Rockglen Capital, a small-business funding service in Bentonville, AR, explains inventory financing: funding for stock bought ahead of sales, secured by the goods. The page covers using a business loan to buy inventory, floor stock and stock financing, inventory funding for builders, what a partner reads, and a worked example for a Benton County store.
At a glance
- Benton County, AR: retail employers
813 (CBP 2023)
- Benton County, AR: wholesale employers
395 (CBP 2023)
- Security
The stock itself
How to use a business loan to buy inventory for business in Bentonville, AR
Start from the order: what you are buying, from whom, at what cost, and how many weeks it takes to sell through. A partner wants to see the purchase order or supplier invoice, the sales history of similar stock, and the store's deposits. The loan is sized to the order, and the payments are set to the sell-through. Benton County had 813 retail employer establishments and 395 wholesale employer establishments in 2023 (CBP 2023); either kind of business can buy ahead.
How does floor stock financing work in Bentonville, AR?
Floor stock financing, also called floor plan financing, pays the supplier for high-value items shown on the sales floor: vehicles, boats, trailers, appliances or furniture. Each item is tracked by serial number. When an item sells, the business pays off that item's advance plus interest. The partner audits the floor from time to time to check that every financed item is either still there or paid off. Benton County had 49 automobile dealers and 40 furniture and home furnishings stores with payroll in 2023 (CBP 2023).
How does stock financing work in Bentonville, AR?
General stock financing covers goods that are not tracked one by one: clothing, parts, supplies, groceries. The partner lends against a share of the inventory's cost, called the advance rate, and the business reports stock levels on a schedule. As stock sells and is replaced, the borrowing can move up or down with it, much like a line of credit secured by stock.
Inventory financing for small business around Bentonville, AR
Illustration only, invented figures, not an offer: a boutique orders $30,000 of stock for a new line and expects to sell it over six months. A $30,000 loan over 6 months at a rate of 13 percent comes to about $5,191 a month and about $31,148 in total payments. If the stock sells at a 50 percent markup, the $45,000 in sales leaves about $13,852 after the payments, before rent and payroll. Check the sell-through assumption; unsold stock still has to be paid for.
How does inventory financing work for a Benton County, AR business?
- Pick the order and get the supplier invoice or purchase order.
- Call or send the form; say what the stock is and how fast similar stock has sold.
- The partner reviews the order, the sales history and the bank statements, and sets an advance rate and term.
- If you accept a written offer, the partner pays the supplier or funds your account.
- You pay down the balance as the stock sells, on the agreed schedule.
Inventory funding for builders for Benton County, AR businesses
Builders buy lumber, roofing, fixtures and appliances before a house or a commercial job is finished. Benton County had 234 residential building contractors and 68 building material and supply dealers with payroll in 2023 (CBP 2023). Materials bought for a specific job can fit a construction line of credit paid down from draws; stock carried by a supply dealer fits inventory financing proper. Partners may ask a builder for the contract, the draw schedule and supplier invoices.
What a partner reads in an inventory request
- The supplier invoice or purchase order behind the stock
- Sales reports by product line for recent months
- An inventory count or report from the point-of-sale system
- The latest business tax return plus recent bank statements
- A list of current debts, including any supplier credit terms
Supplier terms matter. A supplier that gives 30 or 60 days to pay is already financing part of the order; the request may only need to cover what falls outside those terms.
Inventory financing compared with a line of credit or a merchant cash advance
An inventory loan is tied to a specific order and paid down as it sells. A line of credit can buy stock again and again without a new application each time. A merchant cash advance is not a loan; a share of card sales is remitted until the agreed total is met, and its total cost in dollars can be far higher than a loan's. Put the total dollar cost of each next to the margin the stock will earn.
Inventory financing and the retail page
For a store, inventory is one of several costs; fixtures, payroll and card fees sit beside it. The retail page covers the full set of options for Benton County stores, and the industry pages cover the rest. County business figures put the retail count in context.
By Rockglen Capital · Updated