An inventory line of credit is a larger, committed facility, so the process looks different from a short-term loan. Knowing what's coming - the paperwork, the appraisal, and the timeline - makes it easier to plan around. Here's how it typically goes.

It Starts With a Conversation

After you apply, a lending specialist will be in touch within one business day to talk through your goals and match you with the right lending program. Applying is free and commits you to nothing, though it doesn't guarantee an offer. Inventory line of credit applications typically don't involve a credit pull, though a lender may still run one.

Inventory lines start at $2 Million. As a rule of thumb, you'll want at least $2.5 Million to $4 Million of inventory at cost to qualify.

The Documents You'll Need

Because these are larger facilities, lenders look more closely. You'll receive a checklist of exactly what's needed, and you can expect to provide:

  • A detailed inventory report by item and cost, in Excel
  • Your year-end financial statements for the last three years, or for as long as you've been in business
  • Year-to-date financials compared with the same period last year
  • 12-month projections
  • Current receivable and payable agings
  • A personal financial statement for each owner of 20% or more

From Term Sheet to Closing

Once you've sent your application and financials, the lender typically responds with a term sheet within a couple of days. After you sign it, underwriting begins, including an independent appraisal and field exam of your inventory.

The line is typically 50% to 80% of what your inventory cost you, based on what it would bring in an orderly sale, and the independent appraisal sets the final number. Closing typically takes a month or more, so it pays to start well before you need the capital.

What to Review Before You Sign

You'll see the proposed terms before you agree to anything, and nothing is binding until you choose to sign. A few points are worth knowing ahead of time:

  • A personal guarantee typically isn't required, though a lender may still ask for one
  • Owners do sign a validity guarantee, a simple promise that the inventory and financial information they provide is accurate
  • These are committed facilities, typically for 3 years, and a declining fee applies if you close the line early
  • Your inventory is typically reappraised once a year by an independent appraisal company, at your expense
  • Upfront, closing, and annual fees can apply, and all are listed in our Lending Products menu

If you're deciding whether this structure fits your business, our Lending Products menu has the full breakdown of terms and our FAQs cover the most common questions, or you can Apply Now to start the conversation.