Floorplan finance

If your business specialises in selling high-value items such as cars or electronics, finding the funds needed to purchase those items can place a big strain on cash flow. Floorplan finance is designed to provide the funds you need to buy inventory for your business, helping you put products on the shelves without making a significant dent in your day-to-day cash flow.

So, is floorplan finance right for your business? Let's take a closer look.

How does floorplan finance work?

Floorplan finance, which is sometimes also known as inventory finance, is designed to help retailers purchase high-value items for resale to customers. This type of financing provides a revolving line of credit, providing access to the funds you need to purchase inventory for your business and stock the shelves.

The way it works is quite simple: the lender pays the manufacturer or distributor for the stock you purchase. Then when an item is sold, you repay the appropriate amount of floorplan finance to the lender. This ensures that you don't have too much working capital tied up in your business inventory, leaving other funds free to provide the cash flow your business needs from one day to the next.

What can you use floorplan finance for?

Floorplan finance allows you to continue to help your business grow without tying up all your funds to purchase inventory. It allows you to purchase the items you need to stock the shelves and get customers through the door, but at the same time ensures that you have enough cash flow to manage and expand your business.

It's also an extremely useful form of financing for seasonal business or those that experience fluctuating cash flow. For example, in the lead-up to Christmas, retailers need to purchase extra stock to cope with the anticipated increase in sales. Many smaller retailers simply don't have enough cash available to purchase the necessary stock, so inventory finance provides the funds they need to maximise sales during this busy shopping period.

Manage cash flow

If cash is tied up in unpaid customer invoices, invoice finance could help you free up funds to buy more stock alongside a floorplan facility. It lets you access a percentage of the value of your outstanding invoices upfront, using those invoices as security, so you don't need to provide property or other assets. Fees and interest-style charges apply, and with most facilities your business remains responsible if a customer doesn't pay.

Compare business finance options below.

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Finder Score	Min. Loan Amount	Max. Loan Amount	Loan Term	Upfront Fee	Filter Values
8.2 Great Valiant Finance Business Terms Loans	8.2 Great	$5,000	$500,000	3 months to 3 years	Variable, starting from $0		Enquire nowView details Compare product selection Compare	loading
6.2 Standard ScotPac Invoice Finance	6.2 Standard	$200,000	$200,000,000	1 to 2 years	Establishment fee 1% of the limit		Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $200,000 in invoices.	Go to siteView details Compare product selection Compare	loading
ScotPac Selective Invoice Finance			No maximum amount				Finance your unpaid invoices on demand with terms of - months. 95% of invoice is paid upfront, with no minimum trading history required.	Go to siteView details Compare product selection Compare	loading
6.7 Standard NAB Vehicle & Equipment Finance	6.7 Standard	$10,000	$150,000	1 to 5 years	$600 initial set up fee		ContinueView details Compare product selection Compare	loading
5.4 Standard BankSA Vehicle and Equipment Finance	5.4 Standard	$15,000	No maximum amount	1 to 7 years	upon application		This loan can be used to hire, lease or purchase vehicles or equipment for your business, with borrowing amounts from $15,000.	ContinueView details Compare product selection Compare	loading
5 Standard ABR Finance	5 Standard	$10,000	$300,000	1 to 3 months	20%		ContinueView details Compare product selection Compare	loading
6.2 Standard Fifo Capital Trade Finance	6.2 Standard	$500,000	$5,000,000	Up to 6 months			ContinueView details Compare product selection Compare	loading
5.4 Standard Fleetcare Business Fleet finance and leasing	5.4 Standard		No maximum amount				ContinueView details Compare product selection Compare	loading
8.8 Great Stratton Finance Business Car Loan	8.8 Great	$5,000	$300,000	1 to 7 years	$482		A business vehicle loan for up to $300,000, with flexible contract terms and fast turnaround times.	ContinueView details Compare product selection Compare	loading
6.1 Standard Fifo Capital Selective Invoice Finance	6.1 Standard	$10,000	$1,000,000				ContinueView details Compare product selection Compare	loading
7.7 Great Westpac Invoice Finance	7.7 Great	$1,000,000	No maximum amount				ContinueView details Compare product selection Compare	loading
6 Standard Octet Trade Finance	6 Standard	$100,000	$12,000,000	1 to 4 months	Transaction fee 2.5%		Access a line of credit to pay suppliers in over 65 countries. Borrow from $100,000 up to $12,000,000.	ContinueView details Compare product selection Compare	loading
5.4 Standard Royal Finance Secured Business Loan	5.4 Standard		No maximum amount		depends on amount borrowed		ContinueView details Compare product selection Compare	loading
Bigstone Asset Finance		$10,000	$2,000,000	1 to 5 years	$250		Borrow up to 100% of the value of your assets with no ongoing fees and the option for low doc finance.	ContinueView details Compare product selection Compare	loading
7.7 Great Earlypay Equipment Finance	7.7 Great	$50,000	$1,500,000	2 to 5 years			Upgrade or expand your business's equipment with equipment finance from Earlypay. Borrow from $50,000 to $1,500,000.	ContinueView details Compare product selection Compare	loading
5.5 Standard Shift Asset Finance	5.5 Standard		No maximum amount	Up to 7 years	$499		ContinueView details Compare product selection Compare	loading
5.4 Standard Bank of Melbourne Vehicle and Equipment Finance	5.4 Standard	$15,000	No maximum amount	1 to 7 years	Upon Application		Borrow from as low as $15,000 for your business' vehicle or equipment requirements. You may choose between owning, hiring and leasing the assets.	ContinueView details Compare product selection Compare	loading
5 Standard Westpac Vehicle and equipment finance	5 Standard	$15,000	$250,000	1 to 7 years	Upon application		Finance your business vehicle or equipment with this loan, tailored to your business needs. Flexible repayment options available and this loan is secured against the asset purchased.	ContinueView details Compare product selection Compare	loading
5.9 Standard ANZ Vehicle and Equipment Finance Most Loved	5.9 Standard	$7,500	$500,000	1 to 7 years	No establishment fee		Borrow from as low as $7,500 to fund your business vehicle and equipment needs. This loan is secured against the asset purchased and approved customers may be eligible to avoid paying a deposit.	ContinueView details Compare product selection Compare	loading
8.9 Great Valiant Finance Vehicle and Equipment Finance Loans	8.9 Great	$5,000	No maximum amount	3 months to 7 years	starting from $399 and can be paid upfront or included in the loan amount		Enquire nowView details Compare product selection Compare	loading

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How to compare floorplan finance loans

There are several important factors you'll need to consider when comparing floorplan finance loans for your business, including:

• Interest rates. The interest rate that applies to your line of credit will impact the total cost of repaying the money you borrow, so compare interest rates across lenders to find the best value for money.
• Fees. Floorplan finance fees can also affect the total cost of financing. Remember to check for upfront charges such as application or establishment fees, as well as any ongoing fees that apply to the business loan facility.
• Secured or unsecured. Most forms of inventory finance are secured directly to the inventory items you purchase and then re-sell. However, unsecured financing is also available in some cases. Make sure you compare both options to decide whether a secured or unsecured loan is right for you.
• Loan amount. Check with each lender to find out the maximum amount you'll be allowed to borrow.
• Repayment flexibility. Check how long you have to repay the funds you borrow after items of inventory are sold. When you sell stock purchased with floorplan financing, you either repay the debt or purchase more stock. The lender will also conduct periodic stock checks. If you have insufficient stock to secure the funds you have borrowed you'll have to repay some of the finance.
• Type of inventory. Inventory finance can be used to purchase a wide range of high-value items, from cars and motorcycles to electronics and even agricultural equipment. Check which types of inventory your lender will allow you to finance.

Is there anything to avoid?

There are a few key risks you should be aware of before applying for inventory financing. Consumer appetites can be quite fickle, so items that are in high demand now may quickly go out of fashion. Business sales could take an unexpected downturn, while there's also a risk that items could be stolen or damaged. When any of the above happens, you could be left with a loan that you may struggle to repay.

Speaking more generally, it's always important to be careful not to get in over your head. Never borrow more than you can comfortably afford to repay, and remember to check the fine print to familiarise yourself with all the fees and charges that will apply to your loan facility.

Frequently asked questions

• What is floor plan finance?

  Floor plan finance is a specialised type of inventory funding for dealerships selling high-value goods like cars, boats, caravans and machinery. It allows a dealer to fund their showroom stock without paying for the items upfront.

• How does floor plan finance work?

  The finance provider pays the manufacturer directly for the stock. The dealer then holds the stock for sale under a 'bailment agreement'. Once a vehicle is sold to a retail customer, the dealer repays the finance provider for that specific unit from the sale proceeds.

• Who uses floor plan finance in Australia?

  It is primarily used by motor vehicle dealerships (new and used), caravan and RV yards, boat and marine dealers, and agricultural and construction equipment dealers who need to hold a significant amount of high-value stock on their premises.

• What is a 'curtailment' in floor plan finance?

  A curtailment is a periodic repayment that a dealer must make on a piece of stock if it remains unsold for a certain period (e.g., 90 or 180 days). This reduces the lender's risk on ageing inventory.

• Is real estate security required?

  No, the facility is secured by the stock itself (the 'floor plan'). The lender takes a charge over the inventory being financed, meaning personal real estate is not usually required to secure this type of funding.

Written by

Tim Falk

Writer

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Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 20-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio