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Ramping up for a big launch, preparing for seasonal surges, or expanding product lines—all these hinge on one critical factor: funding. Without enough capital, even the most promising businesses can sputter and stall. But what do you do if you’re caught in the catch-22 of needing more stock to generate sales but also requiring sales to afford more stock? 


Cue inventory financing, a strategic tool startups can leverage to maintain momentum and take advantage of growth opportunities. So, what exactly is it, and how does it work to fortify your startup’s resilience? Find out in this comprehensive read. 

What is inventory financing

Inventory financing is a specialized financial option to help you access funds using unsold inventory as collateral. If you’re rich in product but short on cash, then inventory financing for startups is for you. Here, the fund amount is a percentage of the value of your existing inventory, whether it’s raw materials or finished goods.


By using what you already have to sustain and grow, you can bridge short-term cash flow gaps without dipping into reserves or waiting for sales. This way, you can supplement your working capital, boost your liquidity, capitalize on market prospects, or scale operations effectively. 

2 Types of Inventory Financing

Gain an understanding of inventory financing for startups by unpacking these two main categories: 

  1. Inventory loan

In inventory loans, lenders will offer you a loan based on the value of your inventory. You then settle this loan in set monthly payments over a fixed term, usually tied to the lifespan or turnover rate of the inventory, or in a lump sum after its sale. Typically, an inventory loan is a one-off loan, which requires a new application every time you need additional funding.

  1. Inventory line of credit

This flexible form of inventory financing gives you a fixed amount of credit that you draw upon as needed, but you pay interest only on the amount you’ve used. This will particularly suit you if your business has fluctuating inventory needs because you can access the funding repeatedly as long as you pay back the borrowed amount. 

How to Secure Inventory Financing for Startups 

Here are the critical steps to keep in mind when applying for inventory financing:

1. Determine your funding needs  

Before seeking financing, know precisely how much inventory you need, if you intend to use the funds to stock up. Thoroughly assess your startup’s inventory requirements by considering sales volume patterns, seasonality, and other economic factors affecting customer demand. Remember that overestimating can lead to excessive borrowing and unsold inventory while underestimating might leave your business short on sellable stock. 

2. Meet basic requirements

Ensure your business satisfies these criteria before applying​​:


  • Your startup should have been operational for at least a year, so you’ll have a more comprehensive sales history for lenders to review. 
  • Prepare a detailed sales history demonstrating profitability and the capacity to repay.
  • Showcase your startup’s ability to monitor and safeguard merchandise well by presenting a well-organized inventory management system. It should be able to provide timely reports on product shipping, returns, and sales.

3. Select the right inventory funding partner

Take the time to compare different financing entities to ascertain their unique benefits and drawbacks. Consider how quickly you need the funds, the amount of financing you require, and whether the lender specializes in your industry. 

4. Gather financial records

Inventory financing may not be as stringent as traditional forms of funding. However, some lenders may still require certain financial documents to properly evaluate whether you can repay the loan. These include the following standard documents:


  • KYC (Know Your Customer) process you use to verify your clients’ identities
  • Certificate of business registration 
  • Proof of company address 
  • Profit and loss statements and balance sheets
  • Sales forecast
  • Business bank statements
  • Inventory lists
  • Management records
  • Tax returns

5. Process your application 

Once your requirements are ready, complete an application online or visit a lender’s physical branch. The application form typically requires basic information about you and your business, including the loan amount you’re seeking. 

6. Get ready for an audit

After you’ve submitted the application and your financial documents, the lender will thoroughly evaluate your creditworthiness and eligibility for inventory financing. If you pass the initial review, they’ll usually conduct a field audit of your office space, facility, or warehouse. This will help them assess your existing inventory and operations.

7. Review and consider the loan offer

Following the audit of your financials, the lender might present you with a preliminary loan offer. Carefully review the terms and conditions of the loan to ensure it matches your startup’s financial needs and objectives.

Further Essential Considerations for Startups

Take the following into account when pursuing inventory financing

Interest rates and terms

The rates and terms will depend on the lender, the liquidation value of the inventory, the borrower’s creditworthiness, and the overall financial health of your business.

Generally, inventory financing has higher interest rates than traditional funding due to the lender’s increased risk. It’s usual for inventory financing rates to be between 13% to 19% or even exceed 20%.

Loan amounts

Due to the associated risks and potential depreciation, lenders usually provide loan amounts worth 50% to 80% of the inventory’s liquidation value. This might be less than its initial purchase price​. In addition, some lenders impose significant minimum loan requirements (the smallest amount a lender is willing to lend) due to the steep setup costs.

Other costs

Be aware of these various expenses beyond just the loan interest: 

  • Loan application fees
  • Inventory appraisal fees 
  • Early repayment
  • Late fees
  • Origination fees (for processing a new loan application)
  • Costs related to inventory risk, such as shrinkage (loss of stock), inventory theft, administrative errors like lost goods or misplaced shipments, and product value depletion for items stored too long​​
  • Storage costs for renting warehouse space, utilities, and material handling ​

Navigating the complexities of inventory financing can be daunting. But what if we told you it’s possible to enjoy the benefits of this financial solution and still keep things simple? This is where Kickfurther can help. 

Why Kickfurther?

Kickfurther isn’t your typical inventory financing—it’s an innovative solution that takes things up a notch. With us, you can experience a more growth-focused approach to inventory financing for startups. Here are the advantages of partnering with us: 

  • No immediate repayments – Do not pay until your product sells. Other providers may debit your account daily as part of a repayment schedule, and loans require repayment before your sales cycle has even begun. With Kickfurther, you set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive – We do not require equity in your business to access inventory funding.
  • Not a debt – This is not a loan, so it does not put debt on your books, which can sometimes further constrain your working capital/access to capital and lower VC valuation.
  • Immediate access to capital – You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most brands. By funding your largest expense (inventory), we help you free up existing capital to grow your business wherever you need itproduct development, advertising, adding headcount, and more.

Don’t let the usual constraints of traditional inventory financing hold you back. Secure the flexible funding you need with Kickfurther with these easy steps:  

  1. Create a free business account.
  2. Complete the online application. 
  3. Review a potential deal with one of our account reps to get funded in minutes.

For streamlined and responsive inventory financing that fuels growth, join Kickfurther. Get started today and take your business to the next level!

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