Revolving credit, sized to how your inventory sells.
Short-term revolving capital for buying inventory when it’s needed: structured around your sales, your turns, and your suppliers’ calendars.
When your shelves fall out of sync with your customers, the cost is rarely just the missed sale. It can be the customer, and sometimes the reputation. Most product businesses fund inventory from cash flow alone, so one interruption ripples into the next buying cycle. Capital Source has been funding businesses since 2015 and manages over $500 million in active funding programs, and an inventory line of credit is one of the structures we reach for most when a business lives and dies by what’s in stock.
What is an inventory line of credit?
An inventory line of credit is short-term revolving credit designed to help your business buy the inventory it needs, when it needs it, with your on-hand or purchased inventory serving as collateral and the line sized to the strength of your sales. You draw against the line when stock needs to be bought, repay as it sells through, and draw again for the next cycle. That control matters: you decide how much to borrow, and the discipline is to borrow only what you expect to repay quickly.
Because availability is there when demand is, the line works as just-in-time capital. It’s designed so a stockout doesn’t have to be the answer you give a customer, and more of your own capital stays working in the business instead of sitting on a shelf.
Who is an inventory line of credit for?
Retailers, wholesalers, distributors, and any product business with real inventory turns. If your revenue depends on having the right stock at the right time, the line is built for you. That includes restaurants and e-commerce operators, where a stockout doesn’t just cost a sale; it sends a customer to whoever does have it. The common thread is turnover: inventory that moves, sells, and converts back to cash on a rhythm you can point to.
When does an inventory line make the most sense?
Restocking ahead of a heavy season
Build inventory before your strongest sales window instead of rationing it, then repay the draw as the season converts stock into revenue.
Smoothing cash flow and operating costs
A flexible source of capital that built to absorb the gap between paying for inventory and getting paid for it, so operating expenses and restocking aren’t fighting over the same dollars.
A discount buy worth taking
When a supplier offers a major inventory purchase at a steep discount, the line lets you act on the opportunity without draining the operating account.
Supplier payment timing
Pay suppliers on their schedule, even when it lands before your customers pay you, and keep the relationships and terms that come with paying on time.
What does it take to qualify?
We look first at your sales track record and projections, not at credit alone. That’s how we measure the real risk: whether the inventory you buy will sell through. Credit history matters less than sales performance, and we underwrite beyond FICO, so a business with strong sales can qualify even when the score alone would give a bank pause. There are no SIC-code restrictions; your industry shapes the structure, not the answer.
Inventory management readiness counts too. Expect us to look for an effective inventory management system, accurate business records and a reliable account of total inventory, and a warehouse that is properly structured and maintained. Plan for an onsite audit, sometimes called a field exam, before the line is finalized. All financing is subject to underwriting, and we’ll tell you up front what we need.
Is an inventory line right for your business?
Turns are the honest test. A business with strong sales and high inventory turnover can profit from a well-managed line, because draws convert to revenue fast enough to repay and redraw. A business with weak sales or slow-moving inventory can find the same line a burden: the balance lingers, the cost compounds, and the structure works against you. Our rule is simple: borrow what you can repay quickly. If a revolving line isn’t the right shape for your situation, we’ll say so and point you to a structure that is.
How the process works
Start with the online application or a conversation with our Deal Desk. We review your sales history, projections, and inventory records, and decisions can come as fast as 24 to 48 hours once we have what we need. A field exam typically follows, then the line is established and you draw as inventory needs arise, repaying as stock sells through.
Capital that moves at the speed of your shelves.
Tell us how your inventory sells and we’ll structure availability around it, cycle after cycle.
Match Funding to Inventory Turns
Support Your Next Inventory Cycle
Related structures
If your need is a larger, one-time inventory position rather than a revolving cycle, see our inventory financing structures. For the broader picture of how we fund the gap between paying for the work and getting paid for it, start at working capital, or compare the general-purpose business line of credit. And for a worked example of seasonal inventory pressure, read our insight on financing a candle manufacturer’s seasonal build.
Frequently asked questions
How is an inventory line of credit sized?
The line is sized to the strength of your sales, not to a formula applied from a distance. We review your sales track record, your projections, and how quickly inventory turns, then structure availability around what the business can realistically sell through and repay.
What if my credit isn’t great?
Credit history matters less than sales performance. We underwrite beyond FICO, looking first at your sales track record and projections, so a strong-selling business can qualify even when the score alone would give a bank pause. All financing remains subject to underwriting.
How do draws and repayment work?
You draw against the line when inventory needs to be purchased, repay as that inventory sells through, and draw again for the next cycle. You control how much you borrow, and the discipline is to borrow only what you expect to repay quickly.
What does the inventory audit involve?
Expect a field exam: an onsite review of your inventory, records, and warehouse. We look for an effective inventory management system, accurate counts and business records, and a properly structured and maintained facility. Being ready for that visit shortens the path to a decision.
How is an inventory line different from a general business line of credit?
An inventory line of credit is collateralized by your inventory and sized to your sales, which makes it purpose-built for stocking, restocking, and supplier payments. A general business line of credit is broader working capital for any gap between income and expenses. If your need is wider than inventory, the general line may be the better structure.
Strong sales deserve stocked shelves.
Show us how your inventory turns and we’ll structure a line around it. No pressure, just a clear read on what fits.
See What Your Business May Qualify For
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