Facility, within Asset-Based Lending
Stock & Inventory Finance
Stock and inventory finance advances cash against the value of stock a business already holds, not against an invoice, because there isn't one yet. It fits wholesalers, importers, and distributors carrying real value in a warehouse, or seasonal retailers building stock ahead of a peak trading period. Lenders typically advance a percentage of the stock's assessed liquidation value rather than what it cost or what it's marked to sell for, and it's usually offered as part of a wider asset-based facility rather than completely standalone.
Recognition
Cash tied up on the shelf, not in a ledger
Stock's been bought and paid for. It hasn't been sold yet, so there's no invoice, no customer, nothing to finance against in the normal invoice-finance sense. Just real value sitting in a warehouse or a yard.
Why it happens
Buying ahead of selling is how stock-heavy businesses actually work
Wholesalers, importers, and seasonal retailers routinely buy stock weeks or months before it's sold, sometimes an entire season's worth at once. That's not poor planning. It's how the sector operates, and it creates a real, recurring cash gap between paying a supplier and being paid by a customer.
Where this fits
The stock-specific piece of Asset-Based Lending
This sits underneath Asset-Based Lending as the stock-specific version. It's usually financed alongside receivables and plant, not instead of them, inside a wider facility. It's distinct from invoice finance because there's no invoice yet, and distinct from a general credit line because the advance is specifically secured against the stock itself, valued and audited as its own asset class.
Specialist insight
What gets valued, and what it gets valued against
A lender doesn't advance against retail price, or even what the stock cost. It advances against liquidation value (what the stock would realistically fetch if it had to be sold quickly), which sits well below normal sale price. Commercial lenders commonly quote advance rates somewhere in the 50% to 80% range of that assessed liquidation value (see ABC Finance's explanation of inventory-finance advance rates), though the real number for any specific business depends on how fast the stock moves, how specialised it is, and how easily a lender believes it could actually be sold. Fast-moving, generic stock tends to get a better rate than slow-moving or highly specialised inventory.
Where this tends to go wrong: businesses often assume the whole warehouse counts. In practice a lender will usually exclude obsolete, damaged, or slow-moving stock from the eligible base entirely, not just discount it, so the real facility size can come in smaller than a simple percentage-of-total-stock calculation would suggest.
Decision helper
What typically fits
- Wholesale and distribution businesses carrying stock between purchase and sale.
- Importers holding goods ahead of a selling season.
- Retailers with a genuine seasonal stock build, not routine day-to-day shelf stock.
Alternatives and limitations
Once the stock's been sold and there's a real customer invoice behind it, this stops being the right facility. See Invoice Finance for that stage instead. And if the stock is only one part of a wider, mixed balance sheet with meaningful receivables and equipment too, standalone stock finance is usually the wrong shape. See Asset-Based Lending for the combined version.
Talk it through
Need another perspective?
You may already know which facility you think fits. The more valuable question is whether it's actually the right structure for what's happening in the business. We'll review the situation before suggesting possible routes. It costs nothing to have that conversation.
Thank you. It's with our team now.
A person reads every enquiry and we'll come back to you with what we think the right next step is. No obligation at any point.
What happens next
- A person on our team reads it. No need to know which facility you want first.
- If we can help, we may introduce you to a provider and tell you who they are.
- No charge and no obligation at any point. You decide whether to go further.
Adam Parker
Founder of Muswell Rose Consulting Ltd, which trades as Established Finance · former Managing Director of Penny, an invoice finance business, working in mortgages, commercial finance and fintech lending since 2010 (career history).
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Practical questions
Before you get in touch
How long does it take?
It varies by facility, so there isn't one number that fits every case. Some drawdowns against an existing facility complete within a day or two; arranging something new from scratch usually takes longer. We'll give you a realistic timeline once we understand your situation.
What information do I need?
To start, just a description of what’s actually happening in the business. If it progresses, the provider will ask for the usual things: recent accounts, a sense of turnover and trading history, and details of the specific need.