Quick answer
Stock and inventory finance is funding used to buy goods for resale — retail stock, wholesale inventory, raw materials — so a business can stock up before busy periods or take bulk discounts without emptying its bank account. It can be a dedicated inventory facility, a line of credit or a short-term loan, and is usually repaid as the stock sells.
Key points
- Funds inventory ahead of the sales it will generate.
- Can be a dedicated facility, a line of credit or a short-term loan.
- Lenders care about how quickly your stock turns into cash.
- Unsold stock still has to be repaid, so buy with discipline.
- Used for
- Retail, wholesale and raw-material stock
- Repaid
- Usually as stock sells
- Unsecured range
- Typically $5k – $500k
Empty shelves don’t sell anything. But full shelves cost money long before they make any — and for retailers, wholesalers and online stores, the biggest cash squeeze of the year often lands right before the busiest trading period. Stock finance lets you fill the shelves first and pay as the goods walk out the door.
What is stock and inventory finance?
It’s finance used to buy goods you’ll resell (or raw materials you’ll turn into products). The ATO describes trading stock as anything produced, manufactured or acquired for manufacture, sale or exchange — and that’s exactly what stock finance funds.
It comes in a few shapes:
- A short-term stock loan — a lump sum for a specific order, repaid over a few months as it sells.
- A business line of credit — draw for each restock, repay as sales come in, redraw for the next one.
- A dedicated inventory facility — some lenders fund stock against purchase orders or take security over the inventory.
- Trade finance — the specialist option when your stock comes from overseas suppliers.
Who is stock finance good for?
- Retailers building up for Christmas, back-to-school, end of financial year sales or a seasonal range. See retail.
- Online stores preparing for big sale events or launching a new product line. See e-commerce.
- Wholesalers and distributors taking bulk deals from suppliers.
- Manufacturers buying raw materials ahead of a large production run.
- Hospitality venues with expensive stock like wine and spirits.
How does stock finance work, step by step?
- Plan the order — what, how much, when it arrives and when it sells.
- Enquire with the amount, supplier and your sales pattern. No credit check to enquire.
- Assessment. The lender reviews sales history, stock turnover, margins and existing stock levels.
- Structure. Short-term loan, line of credit or inventory facility, with a term matching the sell-through.
- Funding. Money is paid to you or straight to the supplier.
- Sell and repay. Repayments come from sales — ideally finishing just as the stock clears.
What are the pros and cons?
| Pros | Cons |
|---|---|
| Stock up before your busiest period | Unsold stock still has to be repaid |
| Take bulk or early-payment supplier discounts | Lenders scrutinise slow-moving stock |
| Keeps cash free for wages and marketing | Over-ordering becomes expensive quickly |
| Repays naturally as stock sells | Seasonal forecasts can miss |
| Flexible structures for one-off or ongoing needs | Stock-only security is limited, so trading matters |
How do lenders look at your stock?
Lenders are really asking one question: how quickly does your stock turn back into cash? They’ll consider:
- Stock turnover — how many times a year you sell through your average inventory.
- Gross margin — how much profit each sale leaves after the cost of goods.
- Seasonality — whether the order lines up with a proven peak.
- Ageing — how much existing stock has been sitting around for months.
- Concentration — whether you rely on one supplier or one product.
Clean, current stock reports from your accounting or inventory system go a long way. If your back room is full of last season’s lines, clearing them first can make the new order easier to fund — and cheaper to carry.
What does it look like in practice? (illustrative)
A Hobart online homewares store does almost half its yearly sales between mid-November and Christmas. Its supplier offers a meaningful discount for orders placed by August. The owner uses a short-term stock loan to place a bigger order in August, sells through November and December, and clears the loan in January. The supplier discount and the extra sales from having stock on hand comfortably outweigh the cost of the finance. A line of credit covers smaller restocks for the rest of the year. Illustrative only.
How much stock should you finance?
- Start with last year’s sales for the same period, adjusted for growth you can actually see.
- Subtract stock you already hold that will sell in that window.
- Allow for lead times and a sensible safety buffer — not a mountain.
- Check that repayments fit even if sales come in lower than hoped.
If you’d like help sizing it, talk to a real person about your order.
What are the most common stock-finance mistakes?
- Ordering on optimism. Last year’s sales plus a realistic uplift beats a gut feel.
- Ignoring old stock. Ageing inventory ties up cash and makes lenders nervous.
- Mismatched terms. A long loan for stock that sells in eight weeks means paying for it long after it’s gone.
- Forgetting landed costs like freight, packaging and storage.
- No plan B. Know how you’ll clear slow lines — bundles, wholesale, sale events — before you buy.
What documents will you need?
- Supplier quotes, pro-forma invoices or purchase orders
- Recent business bank statements and BAS
- Sales reports, ideally showing the same period last year
- A current stock report or inventory valuation
- ABN or ACN and photo ID
What are the alternatives?
- Trade finance — when your suppliers are overseas.
- Seasonal business finance — when the stock order is part of a predictable annual cycle.
- Merchant cash advance — repayments that flex with card sales.
- Unsecured business loan — a simple term loan for a mixed purpose.
Ready to fill those shelves?
When stock is the engine of your business, being able to buy the right amount at the right time is a genuine competitive advantage. We’ll look at your sales pattern and tell you which structure suits your order.
Asking is free of any credit check, your details stay with our team rather than being passed to a queue of lenders, and you’ll talk to an actual person. Give us accurate figures on the order size, timing and your sales history, and we’ll match the right finance first go. See if you qualify.
Frequently asked questions
What is stock finance?
It's any finance used specifically to buy inventory for resale. It can be structured as a short-term loan, a revolving line of credit, or a dedicated inventory facility, and is typically repaid as the stock is sold.
Can stock be used as security for a loan?
Sometimes. Some lenders take security over inventory, often registered on the PPSR, but because stock values can fall quickly, many stock loans are assessed mainly on trading history instead.
How do lenders assess stock finance?
They look at your sales history, how fast stock turns over, your gross margin, seasonality, and how much existing stock you're holding. Slow-moving or obsolete stock is a red flag.
Is stock finance better than a line of credit?
For one big seasonal order, a short-term stock loan can be neat and simple. For frequent, smaller restocks, a line of credit is often more flexible. Many retailers use both.