UK stock finance and inventory funding

When stock finance is the right product

Stock finance is the right answer when the money is needed for inventory and the inventory itself drives the repayment. Three patterns dominate UK SMB usage:

• Pre-season buy-in. Retailers and wholesalers buying winter stock in August to sell from October to December. The cash goes out three months before it comes back. Stock finance bridges the gap.
• Bulk-buy discount. Supplier offers a 10% to 15% discount for paying in advance or buying a larger lot. Stock finance arbitrages the discount against the finance cost; if the discount exceeds the finance cost, the deal pays for itself.
• Marketplace replenishment. Amazon FBA and Shopify sellers funding the next stock cycle out of the last one, smoothing out the working-capital cycle so stockouts do not happen.

Where stock finance is the wrong answer: long-life equipment (use asset finance, see /by-product/asset-finance/), unpaid invoices (use invoice finance, covered on our sister site MarketInvoice), or general working capital not linked to a specific stock cycle (use a flexi-loan, see iwoca).

Structure 1: stock-purchase term loan

A standard unsecured term loan with the use-of-proceeds defined as stock purchase. Cleanest structure, most familiar to underwriters, but constrained by the same eligibility criteria as any UK SMB term loan: two years of filed accounts, clean credit, turnover above £100k.

Typical UK pricing for the stock-purchase use case: 7% to 15% APR depending on credit profile and ticket size. Term is usually six to 24 months because the stock cycle pays it off; longer terms are available but the cashflow logic argues against them.

UK lenders that engage on stock-purchase term loans:

• Funding Circle, £10k to £500k, six months to six years, 6.9% to 26.9% APR. Two years of filed accounts required.
• iwoca, flexi-loan structure works well for stock buy-in because you only pay interest on what you draw. From 2% per month on drawn balance.
• 365 Business Finance, £10k to £500k MCA + term loan structure. Strong for retail with card flow.
• Allica Bank, £150k+ for established Ltd companies wanting bank-issued stock-purchase finance.

Structure 2: trade finance lines (pay-supplier-direct)

Trade finance is purpose-built for international or domestic stock purchase. The lender pays your supplier directly under a Letter of Credit or open-account structure. You repay 60 to 180 days later, once the stock has been received, sold and the customer has paid. The lender is paying for the stock, not just lending you money.

UK SMB trade finance providers:

• Bibby Financial Services, the largest UK SMB trade and invoice finance specialist. Trade finance lines from £25k.
• FGI Finance, international factoring and trade finance. Strong for cross-border supplier transactions.
• Sterling Trade Finance, brand absorbed but the team and panel run on. Specialist trade-finance underwriting.
• TradeRiver, trade finance via revolving purchase facility. Up to £2.5m, draws against approved suppliers.
• IGF Invoice Finance, asset-based lending including stock and inventory financing as part of a wider facility.

Trade finance pricing typically lands at 1% to 2% per 30 days of advance, depending on supplier risk and your credit profile. For repeat-supplier relationships under an established line, pricing is lower and the line revolves automatically as transactions complete.

Cross-link: trade finance overlaps materially with asset-based lending. See our asset finance hub for the equipment-side product and our lender reviews for the named providers above.

Structure 3: MCA against retail card flow as stock funding

Merchant cash advance is most often discussed as a working-capital product but it is heavily used as stock funding by UK retailers and hospitality operators. The mechanic is straightforward: the MCA lends you the stock-buy-in cost, repaid as a percentage of card sales over the next three to nine months. The stock generates the card flow that repays the advance.

Why retailers reach for MCA over a term loan:

• Sub-2-year traders qualify on six months of card-machine history. Term loans typically need two years of filed accounts.
• Repayment scales with takings. A bad week pays less; a strong week pays more. Useful for seasonal stock cycles.
• Same-day decision and funding on accepted applications. Stock buy-in is often time-sensitive.

UK MCA providers underwriting stock-purchase use cases:

• Capify, £3.5k to £500k, factor rate 1.15 to 1.45, same-day decision. Strong specialism in hospitality and retail.
• 365 Business Finance, £10k to £500k, factor rate 1.10 to 1.40, direct-MCA pricing.
• Liberis, embedded MCA via partner channel (Worldpay, Barclaycard merchants).
• YouLend, embedded MCA and revenue-based finance for marketplace and platform sellers.

The trade-off on MCA is cost. A factor rate of 1.30 over nine months is roughly 60% effective APR. That is fine if the discount on the bulk-buy stock is 15% and the inventory turns three times in 12 months; it is the wrong answer if the stock sits unsold for six months and the factor is doing the work alone.

Structure 4: advance-payment and supplier-side bridging

A narrower structure used when the supplier needs paying in advance and conventional trade finance does not fit (supplier outside trade-finance approved list, transaction too small, currency or jurisdiction mismatch). Supplier-side bridging is a short-term loan, typically 30 to 90 days, repaid on stock realisation.

UK providers with supplier-side bridging or short-term stock-cycle facilities:

• Reparo, short-term business loan and bridging. £10k to £1m, three to 18 months.
• Just Cashflow, revolving credit / cashflow facility. Useful for repeat stock cycles.
• Ultimate Finance, invoice finance, asset finance and bridging. Often the right answer for B2B stock-then-invoice cycles.
• Credit4, SME term loan and revolving credit, used for stock buy-in cycles.
• Spotcap, brand still listed historically; product reach now narrow.

Pricing on supplier-side bridging is higher than mainstream term-loan and lower than MCA, typically 1% to 1.5% per 30 days. The use-case is narrow but where it fits, it is the right answer.

Stock finance for marketplace and DTC e-commerce

A specific subset worth calling out. Amazon, eBay, Shopify and Etsy sellers have a near-perfect data trail (sales velocity, returns rate, marketplace fees, payout cadence) which UK marketplace-finance lenders underwrite directly. The stock funding cycle is shorter and the underwriting is faster.

UK marketplace stock-funding providers:

• YouLend, embedded MCA and revenue-based finance via marketplace partners.
• Liberis, BNPL for SMBs and stock-funding via partner channels.
• Wayflyer, revenue-based finance for e-commerce. Strong on stock funding for DTC brands.
• Outfund, revenue-based finance for online and subscription businesses.
• SellersFunding, e-commerce working capital and term loans.
• Kriya, invoice finance, B2B BNPL and business loan, useful for B2B-DTC hybrids.

Pricing on marketplace revenue-based finance lands at factor rate 1.10 to 1.25 over three to nine months, materially cheaper than equivalent off-marketplace MCA. Same-day decision is standard.

Eligibility, structure and what to expect

UK stock finance is dual-underwritten: the company and the director. Common eligibility points across structures:

• Trading history: two years for term loans and trade finance lines, six months for MCA and marketplace finance.
• Turnover threshold: typically £100k for mainstream term loans, no firm threshold for MCA underwritten on card flow.
• Personal guarantee: almost always required on Ltd-company stock finance. Some MCA structures offer no-PG to qualifying applicants (365 Business Finance is the noted UK example).
• Credit profile: clean credit for term loans and trade finance; some flexibility on MCA and revenue-based finance.
• Sector: hospitality, retail, e-commerce and wholesale are well served. Excluded sectors (gambling, adult, CBD) struggle.

Expect the lender to ask for a stock list, a supplier name, a sales forecast and recent management accounts. The strongest applications are framed around a specific stock cycle (the August buy-in for the October to December sell-through) rather than open-ended working capital.