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Most small businesses carry inventory of some kind. And most small businesses need small business loans to finance that inventory.

For your company, inventory might be parts you manufacture for other businesses. Or it might be things you produce to sell directly to consumers. Or it might be merchandise you purchase to re-sell to customers as part of the services your business offers. Sod for your landscape business, for example. All inventory has one thing in common. You have to shell out money for it before you can generate any income from it.In a perfect world, you could always pay cash for fresh inventory. Simply by dipping into your cash reserves.

If you laughed when you read that, I understand. No small business operates in a perfect world. Building up cash reserves is important. But it’s not easy. Your cash flow is too unpredictable. This situation is an ongoing fact of life for most small businesses. Insufficient cash flow presents a serious challenge when you need inventory. Sometimes, it can feel like an insurmountable hurdle. What a relief to know there are small business loans that solve this problem.


There are two types of inventory:

  1. Items that sell fairly consistently, year round. You have an ongoing need to replenish these items, so you don’t run out. With inconsistent cash flow, that can put pressure on your ability to pay other bills. Or, say you’re a manufacturer. You’re shipping a large order. But you haven’t been paid. Yet you need more supplies to make more goods.
  2. Seasonal items. Seasonality presents one of the toughest challenges for small business owners. You need to stock up for the upcoming season. That might be your new spring line, back-to-school giveaways for your dental office, or snow tires and chains for your auto repair shop. Typically you have to order these items months in advance. You have to pay for them up front, when you order. Or shortly after that. But maybe right now is your slow season. You don’t have the revenue to pay for that extra inventory.

Bad credit increases the pressure.

You can’t operate your business without inventory. But what if your business has bad credit? That isn’t unusual for small businesses. But it means your vendors may be even more demanding about up-front payment.

Here at UCS, we understand. We are experienced working with small businesses in your position.  And nobody knows the lending landscape better than we do. I’m happy to say there are small business loans to help you finance your inventory. We’ll match you with the right one. Quickly and efficiently.


To some extent, the best financing choices depend on what kind of inventory you stock. And the total value. Business credit cards may be appropriate to purchase less expensive inventory. For example, spa and salon supplies and retail products. Or F&B inventory your restaurant, bar or catering operation.  Expensive items or high volumes that cost more are better suited to other types of financing.

Business loans from a bank don’t make sense for inventory financing. Even if your business qualifies. Banks prefer to loan large amounts of money – more than most inventory needs. And it takes years to repay. You need something with a shorter “turn.” Financing that matches your sales cycle. That might be any of these alternatives:

  • Vendor financing. Often, suppliers will give you 30 to 60 days to pay. This can ease your cash flow. However, it still may not cover your business cycle. This happens when the inventory you’re buying today won’t sell until farther in the future.
  • Business credit cards or a business line of credit. You can spend up to your limit. The faster you repay, the less interest expense you’ll incur. Your business should already have these options in place. They can be a godsend if a sudden opportunity appears. For instance, a vendor is offering a time-sensitive discount.
  • Short-term business loans. Typically you’ll have 6 to 12 months to repay. That’s a better fit than a long-term loan.
  • Merchant cash advance. I recently wrote about how merchant cash advances can help beauty salons and spas finance their inventory. Give this article a read, even if you’re in another line of business.
  • Accounts receivable factoring. By selling your receivables. You get the money right away.
  • Family or friends. This is not the best idea, unless you’re at wit’s end. Call United Capital Source first. We can help you find a much more comfortable solution.
  • Personal investment. Putting some skin in the game shows you believe in your business. If it’s an inventory emergency, putting up your own money may be OK as a one-time option. But your business needs to stand on its own in order to grow and thrive. Again, calling UCS instead will give you a much better long-term solution.


Using small business loans to finance inventory can be a strategic management tactic. Borrowing the money leaves cash in your pocket. That helps smooth monthly cash flow. The key is understanding the total cost of financing.

My advice is, get a handle on your inventory. That starts with knowing what you have on hand. And how quickly it’s likely to sell. That way you’ll know how much inventory you need. That can be a balancing act. You don’t want to turn customers away. But you don’t want to be sitting on too much unsold product. And in some instances, re-stocking does not make financial sense. Maybe you could you use the money more effectively for something else. So do the math. Remember that unsold inventory carries other costs such as taxes and warehousing.

Managing this vital resource is critical for business growth and profitability. That’s true whether you own a salon, a boutique, a construction firm, or an eye clinic. If you need new inventory and you don’t have the cash, small business loans can help. Give us a call. We’ll find you the best one to keep your business moving forward.

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