Inventory Financing


As an ecommerce seller, you’ve likely heard a thing or two about inventory financing. What’s true and what’s fable? Before you embark on your own financing search, we want to help you get a few things straight so you can make the right decisions for your business and its growth.

With that, here are 5 myths and truths about inventory financing:

Myth #1: Business financing is the same as personal debt.

Truth: Business financing is completely different than personal debt.

inventory financing

On one hand, business financing is a tool for growth. Business lenders want to see that your business is showing promise before they’ll even approve your application. Moreover, in many cases, they will also want to know what you’ll use their funds for. And because you need business financing for a specific use-case — like buying bulk inventory at a discount to maximize your margins or launching a marketing campaign to boost sales — you can be confident that your investment will pay off.

Meanwhile, personal debt doesn’t take your business into account at all. And, if not used responsibly, could put you into serious financial trouble.

Myth #2: You shouldn’t have to take out financing to buy inventory.

Truth: In actuality, buying inventory is the perfect use-case for financing.

inventory financing

This is especially true when you experience payout delays that limit your ability to turn inventory quickly or consistently.

With financing, you can buy inventory in real-time / as you need it. This means that you never experience a stockout or its money-losing consequences like forfeited sales or account suspension. Not only that, but you can also take advantage of that flash inventory sale your supplier is running (you know, the one that will help you increase your margins and make more money).

At the end of the day, you stand to lose more money if you only buy inventory when you get your marketplace payouts — and in many cases, this ends up being more expensive than the actual cost of financing.

Myth #3: It’s never a good idea to use more than one financing option simultaneously.

Truth: As long as you use them responsibly, it’s totally fine to take on different forms of debt.

inventory financing

In some cases, debt can actually be beneficial to your business’s growth. Think about it. There are different types of financing options that work well for different financing needs. For example:

  • Short-term need: You want to buy inventory at a discount and turn it for a quick profit.
  • Long-term need: You need to invest in a new product launch, covering everything from research to testing to production and more.
  • No immediate need: You may not have a specific need right now, but you want to be prepared for one should it arise unexpectedly.
  • Seasonal: Your business does really well at certain times of year and you’ll need a solution designed with this seasonality in mind.

Whatever the reason, you’ll want a financing solution that is designed for it, both in terms of amount, payout options, re-payment terms, and the like.

Myth #4: Interest and fees are the only costs associated with financing.

Truth: In addition to interest and fees, there are other financing costs to consider.

inventory financing

Many of these costs don’t have anything to do with money. For example:

  • Stress: If you need another reason to avoid using personal debt for your business (see Myth #1), consider the stress associated with using a home equity loan. If something goes wrong with your business and you can’t make payments in full or on time, you could lose more than your business — you could lose your home as well.
  • Time: Between finding the right lender for your business, filling out applications, and waiting for decisions and funding, the overall financing process can be long and tedious. Make sure you find a solution that respects your time so you can go back to running and growing your business. (PS: such a solution exists — see next section.)

At the end of the day, you want to look at your financing investment from all angles to ensure that it’s the right one for your wallet, your sanity and your time.

Myth #5: You need to have a big established business in order to get financing.

Truth: There are a variety of lenders that provide financing to small and online businesses.

inventory financing

Many of these lenders don’t even require a credit check. In fact, some are designed specifically for marketplace sellers, like Payability.

Payability offers a variety of cash flow solutions, provides funding in as fast as 24 hours, and makes decisions without ever running your credit. So, whether you are looking for a large lump sum of cash, need daily payments, or want on-the-go access (or a combination of all three), consider Payability. Learn more about these faster-growing sellers and how you can join their ranks at and get a $200 sign on bonus.

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