Borrowing against inventory?

March 15, 2026

by a searcher from University of Oklahoma - Michael F. Price College of Business in Oklahoma City, OK, USA

Anyone have experience using inventory-backed loans for working capital? I'd love to hear how it went, pros/cons, and recommendations for lenders that work well with small main street businesses. Thanks!

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Depending on what the inventory is, there may be financing options. If it is inventory that has general market value and can be used by many, then there are options. If the inventory is for a specific customer and does not have more general uses, then it can be very hard to finance inventory. Most inventory lenders also want the A/R as collateral that way they control the full collection cycle as that inventory eventually turns into A/R. You could use SBA financing if you need a smaller amount as there is an SBA express line of credit that goes up to $500,000 and does not require a borrowing base. I would be happy to discussion options. You can reach me here or directly at redacted

Reply by a professional-advisory
from University of Alabama in Baltimore, MD, USA

Inventory-backed loans are not what I'd recommend, unless you absolutely have no choice. I've always had a LOC, tied to my signature, or some other asset. Never my inventory. If the market drops and your lender gets nervous, they can do an 'reassessment' and if they determine the 'value' is lower in the current market, they can force you to generate the difference in cash. I've seen it happen. Another option is Factoring.

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