Inventory financing
Turnover, sell-through, cost.
Industry guide
Funding for manufacturers and wholesale distributors
Manufacturing and distribution have the longest cash cycles in small business: pay for materials, hold work in progress, ship, then wait on net-60 terms. The financing market for this is mature, and it is mostly asset-based.
The cash cycle
Days of inventory + days of receivables − days of payables = the number of days you finance your own operation. A distributor holding 60 days of stock, waiting 45 days to be paid, and paying suppliers in 30 days is financing 75 days of sales at all times. Shortening any leg is worth more than any funding product. Working capital math.
What fits what
| Need | Usually fits | Usually doesn’t |
|---|---|---|
| Materials for a confirmed large order | Purchase-order financing; supplier terms | Daily-pay advance |
| Ongoing inventory and receivables | Asset-based line secured by inventory and receivables; factoring | Advance |
| Machinery | Equipment financing | Working capital advance |
| Facility purchase or major expansion | SBA 504 (education); term loan | Stacked advances |
What lenders look at
- Receivables aging and customer concentration.
- Inventory reports, turnover, and obsolescence.
- Gross margin by product line.
- Equipment appraisals for larger facilities.
Watch for
- Advances sized on gross deposits that are mostly cost of goods.
- Factoring contracts with concentration limits below your largest customer.
- Blanket liens that conflict with equipment lenders.
What Fast Mula is and isn't. Fast Mula helps you compare business-funding structures and submit one inquiry. Nothing on this site is an offer, approval, guaranteed rate, or guaranteed timeline. Any funding depends on a provider's own review, and terms vary by state.
Common questions
What is purchase-order financing?
A funder pays your supplier for goods needed to fill a confirmed order from a creditworthy customer, and is repaid when that customer pays. It fits distributors and light manufacturers with large orders and thin cash.
Related
Invoice financing
Receivables facilities.
Big Mula
Larger, structured needs.
Manufacturing
Materials, WIP, machinery, long receivables.
Wholesale distribution
Turns, margins, customer terms.
Manufacturer or distributor? See what fits
Tell us about the cycle, the order book, and the need.