Wholesale inventory financing is credit that lets a distributor or wholesaler buy stock before it sells, with the inventory (and usually the receivables it turns into) as collateral. For most wholesalers it comes as an asset-based line of credit, a floor plan for serialized goods, purchase order financing for specific orders, or an SBA-backed working capital line. This page covers how those work for distributors; for the basics that apply to any business, start with our inventory financing guide.
Wholesalers have a particular problem: large, regular purchases from manufacturers, thin margins, and customers who expect net terms. Cash goes out when you buy and comes back only after the goods sell and the invoice is paid. Our wholesale financing hub covers the wider set of options.
How lenders finance wholesale inventory
Lenders see inventory as weaker collateral than receivables. An invoice is a customer’s promise to pay; a pallet of stock has to be sold first, and in a liquidation it may fetch far less than you paid. So most lenders lend a lower share against inventory than against receivables, and some cap the inventory portion of a line. 1st Commercial Credit, for example, says of inventory in its asset-based lines: “The borrowing base must stay under 25% of the accounts receivable face value” (1st Commercial Credit).
That leads to the main structures:
- Asset-based line of credit (ABL). A revolving line with a borrowing base: a set percentage of eligible receivables plus a smaller percentage of eligible inventory. You report the collateral regularly, and the available credit rises and falls with it. See how these are built in structuring an asset-based loan on inventory and receivables.
- Floor plan financing. Each advance is tied to a specific, serial-numbered item and repaid when it sells. The Office of the Comptroller of the Currency (OCC) defines it as “a form of inventory financing for a dealer of consumer or commercial goods, in which each loan advance is made against a specific piece of collateral,” and lists goods such as “large home appliances, furniture, television and audio equipment” alongside vehicles and equipment (OCC Comptroller’s Handbook).
- Purchase order financing. A funder pays your supplier for goods already sold to a creditworthy customer. It funds a specific order, not general stock. See purchase order financing.
- Supplier payment (trade payable) financing. A funder pays your supplier on the invoice due date and you repay the funder later, which stretches your payment terms.
- SBA working capital lines. SBA-guaranteed lines from banks that lend against inventory and receivables, covered below.
What wholesale inventory financing costs
Pricing comes in different forms, so check which one you are looking at. An interest rate or APR states the cost per year. A monthly rate is charged on the balance each month, so 0.75% a month is about 9% a year before fees. A fee on a PO or supplier-payment deal is a percentage of the transaction for a period the funder defines. Figures checked on September 21, 2026, from each provider’s own pages; they are published ranges, not quotes.
| Provider and product | Pricing as published | Size and minimums as published | Other terms stated |
|---|---|---|---|
| Porter Capital asset-based lending | “Low monthly asset based rates of 0.75%” | “Lines of credit up to $25,000,000” | Accepts receivables and physical inventory as collateral; “Funding approval in 24 hours” |
| 1st Commercial Credit asset-based lending | “Rates at 1% Admin plus Prime Rate” | “$3 Million Minimum Facility”; for businesses with monthly sales of $2.5 million to $10 million | Inventory borrowing base capped at under 25% of receivables |
| 1st Commercial Credit purchase order financing | “From 1.5% to 5%” | “$100,000 transaction minimum” | Must “retain a minimum of 25% profit”; one year in business |
| 1st Commercial Credit trade payable financing | “Rates at 1.5% to 5%” | Up to $10 million; $100k minimum spend | For creditworthy buyers; pays suppliers on the due date |
Sources: Porter Capital; 1st Commercial Credit asset-based lending, purchase order financing and trade payable financing.
Neither provider publishes an inventory advance rate on these pages, and the PO and supplier-payment fees do not state the period they cover. Ask for both in writing, along with any charges for field exams, collateral monitoring, unused line fees and early termination. The SBA notes that on asset-based CAPLines, “because these loans require continual servicing and monitoring of collateral, additional fees may be charged by the lender.”
SBA options for distributors
SBA programs are delivered through banks and other approved lenders, with the SBA guaranteeing part of the loan (SBA types of 7(a) loans):
- 7(a) Working Capital Pilot (WCP). Up to $5 million, with a maturity of up to 60 months. The SBA’s manufacturer page describes an asset-based version that lets borrowers “draw working capital against their inventory and accounts receivable.” You need “a history of 12 full months of operations” and must be able to produce “timely and accurate financial statements, accounts receivable and accounts payable agings, and inventory reports.”
- Seasonal CAPLine. “Finances the seasonal increases of accounts receivable and inventory,” and can be revolving or non-revolving. It suits distributors that build stock ahead of a peak season.
- Working CAPLine. “An asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit.”
For how these compare with other SBA products, see SBA loans for working capital.
What lenders look at
- Inventory turnover. Stock that sells in weeks is better collateral than stock that sits for months. Expect questions about aged and slow-moving items.
- What the stock is. Finished, branded goods with a resale market are easier to lend against than perishable, custom, or fast-obsolescing items. Lenders often exclude some categories from the borrowing base.
- Reporting quality. Perpetual inventory records, regular counts, and receivables and payables agings. Lenders test these in field exams.
- Customer mix. For PO and supplier-payment programs, the credit of your customers matters. 1st Commercial Credit lists “creditworthy Buyers” for its supplier-payment program.
- Size. Minimums vary widely, from a single $100,000 PO transaction to a $3 million asset-based facility at the providers above.
Which option fits which situation
| Situation | Option to look at first | Trade-off |
|---|---|---|
| Ongoing stock purchases with steady receivables | Asset-based line of credit | Reporting, field exams and a lower advance on inventory |
| A large order you cannot fund | Purchase order financing | Only for confirmed orders; fees on a per-deal basis |
| Serial-numbered goods sold one by one | Floor plan financing | Audits and repayment when each unit sells |
| Supplier wants payment faster than you collect | Supplier payment financing | Fee on each supplier payment |
| Seasonal stock build | SBA Seasonal CAPLine or a bank line | Bank paperwork and time to close |
| Cash tied up in receivables, not stock | Distributor factoring | Customers pay the factor; fees rise with slow payers |
Pitfalls to plan for
- Counting on a borrowing base you won’t get. Ineligible inventory (aged, slow-moving, in transit or on consignment) can shrink the line well below the value on your balance sheet. Ask for the eligibility rules before you sign.
- Financing stock that doesn’t move. Borrowing to buy more of what already sits in the warehouse raises costs without raising sales. Review turnover by SKU first.
- Stacked liens. An ABL lender, a PO funder and a factor may all claim the same goods or receivables. Agree priority up front; see what a UCC filing is.
- Covenant and reporting slips. Late borrowing base reports or missed covenants can freeze a line when you need it. Build reporting into your monthly close.
FAQ
How much can a wholesaler borrow against inventory?
It depends on the lender and the stock. Advances against inventory are usually lower than against receivables, and some lenders cap inventory as a share of the line; 1st Commercial Credit keeps it under 25% of receivables face value. Ask each lender for its inventory advance rate and eligibility rules.
Is inventory financing the same as floor plan financing?
Floor plan financing is one type of inventory financing, where each advance is tied to a specific item. General inventory lines lend against the whole pool of eligible stock.
Can I finance inventory I import?
Yes, but goods in transit are often excluded from a borrowing base until they arrive. PO financing and supplier-payment programs can fund the purchase itself; see import and export financing.
Do I need an SBA loan to finance wholesale inventory?
No. SBA lines are one option. Asset-based lenders, PO funders and supplier-payment programs work without an SBA guarantee, usually faster but at a different price.
Next step
Pull an inventory aging by SKU and your receivables aging before you ask for terms; those two reports drive most lenders’ answers. Our wholesale financing page explains how we compare inventory, PO and receivables offers from the lending partners we work with.
Sources
- OCC Comptroller’s Handbook: Floor Plan Lending
- SBA: Types of 7(a) loans
- SBA: Increasing access to capital
- Porter Capital: Asset-based lending
- 1st Commercial Credit: Asset-based lending
- 1st Commercial Credit: Purchase order financing
- 1st Commercial Credit: Trade payable financing
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.