Inventory financing is funding for goods bought ahead of sale, usually secured by that inventory. Brookmont Funding, a small-business funding broker in Terre Haute, Indiana, explains how it works, what floor plan financing means and how liens are recorded, for Vigo County retailers and wholesalers, then introduces requests to lending partners, which decide and set every rate and term.
| Purpose | Stock bought before customers pay for it |
|---|---|
| Collateral | The inventory itself, often with a general lien |
| Repayment | Paid down as items sell, or on a set calendar |
| Public record | A UCC financing statement is commonly filed |
| Vigo County context | 392 retail employer establishments in 2023 (CBP) |
How inventory financing works
A partner puts up money against goods you are about to buy or already have on the shelf. Because goods lose value if they do not sell, partners usually lend only part of what the inventory cost, and they want to know how fast it turns. As items sell, the business repays; some structures sweep a share of each sale, others run on a fixed schedule like a short-term loan.
Expect the partner to ask for an inventory list, recent purchase invoices, sales history by product line and a description of how stock is tracked. Clean records are the single biggest help.
Retail and wholesale in Vigo County, Indiana
Retail trade had 392 employer establishments in Vigo County in 2023, employing 6,138 people, with 136 of those stores under five employees (U.S. Census Bureau, County Business Patterns 2023). Wholesale trade added 90 establishments. Another 531 retail businesses operated with no paid staff in 2024 (Nonemployer Statistics 2024), a separate count from a different program and year.
Around our own address, retail was the most common sector in ZIP code 47807, with 74 of the ZIP's 502 employer establishments in 2023 (Census ZIP Business Patterns). The Terre Haute, IN page has the rest of the ZIP's mix.
Floor plan financing, explained
Floor plan financing is a form of inventory financing for high-value items sold one by one, each identified by a serial number. The partner pays the supplier for each unit, the dealer repays that unit's advance when it sells, and the partner audits the floor from time to time to check that unsold units are still there. It is common for dealers of vehicles, boats and large equipment. Smaller stores with many low-value items more often use a general inventory line.
How partners value your stock
A partner does not value inventory at what you paid for it. It looks at what the goods would fetch if it had to sell them quickly, and that depends on the product. Finished goods with a ready market, such as branded hardware or auto parts, are valued more generously than perishables, seasonal fashion or custom stock that only one buyer wants. Slow-moving or obsolete lines may be excluded altogether.
Expect the partner to ask how inventory is counted and how often, whether the business uses a point-of-sale or inventory system, and how much stock is held on consignment or already promised to customers. Accurate counts are often the difference between a workable advance rate and a disappointing one.
Liens and the UCC filing
Because the inventory secures the funding, the partner usually files a UCC financing statement giving public notice of its interest. That filing shows up when the next lender searches your business name, and it can limit your ability to pledge the same stock elsewhere. Our Indiana UCC guide explains how to check what is already on record before you apply.
Inventory financing, factoring or a credit line?
| Inventory financing | Invoice factoring | Line of credit | |
|---|---|---|---|
| Based on | Goods not yet sold | Invoices already issued | The business's overall credit |
| Suits | Stores and distributors buying ahead | Firms selling on account to other businesses | Recurring, varied costs |
| Collateral | The inventory | The receivables | A general lien or none |
Factoring turns unpaid invoices into cash and is a different product; Brookmont Funding does not arrange it. If stock purchases are steady and modest, a revolving line may cost less and be simpler to manage.
Wholesalers and distributors
Wholesale trade had 90 employer establishments in Vigo County in 2023, 27 of them with fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Distributors usually hold larger stock and sell on account to other businesses, so their funding questions straddle inventory and receivables: the stock before it ships, and the invoice after. Partners often look at both together.
Before you finance stock
- Know your turnover by product line: slow lines tie up funding
- Check that suppliers' terms do not already cover the gap
- Search for existing liens on your inventory
- Ask how often the partner audits or requests stock reports
- Compare the total cost with the margin on the goods
See all six options, how local sectors use them, or the steps after your call.
By Brookmont Funding · Updated