Inventory can be funded through working capital, a line of credit or financing specifically secured by inventory, depending on eligibility and product availability. The right fit depends on when you must pay the supplier and when sales become cash. Propello can review the business funding request without assuming every inventory-financing structure is available.
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How Much Should I Request for an Inventory Purchase?
Begin with the purchase order, shipping, taxes and other costs of getting the stock ready to sell. Subtract the cash you can contribute without straining normal operations. A wholesale discount is useful only if the extra stock can be sold profitably and on time.
Separate proven replenishment from a speculative new product. The sales history of your existing best seller does not establish demand for a new category. Describe that difference when explaining the request.
Will the Inventory Sell Before Payments Are Due?
A Purchase Can Be Profitable but Poorly Timed
You pay $14,000 for inventory expected to generate $22,000 in sales. The $8,000 difference is not profit until shipping, selling costs, returns and funding costs are considered. If stock arrives in six weeks but financing payments start next week, operating cash must cover that gap.
Test a slower-sales case as well. Inventory that sits on a shelf cannot meet an automatic withdrawal, even when its eventual selling price looks attractive.
What Information Helps a Funding Review?
- Supplier quote and payment deadline.
- Expected delivery and selling period.
- Recent sales and gross margins for similar products.
- Current inventory and existing financing payments.
- The amount you can contribute and a slower-sales plan.
Ask whether the proposed product restricts how funds can be used or places a lien on inventory or other business assets. Keep those terms distinct from the general goal of buying stock.
Educational information, not a loan offer. Availability and terms depend on the program, property or business, and borrower qualifications. Legal and tax questions should be reviewed with your advisers.