans – Financing

If you’re a business owner whose revenue depends on buying and selling items, you might have to take out a loan at some point to fund new purchases that can’t be made out of pocket. That’s where inventory financing comes in. This form of business financing allows business owners to borrow the cash that they need to replace or replenish their stock, while also allowing them to use the items that they’re purchasing as collateral for the loan.

What is inventory financing?

Inventory financing is a form of borrowing that allows businesses to work with lenders to fund purchases and investments in products that the business owner intends to sell. Much like equipment financing, inventory financing often allows the borrower to use the products that they’re purchasing as a form of collateral, instead of their personal assets or other assets associated with their business.

Can inventory be used as collateral?

One of the major benefits of using inventory financing to pay for material purchases is that borrowers can use the merchandise that they are purchasing as the collateral for the loan that they’re taking out.

Are collateral loans a good idea?

Loans that require borrowers to put down their homes or other personal assets as the collateral can be highly risky for business owners who are unsure of their ability to repay the debts. Using inventory financing can be a viable alternative to typical funding that requires collateral, because it allows the borrower to avoid risking their personal assets. However, whether you’re using your inventory or your home as collateral, you should make sure that you are able to repay the loan before signing the agreement.

What are some examples of collateral?

While businesses can use their inventory as collateral, other forms of financing may require a home, a car, a business’ property or machinery to be used as the collateral for a loan.

What is the difference between an inventory loan and line of credit?

The entirety of a loan is distributed as one lump sum, while a line of credit is accessible to borrowers in increments. A loan might be better for replacing one batch of inventory that might have been destroyed in an unexpected event, while a line of credit is a better option for funding cyclical merchandising expenses.

How to qualify for an inventory line of credit or inventory loan

Product based: Businesses who are operating in wholesale, food, distribution, manufacturing or retail are the best candidates for inventory financing.

Length of time business has been active: Businesses should have at least one year in operation to qualify for the majority of inventory financing options.

Minimum general requirements: Due to the extra time that the process takes to evaluate an application for inventory financing, some lenders may require that you’re purchasing a minimum monetary amount of a product before they’ll consider you. Additionally, minimum credit and revenue requirements will likely apply.

Financial records: When you apply for an inventory loan, the lender will also take a look at your business’ financial, inventory and sales history.

How to apply for inventory financing loans

Before applying, you’ll need to have a few essential documents ready:

  • Balance sheets
  • Profit & loss statements
  • Personal tax returns
  • Business tax returns
  • Sales forecast
  • Inventory management records
  • Inventory list
  • Business bank statements

Inventory lines of credit options

StreetShares – lower rates

StreetShares offers loans and lines of credit of up to $250,000, with rates as low as 9% for highly qualified borrowers.

Loan Amounts$2,000 to $250,000
APR Range24.00% to 99.00%%
Repayment TermsUp to 3 years
Time to FundingTypically 1 – 5 days
Click “Check Rates” to apply to StreetShares

» MORE: StreetShares Business Loan Review

Accion – great credit

Accion’s loans range between $300 and $1 million, with rates as low as 7% for well qualified borrowers with excellent credit scores.


  • Wide range of loan amounts
  • Some of the lowest rates in the industry
  • Quick to fund
  • Online application process
  • Easy for new businesses to qualify, with a minimum time in business requirement of just six months


  • Difficult for low-credit borrowers or new businesses to qualify
  • Potentially high rates
  • Potentially inflexible repayment terms
Kabbage – quick capital

Kabbage offers lines of credit ranging between $2,000 and $250,000, with rates starting at 24% and a maximum of 99%. Despite its potentially high rates, this lender offers fast cash, with funding times as short as 24 hours.


  • Quick to fund
  • Large credit amounts
  • Easy online application
  • Easier for new or low-credit borrowers to qualify


  • Potentially high rates
  • Potentially inflexible repayment terms
Loan Amounts$2,000 to $250,000
APR Range24% to 99%
Repayment Terms6 to 12 months
Time to FundingA few minutes to several days
Click “Check Rates” to apply to Kabbage

» MORE: Kabbage Business Loan Review

BlueVine – new businesses

BlueVine’s offers lines of credit ranging between $5,000 and $250,000, with APRs starting at 15% and a maximum rate of 78%. This lender works with new businesses as well as owners who have credit scores below 600.


  • Quick to fund
  • Large credit amounts
  • Short, easy online application
  • Easy for new businesses or low-credit borrowers to qualify


  • Potentially high APR
  • Potential for very short repayment terms
Loan Amounts$5,000 to $250,000
APR Range15% to 78%
Repayment Terms6 or 12 months
Time to FundingAs fast as 24 hours
Click “Check Rates” to apply to Blue Vine

» MORE: BlueVine Business Loan Review

Inventory loan options

Credibility Capital – great credit

Credibility Capital offers business loans with amounts ranging between $50,000 and $400,000 and a maximum annual percentage rate of 25%. Because this lender offers rates as low as 10%, the company primarily works with borrowers who have excellent credit scores, multiple years in business and high annual revenue.


  • High loan amounts
  • Low rates
  • No prepayment fee
  • Holistic application evaluation process


  • Bad for low credit borrowers
  • Maximum loan term of just three years, even on the lender’s largest loan amounts
  • UCC-1 filing requirement
  • Personal guarantee possibly required
Loan Amount:$50,000 – $400,000
APR Range:8.00% – 25.00%%
Time to Fund:Typically 7 days
Loan Term:Up to 3 years
How To Qualify:680+ Personal Credit Score
$250,000+ Annual Revenue
Great Option For:Borrowers With Good Credit
Short & Medium-Term Financing
Click “Check Rates” to apply to Credibility Capital

» MORE: Credibility Capital Business Loan Review

OnDeck – quick approvals

OnDeck offers funding with amounts ranging between $5,000 and $500,000, and rates starting at 9.1% with a maximum of 99.8%. This lender can be a good option for borrowers who have low credit scores or need fast cash, as OnDeck loans can fund in as little time as 24 hours.


  • High loan amounts
  • Easy, online application
  • Funding in as little as one day
  • Potentially low APR
  • Easy for borrowers with bad credit to qualify


  • Potentially high APR
  • More frequent repayment than with standard business loans, with payments being made on a weekly or daily basis
  • UCC-1 lien and personal guarantee required
Loan Amounts$5,000 to $500,000
APR RangeAs low as 9.99%
Repayment TermsTerm loans up to 3 years
Time to FundingAs fast as 1 day
Click “Check Rates” to apply to OnDeck

» MORE: OnDeck Business Loan Review


Inventory financing provides a good funding option to business owners who want to fund their merchandise purchases without using their personal or other business assets as collateral. If you’re considering taking out an inventory loan or line of credit, first make sure to evaluate whether you need a one-time loan or if the cash is to fund cyclical expenses. Additionally, even if you have low credit or are operating a new business, it’s important to evaluate multiple offers before deciding on the financing that’s right for you.

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