Inventory financing is business funding used to buy stock, typically secured by that inventory and repaid as the goods sell or on a fixed schedule. Oakridge Business Loans, a small-business funding broker in Bellingham, WA, helps Whatcom County retailers and wholesalers prepare inventory requests for lending partners, which make credit decisions and set rates and terms.
| Suited to | Goods paid for before customers buy them |
|---|---|
| Security | Usually the inventory itself, recorded by a UCC filing |
| Variants | Inventory loans, inventory lines, floor plan financing |
| Whatcom County context | 793 retail and 296 wholesale employer establishments (Census CBP 2023) |
| Who decides | A lending partner; never Oakridge Business Loans |
| Office | 1302 Commercial St, Bellingham, WA 98225 · (360) 370-4248 |
How inventory financing works
The partner advances money to buy stock and takes a security interest in that stock. Because inventory loses value if it does not sell, partners usually advance less than the full cost and care a great deal about what the goods are: packaged products with steady demand are easier to lend against than perishables, fashion items or custom parts.
It comes in three common shapes. An inventory loan is a lump sum for a specific purchase, repaid on a schedule. An inventory line works like a line of credit with a borrowing limit tied to the value of eligible stock. Floor plan financing funds individual high-value units, such as vehicles, boats or large equipment held for sale, and each unit's balance is paid off when that unit sells.
A floor plan financing example
An illustration, not a real client or offer. A dealer of trailers and small equipment in Whatcom County takes delivery of a batch of units. The floor plan partner pays the manufacturer and records each unit by serial number. When a unit sells, the dealer repays that unit's balance plus the interest and fees that have built up. Units that sit too long may need to be paid down on a curtailment schedule, and the partner will check stock on site or by audit from time to time.
Floor plan requirements usually include an established relationship with the manufacturer or supplier, reliable records of stock by unit, insurance on the goods and permission for the partner to inspect them.
Collateral and the UCC filing
Most inventory financing is documented with a UCC-1 financing statement, a public notice that the partner has a security interest in your inventory. It is filed with the state, and later lenders who search the records will see it. That matters for future borrowing: a second lender may be unwilling to finance against stock that is already pledged. Ask whether the filing will cover only the financed inventory or all business assets.
Inventory financing, factoring or a line of credit
| Inventory financing | Invoice factoring | Line of credit | |
|---|---|---|---|
| What is financed | Goods not yet sold | Invoices for goods already sold | Any business cost, within the limit |
| Security | The inventory | The invoices, which are sold or pledged | Varies; often a general lien |
| Repaid from | Sale of the goods, or a schedule | Customer payments on the invoices | Business cash flow |
| Suited to | Retailers and dealers buying ahead | Businesses selling to other businesses on terms | Mixed, recurring needs |
Inventory financing funds the shelf; factoring funds the receivable after the sale. A business that sells on 30- or 60-day terms might use both at different points in the same cycle. When needs are mixed and unpredictable, a business line of credit may be simpler than either.
Whatcom County, WA retailers and wholesalers
Whatcom County had 793 retail employer establishments in 2023, employing 11,198 people with an annual payroll of about $424.9 million, and 296 wholesale employer establishments employing 2,962 (U.S. Census Bureau, County Business Patterns 2023). Retailers here tend to be larger than the average local employer: 44.6 percent had fewer than five employees, compared with 58.1 percent of all Whatcom County employers (same source). A further 1,242 retail businesses operated without paid employees in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024); that figure comes from another Census program and is kept apart.
Those businesses face the same basic timing problem: stock is paid for before it earns anything. The retail page looks at how store owners use each funding type, and the sector overview covers wholesale distribution alongside other industries.
What partners review
Expect to provide recent bank statements, an inventory report showing what you hold and how fast it turns, supplier invoices or purchase orders for the stock to be financed, and financial statements. A partner will weigh how quickly the goods sell, how easily they could be resold if needed, and the business's revenue and existing debt. The request process and the local business picture fill in the rest.
By Oakridge Business Loans · Updated