Canyonhill Advances, a small-business funding service in Mankato, Minnesota, explains inventory financing: funding for wholesale orders and shelf stock bought before they sell, usually secured by the goods. The page covers purchasing inventory, inventory management records, the request form and Blue Earth County, MN retail and wholesale counts from the Census Bureau.
At a glance
- Retail trade employer establishments, Blue Earth County, MN
280 (CBP 2023)
- Wholesale trade employer establishments
89 (CBP 2023)
- Retail trade employees, March 2023
5,953 (CBP 2023)
How inventory financing works when the goods are the collateral
A partner advances part of the cost of goods you are buying or already hold, using the goods as collateral. As the goods sell, the funding is paid down. Because the collateral can lose value or sit unsold, partners usually advance less than the full cost and look closely at how many days the goods take to sell.
Business loan to purchase inventory for Blue Earth County, MN businesses
Blue Earth County, MN had 280 retail trade and 89 wholesale trade employer establishments in 2023, with 5,953 and 1,010 employees respectively (CBP 2023). Stores and distributors both buy before they sell. A loan to purchase inventory is sized to the order and repaid from its sales.
A partner reading the request wants the purchase order or supplier quote, the sales history for similar goods, and the margin the goods are expected to earn.
Financing for inventory for Blue Earth County, MN businesses
Financing can take a few forms: a loan against a specific order, a revolving facility secured by the stock on hand, or a line of credit drawn for purchases. Which fits depends on whether the purchases are occasional and large or steady and small.
Business loan to buy inventory: what Mankato, MN owners should know
- The goods may be pledged; read what happens if they do not sell.
- Partners may limit how much they advance against slow-moving or perishable stock.
- Payments that start before the goods arrive strain cash; ask when payments begin.
- Compare the total dollar cost against the margin the goods will earn.
Financing for inventory management around Mankato, MN
Good inventory records give a partner something solid to review. A partner may ask for an inventory report by item or category, turnover figures, and an aging report showing how long stock has been held. Point-of-sale or accounting software usually produces these. Clear records also help the owner decide how much to buy in the first place.
Inventory loan form in Mankato, MN
One request form serves every structure Canyonhill covers: full name, phone, email, company name if you have one, and three range picks for time in business, annual revenue and the amount requested. On the follow-up call, describe the goods, the supplier, the order size and how many weeks similar stock took to sell. Bring the supplier quote to a call at (507) 361-5031, or attach the details to the request form.
Business loans for inventory for Blue Earth County, MN businesses
Illustration only, invented figures: a hardware and garden store places a $45,000 order for stock it expects to sell over about 90 days at a 35% margin. If the goods sell as planned, they bring in about $69,231 (our arithmetic: $45,000 / 0.65), leaving about $24,231 in gross margin to cover the funding cost and overheads. If the partner advances 80% of the order, the store still puts in $9,000 of its own (our arithmetic: 20% of $45,000).
Turnover: the number partners watch on an inventory request
Inventory turnover measures how many times a year the stock on hand is sold and replaced. It is the cost of goods sold for the year divided by the average inventory held. A store that sells $600,000 of goods at cost while holding an average of $100,000 of stock turns it six times a year (illustration only, invented figures; our arithmetic: 600,000 / 100,000), or roughly every two months.
A partner uses turnover to judge how soon the collateral turns back into cash. Slow-moving categories may be advanced at a lower share of cost or left out. Break the request down by category if some lines sell much faster than others.
Wholesale and distribution orders in Blue Earth County, MN
Wholesale businesses buy in larger lots and sell on terms to other businesses, so their gap has two parts: the time the goods sit in the warehouse and the time customers take to pay. Of Blue Earth County, MN's 89 wholesale trade employer establishments in 2023, 38.2% had fewer than five employees (CBP 2023). For a distributor, a request may combine inventory financing for the order with a line of credit for the receivables that follow.
- Supplier quote or purchase order with delivery dates.
- Customer orders or contracts the goods are meant to fill.
- Receivables aging, showing how promptly customers pay.
- Inventory reports by category.
Floor plans and dealer stock
Dealers of vehicles, equipment or large appliances can use a floor plan: a revolving facility where each unit is financed when it arrives and paid off when it sells. The partner may audit the lot periodically to confirm the units are there. Floor plans are a specialized form of inventory financing; ask any partner how curtailment payments work if a unit sits unsold.
When inventory financing is not the right fit
If the need is wages or rent rather than goods, working capital is closer. If the stock moves slowly, financing it can tie up cash for longer than planned. Notes for stores, stations and dealerships are on the industry pages, and the funding comparison covers all six structures. Blue Earth County, MN store counts sit on the Mankato, MN page.
By Canyonhill Advances · Updated