Inventory financing funds the purchase of goods a business plans to resell; the goods usually secure it, and it is paid down as they sell or on a set schedule. Aspenwater Credit, a small-business funding broker in Dover, Delaware, explains collateral, UCC filings and floor plan structures to Kent County retailers and wholesalers and introduces requests to lending partners, which set terms.
| Built for | Buying goods for resale ahead of sales |
|---|---|
| Collateral | Usually the inventory purchased, with a UCC filing |
| Repayment | As goods sell, or on a fixed schedule |
| Kent County, DE context | 670 retail and 202 wholesale employer establishments (Census CBP 2023) |
| Who decides | A lending partner; Aspenwater Credit arranges only |
What inventory financing is
Inventory financing lends against stock you intend to sell. The partner advances part of the cost of the goods, takes a security interest in them, and is repaid as they sell or on a fixed schedule. Because the goods secure the balance, partners care about how quickly they turn into cash, how easy they would be to resell, and how well you track them.
It is not a fit for slow-moving or highly perishable goods, custom items that only one buyer wants, or stock bought to cover a loss elsewhere in the business.
Who uses it in Kent County, DE
Retail trade is one of the county's largest sectors. Kent County had 670 retail employer establishments in 2023, employing 10,680 people with an annual payroll of $406.4 million; 42.2 percent of those stores had fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Wholesale trade added 202 employer establishments, 63.9 percent of them with fewer than five employees. There were also 1,547 retail businesses with no paid staff in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024), a separate count from a separate program.
Shops, parts distributors and suppliers to contractors all buy before they sell. When a supplier offers a better price on a larger order, or a product line needs a full shelf to sell well, the timing gap becomes a financing question.
Collateral and UCC filings
Most partners secure inventory financing by filing a UCC financing statement, a public notice that they hold a claim on the inventory, sometimes on other business assets too. That filing affects later borrowing: another lender searching state records will see it. Before you sign, ask exactly which assets the filing covers, whether the partner will release it when the balance is paid, and whether any existing lien already covers your stock.
What does floor plan financing mean?
Floor plan financing covers big-ticket units that sell one by one, like vehicles, boats or large machines. Each unit is financed individually and the partner is repaid when that unit sells. Partners usually audit the floor, physically counting units against their records. It is a specialized structure; most shops buying mixed stock use a general inventory line or loan instead.
Inventory financing or factoring?
| Inventory financing | Invoice factoring | |
|---|---|---|
| Based on | Goods not yet sold | Invoices already issued |
| When it helps | Before the sale | After the sale, before payment |
| Who pays it back | Your business | Often your customer pays the factor directly |
| Common users | Retailers, distributors | Businesses selling on terms to other businesses |
Aspenwater Credit does not arrange factoring; it appears here because owners often weigh the two. For recurring stock purchases of different sizes, compare a business line of credit.
Sizing an inventory request by hand
Partners set the amount, but a request that matches real sales moves more smoothly. Work it out before the call:
- Take the supplier quote for the order, including freight.
- Estimate how many weeks the goods will take to sell, using last year's sales of the same lines if you have them.
- Subtract any deposit or cash you will put in yourself.
- Check that the payments fit the weeks when that stock is actually selling, not the weeks before it arrives.
If the goods will take longer to sell than the financing runs, the payments land before the cash does, which defeats the purpose.
Retail inventory financing: what partners review
- Sales records for the goods being financed, not just total revenue
- Inventory reports showing what is on hand and how quickly it sells
- The supplier's quote or purchase order for the order you want to fund
- Bank statements and existing debts, including any liens on inventory
- Evidence that the business's state registrations are current
State records come up often. Our guide to the Delaware business license and gross receipts tax explains how those filings show up in a funding file. The stages are in how a request moves, the alternatives in the six-way comparison, sector pages under financing by industry and county figures on the local business profile.
By Aspenwater Credit · Updated