- Who it's for
- UK Ltd companies, PLCs and LLPs buying stock or inventory for resale or production
- Typical amounts
- £10,000 up to £1,000,000, often linked to confirmed orders
- Typical terms
- 1 month to 12 months, often revolving
- Minimum turnover
- £100,000 a year to use Lending Box
- Security
- Usually secured against the stock and/or a personal guarantee
Indicative only. Subject to lender assessment and approval.
Who it's for
- Retailers and wholesalers buying stock ahead of a busy season, such as Christmas or back-to-school.
- Manufacturers and distributors needing to buy raw materials or finished goods before a confirmed sale completes.
- Businesses that have won a large order but need to fund the stock purchase before payment arrives from their customer.
- Companies whose cash is otherwise tied up in existing inventory, leaving little left over to fund the next purchase.
How it works
- 1You tell us about the stock purchase — the supplier, the cost, and the order or contract behind it.
- 2We match you to lenders who fund stock purchases, which may include specialist stock finance providers or lenders offering asset-based or trade-related facilities.
- 3If an offer is suitable, the lender typically pays your supplier directly, or advances funds against the purchase order or confirmed sale.
- 4You repay the facility as stock sells through, or over an agreed term, sometimes drawing it down again for the next order (a revolving facility).
How stock finance differs from a general business loan
A general unsecured loan is assessed mainly on your trading history and bank statements. Stock finance ties the funding, and often the lender's security, directly to the goods being bought.
- The lender may pay the supplier directly rather than releasing cash to your account.
- Repayment is often expected to track the sale of the stock, rather than following a simple fixed monthly schedule.
- The stock itself, and sometimes the receivables it generates once sold, can form part of the lender's security.
What lenders look at
Because the lender is backing goods that still need to be sold, they look closely at how quickly and reliably that's likely to happen.
- How quickly similar stock has sold in the past — sell-through rate matters more than it would for a general loan.
- Whether there's a confirmed order or contract behind the purchase, rather than speculative buying.
- The reliability and track record of the supplier.
- Your business's overall trading history and existing stock levels.
Stock finance and other working capital products
Stock finance is often used alongside, rather than instead of, other facilities.
- Invoice finance can fund the gap once goods are sold on credit terms, complementing stock finance that covers the purchase itself.
- A broader working capital facility may suit businesses with less predictable or less order-linked stock needs.
- Trade finance specifically covers paying overseas suppliers, which overlaps with stock finance for import-heavy businesses.
How a broker helps
Stock finance is a specialist corner of the market, and not every lender offers it in the same way. As a whole of market broker, we identify lenders suited to your type of stock, order size and sector, and help you put together the purchase orders and figures a lender will want to see.
Our service is free to your business. We're paid a commission or finder's fee by the lender if finance completes; see our Broker Terms for details.
Eligibility
- A UK limited company, PLC or LLP (not sole traders or partnerships).
- Annual turnover of at least £100,000.
- A confirmed supplier, purchase order, or sales contract behind the stock purchase, in most cases.
- A business bank account and trading history that supports the lender's assessment.
- Directors willing, in most cases, to give a personal guarantee.
Documents you'll need
- Supplier quotes or invoices for the stock being purchased.
- Purchase orders or sales contracts from your customers, where the stock relates to a confirmed order.
- 3–6 months of business bank statements.
- Latest filed accounts, and management accounts if your year-end was a while ago.
- Photo ID and proof of address for directors.
Advantages
- Lets you take on larger orders or seasonal buying without draining all your working capital.
- Can be structured around specific purchase orders, which some lenders find easier to assess than general working capital requests.
- Revolving facilities can be drawn down again as stock turns over, suiting businesses with regular purchasing cycles.
- Keeps cash free for other costs — wages, rent, marketing — while stock is being bought and sold.
Things to weigh up
- Lenders typically want to see that stock will sell reasonably quickly; slow-moving or perishable stock is harder to fund.
- Costs are usually higher than standard working capital finance, reflecting the risk the lender takes on unsold stock.
- Most facilities are secured against the stock itself and often a personal guarantee, so losses on unsold goods can still leave you liable.
- A confirmed order or strong sales history is usually needed; it's a difficult product for businesses buying speculative stock with no demand yet lined up.
Worked example (illustrative)
A homeware retailer has won a confirmed order from a national chain worth £150,000, but needs to pay its overseas supplier £60,000 upfront to produce the stock.
A stock finance lender agrees to pay the supplier directly, with the facility repaid once the retailer invoices the chain and is paid, over an agreed period of around 4 months.
Using the business loan calculator below, £60,000 over 4 months at an illustrative 2% a month works out at roughly £15,600 total repayment. The real cost depends entirely on the lender's assessment and facility structure.
Business loan calculator
Monthly repayment
£2,307.25
- Total repayment
- £55,373.91
- Total interest
- £5,373.91
Representative example: borrowing £50,000 over 24 months at 10% a year would cost £2,307.25 a month, £55,373.91 in total, including £5,373.91 interest.
Illustrative only. Your actual rate depends on your circumstances. Indicative only. Subject to lender assessment and approval.
Frequently asked questions
Related guides
Related funding
Lending Box helps UK businesses access business finance, working directly with businesses and their trusted advisers. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 or over, and terms and conditions apply. Guarantees and indemnities may be required. Lending Box can introduce applicants to a number of providers based on each applicant's circumstances and creditworthiness. We can also make insurance introductions. Lending Box will receive a commission or finder's fee for arranging such finance and insurance introductions. Broker Terms