Compare Inventory finance options

Relying on your cash flow to obtain products from overseas suppliers can cause unnecessary stress. This is where unsecured inventory finance comes in.

Unsecured inventory loans are designed to pay your supplier directly on your behalf, allowing you to meet your financial obligations while keeping your shelves stocked and your business's reputation intact.

How does unsecured inventory finance work?

The "unsecured" part means that you don't need to provide security when applying for funding. Here's how it works:

• The lender pays your supplier
• The supplier ships the goods and you restock your inventory
• You sell your goods and repay the lender

Funding is usually granted with a director's guarantee and, depending on the lender, you can apply for up to $1 million. The repayment period is determined by how long it would take to sell your inventory.

A shorter loan term may mean a higher interest rate, but if it's a small amount, it makes financial sense to repay quickly. Paying interest on a small loan over a longer period will eat away at profits.

What are the benefits?

Here are a few reasons why unsecured inventory finance might be the right fit for your business:

• No security required. You are not required to declare your assets as security when applying for this loan. This is ideal for small businesses who need a quick solution to cash flow issues and don't want to put up property as collateral.
• Ideal for overseas suppliers. Shipping inventory from overseas can mean significant delays, especially if you have to put off paying your supplier. An unsecured inventory loan can expedite shipping, helping to eliminate unnecessary delays.
• Avoid using working capital. You don't have to dig into your working capital to unlock cash flow.
• Enhance your business profile. This solution can also help boost your business profile because you're able to take on bigger orders, which will increase your business capacity and maximise turnover.

What should I keep in mind before applying?

There are a few points to consider before applying:

• What is the nature of your inventory? Slow-selling inventory may not be ideal for this type of finance is you may not find a lender.
• What is your credit like? You will generally need good credit to be eligible for unsecured inventory finance.
• Are you confident in your inventory? Remember the lender has the right to inspect the inventory to ensure it's maintained its value and that you keep track of your inventory.
• How serious are you? As there is a lot of due diligence involved, a lender may make initial assessments and present a preliminary offer prior to a thorough review. You may be required to pay a due diligence fee before a final offer is made.

How to qualify for unsecured inventory finance

Lenders want to see that you're able to make repayments, so you need to prove that your business is in decent shape financially. While you don't have to put up collateral for an unsecured inventory loan, your business must meet a few criteria.

• Time in the industry. Lenders usually require that your business has been trading for at least two years.
• Minimum annual revenue. You must show your annual earnings. Minimum earning requirements differ from lender to lender.
• Credit defaults. Defaulting on existing financial commitments shows lenders that your business is not in a position to take on another loan.
• Industry type. Whether or not a lender will approve a loan depends on your industry. If your business type is considered to be volatile or unpredictable, your application might be rejected.

What will I need to apply for inventory finance?

While this will vary from lender to lender, it is a good idea to collect and assess the following documents prior to applying. There is a good chance that inventory finance lenders will want to look at:

• Balance sheets: Having accurate balance sheets for at least two financial years.
• Profit and loss statements: Having accurate profit and loss statements for the current and previous two financial years.
• Business tax return: Will help the lender assess the revenue history of the business.
• Personal tax return: If you are a sole trader or have recently started a business, this may be required by a lender.
• Current inventory list: An itemised list of all the inventory that is currently on hand.
• Inventory management records: These will help to show the lender how quickly inventory has turned over historically.
• Sales forecast: Well-constructed forecasts will help a lender assess the feasibility of invoice financing as an option for your business. You can compare invoice financing products below.

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Finder Score	Min. Loan Amount	Max. Loan Amount	Loan Term	Upfront Fee	Filter Values
8.3 Great Valiant Finance Business Terms Loans	8.3 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
6.7 Standard NAB Vehicle & Equipment Finance	6.7 Standard	$10,000	$150,000	1 to 5 years	$600 initial set up fee		Benefit from a low fixed rate and no upfront deposit to purchase vehicles and equipment for your business.	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
6.3 Standard Fifo Capital Trade Finance	6.3 Standard	$500,000	$5,000,000	Up to 5 years			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
8.9 Great Stratton Finance Business Car Loan	8.9 Great	$10,000	$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
6.2 Standard Fifo Capital Selective Invoice Finance	6.2 Standard	$500,000	$2,000,000				ContinueView details Compare product selection Compare	loading
7.8 Great Westpac Invoice Finance	7.8 Great	$500,000	No maximum amount				ContinueView details Compare product selection Compare	loading
6.1 Standard Octet Trade Finance	6.1 Standard	$100,000	$12,000,000	1 month to 2 years	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
7.5 Great Bigstone Asset Finance	7.5 Great	$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
7.1 Great Earlypay Equipment Finance	7.1 Great	$50,000	$1,500,000	2 to 5 years	$750 - Establishment fee		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
7.8 Great Invoice Financing Australia	7.8 Great	$50,000	$5,000,000				ContinueView details Compare product selection Compare	loading
5.5 Standard Shift Asset Finance	5.5 Standard	$2,000,000	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	No maximum amount	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
6 Standard ANZ Vehicle and Equipment Finance Most Loved	6 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
9 Excellent Valiant Finance Vehicle and Equipment Finance Loans	9 Excellent	$5,000	$500,000	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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The due diligence process

Along with reviewing the above documents, a lender may want to send an independent auditor to your business. This is in order to ensure that inventory financing is a good solution for your current operations and to mitigate their risk.

Unsecured inventory finance can be a convenient option to keep your business moving, but make sure you compare your loan options before you apply to ensure you get the right financing for what your business needs.

Frequently asked questions

• Do I need to provide a personal guarantee for unsecured inventory finance?

  Yes, most Australian lenders require a director's personal guarantee for unsecured business loans. This provides the lender with legal recourse to your personal assets if the business fails to repay the debt, despite the loan not being secured against a specific physical asset.

• How does the lender pay my supplier with an inventory loan?

  The lender typically pays your supplier directly upon receipt of a valid invoice. This direct payment method ensures the funds are used for their intended purpose and can improve your relationship with suppliers by guaranteeing prompt payment.

• Can I use unsecured inventory finance for international suppliers?

  Yes, many Australian inventory finance providers facilitate payments to overseas suppliers in multiple currencies. This is particularly useful for businesses importing stock that need to bridge the gap between paying the manufacturer and receiving sales revenue from the final product.

• Is the interest on an unsecured inventory loan tax-deductible in Australia?

  Yes, interest paid on a business loan used to purchase inventory is generally tax-deductible as a business expense. Because the funds are used to produce assessable income, the cost of the finance can be claimed on your annual tax return.

• What are the typical repayment terms for an unsecured inventory loan?

  Repayment terms usually range from 3 to 24 months depending on the lender and your business's cash flow. Because these loans are unsecured and often tied to stock turnover, the terms are significantly shorter than those of a traditional property-secured commercial loan.

• Does an inventory loan impact my business credit score?

  Yes, the application and ongoing management of an inventory loan will appear on your business credit file. Maintaining a consistent repayment schedule can help build a positive credit history, whereas defaults or late payments will negatively impact your ability to secure future finance.

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Written by

Elizabeth Barry

Journalist

Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024. See full bio

Elizabeth's expertise

Elizabeth has written 185 Finder guides across topics including:

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