Inventory financing is business funding used to buy stock, secured by that stock and repaid as goods sell or on a schedule. Oceanline Loans, a small-business funding broker in Idaho Falls, Idaho, explains advance rates, UCC filings, floor plans and borrowing bases, and connects Bonneville County retailers and wholesalers with lending partners that decide on requests and set rates and terms.
| Built for | Buying stock before it sells |
|---|---|
| Security | The inventory, usually recorded by a UCC financing statement |
| Sizing | A share of the stock's value, often through a borrowing base |
| Bonneville County retail | 517 employer establishments (Census CBP 2023) |
| Bonneville County wholesale | 201 employer establishments (Census CBP 2023) |
| Who decides | A lending partner; Oceanline Loans only brokers |
How inventory financing works
The lender advances money to buy goods, and the goods secure the debt. As stock sells, the proceeds pay the financing down, either item by item or on a fixed schedule. The lender rarely advances the full cost of the stock. It applies an advance rate, a percentage of the inventory's value that it is willing to lend against, because it may have to sell the goods itself, at a discount, if the business cannot repay.
Lenders value inventory differently depending on how easily it could be resold. Finished goods with a broad market count for more than custom parts, perishables or work in progress, and slow-moving stock may not count at all.
Borrowing bases and turnover
When inventory financing is set up as a revolving line, the amount available is usually calculated from a borrowing base: eligible inventory times the advance rate, sometimes added to eligible receivables. The business reports its stock regularly on a borrowing base certificate, and availability moves with it. What a borrowing base is walks through a hypothetical calculation.
Partners also look at how fast stock moves. Inventory that turns quickly is easier to lend against than inventory that sits. You can work out your own turns and days on hand from the cost of goods sold and average inventory using the inventory turnover worksheet.
Floor plan financing: meaning, example and requirements
Floor plan financing is inventory financing for individually identified, high-value units, each tracked by serial number or VIN. The lender pays the manufacturer or distributor for each unit, and the dealer repays that unit's advance when it sells.
An illustrative example with hypothetical figures: a dealer of compact equipment takes delivery of six units. The floor plan lender pays the supplier for all six. When one sells, the dealer repays that unit's advance from the sale, and the other five stay on the plan. Units that sit unsold past a set period often require curtailment payments, partial principal paydowns that grow the longer a unit stays on the lot.
Typical floor plan requirements include serialized inventory, regular physical audits or stock checks by the lender, insurance naming the lender, prompt payoff on sale, and often an approved relationship with the manufacturer. Selling a unit without paying off its advance, known as selling out of trust, is a serious breach of most agreements.
UCC filings and what you are pledging
Inventory lenders almost always file a UCC financing statement, a public notice that describes the collateral they claim. Some describe only the financed stock; others claim all inventory or all business assets. A broad filing can make it harder to arrange other financing later, so ask how the collateral will be described before you sign.
Stock financing versus a credit line or working capital
| Inventory financing | General line of credit | Working capital loan | |
|---|---|---|---|
| Tied to the stock | Yes, closely | Sometimes, through a borrowing base | No |
| Reporting | Stock reports or audits are common | Varies | Usually little |
| Fits | Large or regular stock purchases | Mixed recurring costs | A one-time stock-up |
A general line of credit can cover stock alongside other costs; the full set of six options is on the comparison page.
Sizing a stock purchase before you ask
A request is easier to evaluate when it ties the purchase to expected sales. Start with what you plan to buy and its cost, then estimate how long it will take to sell based on how fast similar stock moved before. If the answer is longer than the financing term, either buy less or choose a structure that repays as items sell rather than on a fixed schedule. Partners also want to know where the stock will be held and how it is insured.
Retail and wholesale in Bonneville County, ID
Bonneville County had 517 retail employer establishments with 8,792 paid employees in 2023, and 201 wholesale establishments with 3,363 employees (U.S. Census Bureau, County Business Patterns 2023). In both sectors, 38.3 percent of establishments had fewer than five employees, a much lower share than the county's 55.3 percent overall, which means stock-carrying businesses there tend to be larger employers. Another 1,038 retail businesses operated without paid employees in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024).
More on the county is on the Idaho Falls, ID page, the sector breakdown is under financing by industry, and how a request moves explains the steps after you call.
By Oceanline Loans · Updated