Stock and inventory funding for UK businesses
Your supplier just offered a cracking deal on bulk stock, but the bank account says not right now. Or Christmas is eight weeks away and the shelves are half empty. Sound familiar? Most of the business owners we help with stock funding are in exactly that position.
How businesses use funding to buy stock
Cash flow is the challenge. You need stock to make sales, but you need sales to fund stock, and short-term business funding is one way businesses bridge that gap. These are the situations we see most often:
Seasonal stock-up
Christmas, summer, Valentine’s Day. The rush is predictable, and funding is used to buy in advance, then repaid from sales over the agreed term.
Bulk buying discounts
Suppliers offer better prices on larger orders. Whether the discount outweighs the total cost of the finance depends on the figures, and the decision is yours.
New product lines
Testing a new product? Some businesses fund the first order of a new line rather than use working capital.
Replacing sold-out lines
When a best-seller runs out, every day without it on the shelf is lost revenue. Each lender sets its own decision and payout times.
Types of funding used for stock purchases
| Funding type | How it works | Speed | Typically used by |
|---|---|---|---|
| Short-Term Loan | Fixed monthly repayments | Lender-set | Planned purchases |
Each lender publishes its own decision and payout times, and they change.
Three products, one name
Stock funding is three different products wearing one name, and the cost of each varies by facility and lender. A term loan pays the supplier and you repay from sales. Invoice finance releases cash against what your customers already owe. Trade finance pays the supplier directly against a purchase order, before you have anything to invoice. Ask for "stock funding" and you may be offered any of the three, so ask which one a quote is.
Invoice finance is the biggest of the three by a distance. UK Finance members had 40,100 businesses on invoice finance or asset-based lending, with £22.7bn advanced against invoices and assets in a year.
Trade finance is the one to ask hard questions about, because some long-established invoice financiers no longer provide it themselves and pass the work to third-party specialists. If a facility is being described to you as trade finance, ask which company will actually be your counterparty and whose terms you are signing.
What it costs, where anyone publishes it
Few invoice finance providers publish a price, so the cost of a facility usually first appears in the offer: the service fee, the discount charge on money drawn and any credit protection, each set by the lender before you sign.
Facilities also differ in how much of the invoice is advanced. Most whole-turnover facilities advance a percentage and hold the rest back until the customer pays. Some single-invoice products advance the full invoice value for one fixed percentage instead. Through us invoice finance is arranged for UK limited companies and LLPs.
For a straight loan to buy stock, the price turns on the size of the loan, the term and the business's own figures, and the rate any one lender quotes is its own decision.
What lenders look at
An invoice finance lender underwrites your customers as well as you, so its criteria differ from those of an unsecured lender, which reads the business’s own trading and accounts. Each lender sets its own minimum trading period, and we take enquiries from companies with at least three months of trading.
One limitation. Where stock is bought from abroad on a proforma invoice with no order behind it, by a business trading for eight months, few lenders publish criteria that cover the case, and if none of them does we say so before any application goes in. Panel composition changes over time, and the lender makes its own decision either way.
Sources
- UK Finance: invoice finance and asset-based lending
- British Business Bank: Small Business Finance Markets
Each lender publishes its own criteria, and they change without notice.
Frequently asked questions
How quickly can I get stock funding?▼
Each short-term loan lender publishes its own decision time, and invoice finance takes longer to set up. Timings are the lenders' own and depend on the statements being ready on day one.
How much can I get for stock?▼
Each lender sizes its offer on the business's own figures: the stock, the turnover it supports and, on invoice finance, the ledger behind it.
What customers say
Trustpilot reviews are quoted as written on Trustpilot; case-study quotes link to the full story
“Great service very quick and efficient no messing or delay in payments, the funds were very much needed for my business to grow and it made a huge difference.”
Stock to buy? Start a funding enquiry.
Tell us what you need and we'll come back with options. A named person calls you back within one working day. We will receive commission from lenders, and nothing goes anywhere without your say-so.