Swiftstead Commercial Capital, a small-business funding broker in St. Cloud, Minnesota, arranges inventory financing through lending partners for retailers, wholesalers and other businesses that carry stock. The partner pays for goods up front, usually secured by that stock, and the balance is paid down as it sells. Partners review sales history, margins and stock turnover and set the terms.
| What it is | Stock purchases, with the stock as security |
|---|---|
| Repayment | Reduced as goods sell, or on a fixed calendar |
| Stearns County retail | 635 employer establishments, 11,013 employees (CBP 2023) |
| Stearns County wholesale | 197 employer establishments (CBP 2023) |
| Who decides | The lending partner |
How inventory financing works
You place an order; the partner pays the supplier or advances funds against the invoice. The inventory secures the balance. You repay either as items sell, on a fixed schedule, or with a payoff when a particular shipment is sold. Partners usually advance only part of the stock's value, because a forced sale of inventory rarely fetches full price.
Collateral and the UCC filing
Most inventory financing comes with a UCC financing statement, a public notice filed with the state that the partner has a security interest in the goods. It may cover only the financed stock or all inventory. Ask which, because a broad filing can block another partner from lending against the same goods. Some partners also check stock counts or ask for regular inventory reports.
Floor plan financing, defined
Floor plan financing is a form of inventory financing used by dealers of high-value units such as equipment or vehicles. Every unit carries its own balance, cleared when that particular unit is sold. For example, a dealer with three machines on the lot carries three separate balances; when one sells, that balance is paid and the other two continue, often with curtailment payments if a unit sits too long. Partners audit the lot to confirm the units are there.
Inventory financing versus a credit line or working capital
For repeat stock purchases, a line of credit may be more flexible, since you draw when an order is due and repay as sales come in. For a single, large purchase tied to a specific season or contract, inventory financing ties the funding to the goods. Online sellers whose stock sits in a third-party warehouse can use inventory financing too, though some partners want to know exactly where the goods are held. The comparison table covers all six structures.
Turnover, worked by hand
Before asking for inventory financing, work out how long stock actually sits. Divide what the goods cost you over the past year by the average value of stock on hand; the result is how many times inventory turned. Divide 365 by that number for the average days an item waits before it sells. If an offer expects to be paid down in 90 days and your goods average 150 days on the shelf, the payments will come out of other cash, and the structure is wrong for that stock.
Run the sum separately for fast and slow lines. A store selling both everyday items and seasonal or special-order goods may want financing only for the slow lines and to pay for fast movers from sales.
Before you sign
- Which goods does the lien cover: this order, or everything on the floor?
- Is repayment tied to sales, to a fixed schedule, or to a deadline per shipment?
- What happens to items that have not sold by the deadline?
- Will the partner inspect or count stock, and how often?
- Are there charges per draw or per shipment on top of interest?
Retail and wholesale in Stearns County, MN
Retail trade had 635 employer establishments in Stearns County in 2023, more than any other sector, with 11,013 paid employees and about $406.2 million in annual payroll; 36.7 percent of those stores had fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Wholesale trade added 197 establishments and 4,191 employees. The office ZIP, 56301, alone had 220 retail establishments (ZIP Code Business Patterns 2023). The office ZIP and county data break those counts down, the sector overview covers retail alongside the trades, restaurants and clinics, and our post on leasing retail space in St. Cloud, MN covers the stock and the fit-out together.
What partners review
- Sales history and how fast stock turns over.
- Gross margins by product line.
- The supplier order or invoice.
- Existing liens on inventory and receivables.
- Bank statements and owners' credit.
How a request moves lays out each step from the first call.
By Swiftstead Commercial Capital · Updated