Inventory finance, also called stock finance, is borrowing secured on your stock. The lender's security is the goods themselves, so it only works if your stock is something a lender could sell without you: finished goods with a resale market, already paid for, and countable in a warehouse somebody can visit. If that isn't your stock, or your facility would be too small to interest a stock lender, an unsecured business loan buys the same stock and never asks what it is.

The problem underneath is the one every business selling physical things knows. You pay for stock before you sell it, and the money leaves when you place the order, not when a customer walks in. The confusing part is the vocabulary: in the UK these two words get used for at least four different products, and only one of them is open to most of the companies searching for it.

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Four different products get sold as inventory finance

Which one you're offered depends on what your stock is and how big your company is. The four behave so differently that a provider saying yes to 'do you do stock finance?' tells you almost nothing on its own.

It's worth matching yourself against this before you talk to anyone, because three of the four rule most readers out:

The first one is inventory finance proper. Your stock becomes one asset class in a borrowing base: the lender sets a percentage against it, the amount you can draw rises as stock comes in and falls as it sells, and it sits alongside the same arrangement over your invoices and sometimes your plant and property. This is the version meant by lending against assets you already own, and it is the one with a minimum size.

Unit stocking is a different product with a confusingly similar name. Lombard describes it as 'an on-demand credit facility secured against individual units of stock', and the stock in question has a serial number: it serves the top 200 UK car and van dealer groups along with caravan, motorhome, holiday home, agriculture, recycling, and groundscare dealers. Novuna, which funds dealers the same way, lists a stock audit and balances that update as units move off the forecourt. If you're a dealer, that's the product you want, and a general business lender can't provide it – though we do fund motor and specialist dealers in other ways. 'Warehouse financing' belongs in the same family and isn't a synonym for inventory finance as a whole: it means lending against goods held under a warehouse receipt, with the warehouse operator party to the arrangement so the lender can reach them.

The fourth is the one you're most likely to be offered, and it's worth saying plainly. Several of the UK pages ranking for 'inventory finance' are selling an ordinary business loan: read past the heading and it's the lender's standard product, sometimes in a secured and an unsecured version, and your stock is not the security. That includes us. A business loan from us can buy stock, and we'd rather tell you that than dress it up as something it isn't.

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What a lender will lend against, and what it won't

Repaying a stock facility depends on selling the stock, so a lender only takes stock it could sell without you. That single test decides more applications than credit history does, and it rules out more than most people expect.

Stock passes when it's finished, countable, and wanted by somebody other than your own customers. It tends to fail when it is:

• Work in progress or raw materials, because a half-built order is worth little to anyone else
• Perishable, with a shelf life shorter than the facility
• Bespoke or own-branded, made for one customer who may not take it
• Already old, since lenders exclude stock that has sat beyond a set age

Nothing on that list is a sign of a weak business. A bakery, a joinery shop, and a brand midway through a season can all be healthy businesses, and none of them holds stock a lender would take as security. That's why 'can I get inventory finance?' often has a better answer than yes or no.

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Your stock is worth less to a lender than it is to you

You value stock at what you paid for it. A lender values it at what it would fetch if they had to sell it without your help, net of collecting, storing, and selling it. IGF, a UK lender that funds stock alongside invoices, advances up to 85% of eligible stock value, and the word doing the work in that sentence is 'eligible'. The percentage is generous; the number it's applied to is one you've probably never worked out, and it is well below your cost price.

That gap also explains the fees. Somebody independent has to put a value on the stock before the facility starts, and come back and do it again while it runs, and you pay for both. Nobody in the UK publishes a rate for stock finance, which is less evasive than it looks: the price depends on what the valuer finds.

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Stock you haven't paid for yet isn't yours to pledge

The stock you most want to finance is often the stock you haven't paid for, and that is the stock you may not be able to borrow against. Under section 19 of the Sale of Goods Act 1979, a seller can reserve the right of disposal, so that 'notwithstanding the delivery of the goods to the buyer… the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled'. Plenty of standard UK supply terms do exactly that.

A lender will therefore read your supplier contracts, and will usually fund only stock you've paid for outright or where the supplier has waived the clause in writing. If most of your warehouse is on terms you haven't settled yet, the eligible figure shrinks again. Worth checking your own supplier paperwork before you spend a fortnight on an application.

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Why most small companies never reach a stock facility

The published floors are high. IGF states the range it works in as £2m to £25m of funding need, and gives its scale as of March 2025: 130+ active clients with £3.9bn+ of combined annual turnover. Divide one by the other and the average client turns over about £30m. A list of UK inventory finance providers is easy to find, and mostly useless below that size: the smallest facility on the list is bigger than the whole amount most readers want to borrow.

There's a structural reason too, and it's in IGF's own description of its receivables facility: 'This is the core of every asset based lending solution we provide.' The stock leg rides on the sales ledger. Lenders want a repayment route they can see, and unpaid invoices from business customers are that route, which is why stock finance is usually sold on top of borrowing against unpaid invoices rather than on its own. Sell to consumers and you have no ledger to put underneath it.

Then there's what you sign. The security is a charge over your assets, registered against your company at Companies House, and under section 859A of the Companies Act 2006 it has to be delivered to the registrar within 21 days of being created. It's then public: your other suppliers and lenders can see it. If you already have a bank overdraft or term loan, that bank may have to agree to rank behind the new charge before anything completes, and a charge over the stock rarely comes on its own. Expect a request for a personal guarantee from at least one director too, whatever the stock is worth.

Practically, that means weeks rather than days. You'll be asked for audited and management accounts, a stock listing with ages and values line by line, your aged debtor and creditor reports, and your supplier terms. Then somebody comes and counts the stock. A facility that works like this cannot be arranged for an order you have to place on Friday.

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The other ways to fund stock, and when each one fits

Sort them by where your cash is actually stuck, because that decides which one works.

If it's stuck in unpaid invoices rather than in the warehouse, financing the ledger is far easier to arrange than a stock facility, for the reason above: the lender can see how it gets repaid. If it's stuck in one import, funding tied to a single shipment pays your supplier directly and is repaid when your customer pays you, though it only works for a trade you can document from end to end and can't fund a season of buying.

If one of your customers is large, ask whether they run a programme their suppliers can join to get paid early. You don't set those up; you get invited into one, and the price is set by your customer's credit rather than yours.

And one route costs nothing, which is why it's worth trying first: more time from the supplier. A supplier who wants the order will sometimes extend terms if you ask before you talk about price. If yours offers iwocaPay, you can pay now or spread the cost over 30 days, 3 months, or 12 months, and they're paid upfront either way.

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An unsecured loan buys the same stock without taking it as security

The advantage is about what you can do, not what it costs: nothing about your stock has to qualify. Not what it is, not how old it is, not whether you've paid for it, and not whether anybody else would buy it. The bakery, the joinery shop, and the brand midway through a season all fail a stock lender's test, and none of that matters here. There's no valuation, no stock listing by line, nobody visiting the warehouse, and no charge registered over the goods.

The second difference matters more than it sounds. A borrowing base moves with your stock levels, so the amount you can draw falls when stock sells or gets written down, sometimes without anybody making a decision. An iwoca Flexi-Loan is a business loan with flexible repayment options, so the limit is set on your trading and stays where it is. The flexibility sits on the repayment side instead, which is the side a stock cycle needs.

That's also why the timing works for a stock purchase. You have 30 days to draw down after approval, so the decision can come before you commit to the order and the money can arrive the week your supplier invoices. If the order falls through there's no penalty for not drawing it, and you can ask for a top-up if it grows.

You can borrow £1,000 to £1m, and you choose a fixed term of between 12 months and five years, so you know the repayment schedule from the outset. Because there's no fee for repaying early, you can clear it as soon as the stock sells – many of our customers only take out our finance for a few weeks, or even days.

We lend to UK limited companies, and every new Flexi-Loan needs a personal guarantee from at least one director. A decision is made within 24 hours, but it might be longer depending on the complexity of the request. A quick decision isn't a light one: we look at your revenue and what your business can afford to repay before we make an offer, and our credit team reviews larger or more complex applications.

It isn't the better answer for everyone. If you hold several million pounds of finished, non-perishable, and resaleable stock and you invoice business customers, a facility secured against the stock and the ledger will give you a bigger line than we can and will flex with your stock levels as you'd want it to. And no loan fixes the underlying problem if the stock you'd be funding is the stock that didn't sell last season.

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Working out how much you need, and for how long

Two numbers from your supplier set the gap, and neither of them is the season. The first is the lead time: if an order takes eight weeks to make and four weeks to ship, the money leaves three months before the first unit can be sold, and the deposit usually leaves on the day you place it. The second is the minimum order quantity, which decides how much cash you commit per line whether you wanted that much stock or not.

Put the two together and you have the amount you need and the rough length of the gap, which is all a lender wants from you and all you need to decide whether it's worth it. The other half of the sum is how fast the stock turns once it lands – how long your cash stays tied up in stock is the number that tells you when the money comes back, and it's worth working out before you borrow against it rather than after.