Quarrypeak Credit arranges inventory financing for stores, parts counters and fuel stops in Morristown, TN and Hamblen County, TN. It is a loan to buy inventory ahead of demand, repaid in installments or as the goods sell, and the stock often serves as collateral. Partners usually look at sell-through history, supplier invoices and the business's deposits.
| Pays for | Stock paid for ahead of the sale |
|---|---|
| Repayment | Installments, or paid down as the stock sells |
| Hamblen County, TN retail employers, 2023 | 256 employer sites, the top sector by count in the 2023 CBP |
| Who decides | A lending partner, after its own review |
How does inventory financing work?
A partner advances money against a specific purchase of goods, or against the stock you hold. You repay on a schedule, or in some structures as the goods sell. Because the inventory itself can be claimed if payments stop, partners care a great deal about how easily that stock could be resold: fuel, groceries and branded parts move quickly, a fashion line or custom fixtures less so.
Inventory financing for a small business is narrower than working capital. The money is meant for stock, and the partner may ask for the supplier invoice before it pays out, or pay the supplier directly.
A loan to buy inventory ahead of demand
The usual reason to borrow for stock is timing: a supplier discount for a larger order, a selling season that needs stock on the floor before the first customer walks in, or a new product line that has to be stocked in depth to sell at all. A business loan to purchase inventory makes sense when the margin on that stock clearly covers the cost of the money.
Hamblen County, TN has plenty of businesses that carry stock. County Business Patterns counted 256 retail employer establishments in 2023, the most of any sector, plus 60 wholesale employers. Within retail the same Census table lists 26 clothing and accessories stores, 18 building material and garden supply dealers, 17 grocery stores and 11 auto parts stores with a payroll that year.
A loan to buy inventory for a boutique
A boutique buys a season's racks months before they sell, and a size run that is too thin loses sales. Partners look at how quickly past seasons sold through and how much was marked down. The retail industry page goes into stores in more detail, and the retail cash flow article covers open-to-buy planning and markdowns.
Parts counters, grocery stock and fuel
Auto repair shops carry filters, brakes and fluids that turn over quickly; 35 repair shops in the county had a payroll in 2023 (CBP). Gas stations, 39 employer establishments that year, buy fuel loads and in-store stock on short supplier terms. A grocery or convenience counter stocks perishables whose order cycle is measured in days.
For fast-turning stock, ask partners about structures that let you draw for each order rather than borrowing one lump sum. For slow-turning stock, keep the term short enough that you are not still paying for goods long after they have gone.
A labeled example: an order paid down as it sells
Made-up figures for illustration; not an offer. A Morristown, TN hardware store places a $24,000 spring order. If past records show the order usually sells through in about four months, the principal works out to $6,000 of repayment a month, before interest and fees. A schedule longer than the sell-through stretches the cost; a shorter one squeezes the store before the stock has sold.
Bring that sell-through history to the call. It is the document the repayment schedule is built from.
What partners read in an inventory request
- Supplier quotes or invoices for the order
- Past sell-through and markdown history
- Monthly deposits and card sales
- How the inventory is tracked (point-of-sale or stock system)
- Any lien already recorded against the stock
If another lender already holds a lien on your stock, say so early; it changes what a new partner can offer. See how a Quarrypeak request works, compare the alternatives on the six-shape page, and find county figures on the Morristown, TN page.
Inventory financing for small business owners: a stock-turn worksheet
Before choosing a structure, work out how fast your stock turns. Take the cost of goods sold for the last twelve months and divide it by your average inventory at cost. That is your turns per year; 365 divided by turns is the number of days a dollar of stock sits on the shelf.
Made-up figures, for illustration only. An auto parts counter with $240,000 of cost of goods sold and $40,000 of average inventory turns its stock 6 times a year, about every 61 days. A furniture store with $150,000 of cost of goods and $75,000 on the floor turns twice, about every 183 days. The first can repay an order inside two months; the second needs a schedule closer to six, or a line it can draw and repay as pieces sell.
What to put in an inventory request file
- The purchase order or supplier quote, with payment terms and delivery date
- Twelve months of sales, by month and by product line if you track it
- Your last two inventory counts or valuations, at cost
- Supplier statements showing how past orders were paid
- Any liens already filed against the stock, and the lender behind them
Financing for inventory versus a line of credit
If you restock every few weeks, a line of credit may be simpler: draw for each order and repay as it sells. Inventory financing suits a large single order, or a business whose stock is its main asset. The industry pages show which local trades lean on each.
By Quarrypeak Credit · Updated
