Inventory financing helps eCommerce businesses free up cash tied in inventory by using it as collateral to access working capital. This ensures steady stock levels, supports growth, and aligns repayments with sales. Here's why it's useful:
- Quick Access to Funds: Get cash within 24 hours to purchase inventory or cover expenses.
- Flexible Repayments: Payments adjust based on sales, easing strain during slower periods.
- Eligibility: Requires $3,000+ in monthly sales, a U.S.-based business, and operation on platforms like Amazon, Shopify, or Walmart.
- Growth Potential: Use funds for marketing, logistics, or scaling during peak seasons.
Key Benefits:
- Avoid stockouts and overstocking.
- Improve supplier relationships with early payments.
- Manage seasonal demand effectively.
With inventory financing, businesses can maintain cash flow, invest in growth, and handle operational challenges with ease.
Getting Started with Inventory Financing
How to Apply and Get Approved
Getting started with inventory financing through Onramp Funds is simple and tailored for eCommerce sellers. Here's how the process works:
1. Initial Application
Connect your online store and provide basic business details. This step only takes a few minutes and requires read-only access to review your sales history.
2. Review Offers
Receive funding offers customized to your business's performance. These offers are designed to align with your cash flow and inventory needs.
3. Receive Your Funds
Once approved, funds are deposited into your account within 24 hours.
Who Qualifies for Funding
Eligibility for inventory financing is based on your business's performance, not your personal credit score. To qualify, your business needs to meet the following criteria:
| Requirement | Details |
|---|---|
| Monthly Sales | Minimum average of $3,000 |
| Business Structure | LLC, Single-Member LLC, C-Corp, or S-Corp |
| Location | Must be a United States-based business |
| Platforms | Operate on platforms like Amazon, Shopify, TikTok Shop, WooCommerce, BigCommerce, Squarespace, Walmart Marketplace, or Shopline |
Sales history, cash flow, and debt levels are evaluated to ensure funding aligns with your business goals. Once approved, repayment is structured around your sales cycle.
Payment Options Based on Sales
After approval, repayment terms are designed to be flexible and tied directly to your sales performance through a revenue-based financing model.
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales. The process was quick, easy, and the support was great." - Jeremy, Founder and Owner of Kindfolk Yoga
Key features of this payment structure include:
- Automatic payments linked to your sales deposits
- Repayments that adjust based on your actual revenue
- No fixed monthly payment requirements
- A transparent fee structure with no hidden costs
This approach ensures that repayments align with your sales cycle, helping you manage inventory investments without straining your cash flow. It’s a practical way to keep operations running smoothly while growing your business.
Cash Flow Benefits of Inventory Financing
Immediate Cash Availability
Inventory financing provides quick access to working capital, helping businesses maintain steady cash flow and focus on growth. Once approved, sellers can access funds in as little as 24 hours. This allows them to:
- Purchase inventory and handle day-to-day expenses
- Cover critical business costs
- Seize opportunities to expand
This rapid funding eliminates cash flow gaps and ensures businesses are ready to meet seasonal or unexpected demands.
Managing Peak Season Stock
With fast access to funds, inventory financing helps eCommerce businesses prepare for busy seasons. Sellers can:
- Stock up adequately before high-demand periods
- Take advantage of bulk discounts from suppliers
- Avoid running out of inventory during key sales windows
The revenue-based financing model is especially helpful for businesses with seasonal sales patterns. Payments adjust based on actual sales, easing financial strain during slower months.
"Onramp's process is very straightforward and easy to navigate. I had funds in my account within a day of final approval." - Adam B., The Full Spectrum Company
Better Supplier Payment Terms
Timely payments made possible by inventory financing can improve supplier relationships and even unlock better terms. For example, paying suppliers early often leads to discounts, which can lower the cost of goods. This also helps strengthen supply chain partnerships.
| Benefit | Impact on Business |
|---|---|
| Early Payment Discounts | Lower cost of goods through supplier incentives |
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" - Torrie V., Founder and Owner of Torrie's Natural
Best Practices for Inventory Funding
Align Funding with Sales Projections
Using historical data and market trends to forecast sales helps determine the right amount of funding for your inventory needs. When planning, take into account:
- Seasonal sales fluctuations
- Past growth trends
- Upcoming marketing efforts
- New product introductions
"We structure your financing to ensure you're not putting your business at risk with too much debt." - Onramp Funds
Avoid Stock Problems
Inventory financing can help you maintain steady stock levels throughout the year. The goal is to use funding wisely to avoid running out of stock or overstocking. Striking this balance supports cash flow and improves profitability.
| Inventory Goal | Financing Strategy |
|---|---|
| Avoid Stockouts | Secure funding ahead of busy sales periods |
| Reduce Storage Costs | Align inventory purchases with sales pace |
| Strengthen Supply Chain | Keep buffer stock for essential products |
Consistent stock management like this allows you to use financing as a tool for growing your business effectively.
Support Business Growth
Using inventory financing strategically can help your business grow. Instead of only focusing on inventory purchases, many successful eCommerce companies use funding to address broader needs.
Some growth opportunities include:
- Expanding product offerings
- Increasing marketing efforts
- Improving logistics operations
- Scaling for high-demand seasons
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales. The process was quick, easy, and the support was great." - Jeremy, Founder and Owner of Kindfolk Yoga
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What to Know Before Getting Started
Benefits vs. Costs
Here’s a quick comparison of the perks and considerations when it comes to inventory financing:
| Benefits | Key Considerations |
|---|---|
| Access to cash quickly | Requires at least $3,000 in monthly sales |
| Payments adjust based on sales | Store must be connected to the funding platform |
| No fixed monthly payments | Fees range from 2-8% of the funded amount |
| Funds available within 24 hours | Consistent sales history is necessary |
| Can fund inventory and marketing | Store must operate on supported platforms |
| No loss of equity | Regular sales deposits are required |
Take these factors into account to see how inventory financing could meet your business needs.
Making the Right Choice
Once you understand the basics, focus on these critical areas before moving forward:
Sales History Assessment
Look at your sales trends and seasonal patterns to get a clear picture of your revenue flow. This will help you time your inventory investments to match cash flow needs.
Cash Flow Requirements
Review your current cash situation and upcoming expenses. Think about:
- When you’ll need to restock inventory
- Marketing campaign timelines
- Shipping and logistics costs
- Seasonal spikes in demand
"We evaluate your sales history, cash flow needs, and debt positions to make you an offer that fits with your cash flow capability. We structure your financing to ensure you're not putting your business at risk with too much debt."
– Onramp Funds
Growth Strategy Alignment
Ensure the financing supports your business goals. For example, Kindfolk Yoga used revenue-based financing to buy inventory while keeping their cash flow steady.
Repayment Structure
Pick a financing option where payments align with your sales cycle. This will help you maintain a healthy cash flow without overextending your resources.
Next Steps
Key Benefits Summary
Inventory financing can improve cash flow for eCommerce businesses. Here's how:
| Benefit | Impact on Cash Flow |
|---|---|
| Quick Access to Capital | Receive funds within 24 hours |
| Sales-Based Repayment | Payments adjust based on your revenue |
| Inventory Management | Easier supplier payment terms |
| Growth Investment | Allocate funds for marketing or expansion |
| Working Capital | Keep cash available for daily needs |
These features make the application process smooth and straightforward.
Get Started with Onramp Funds
Ready to secure working capital? Here's how Onramp Funds can help:
Fast and Simple Application
Connect your store and access funds in as little as 24 hours.
Flexible Fund Usage
Use the funds where your business needs it most - inventory, shipping, marketing, or scaling your operations.
Basic Eligibility Requirements
To qualify, ensure you meet these criteria:
- At least $3,000 in monthly sales
- An active store on supported platforms like Amazon, Shopify, or Walmart
- A U.S.-based business entity
Onramp Funds simplifies the entire process with automated payment systems. As Torrie V. shares:
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!"
Inventory Financing 101: What Business Owners Need to Know
FAQs
How can inventory financing help eCommerce businesses manage cash flow during seasonal sales spikes?
Inventory financing provides eCommerce businesses with the funds they need to purchase stock ahead of busy seasons, ensuring they can meet increased customer demand without straining their cash flow. This approach helps businesses avoid tying up their available cash in inventory, leaving more resources for other operational needs like marketing or logistics.
Repayments are typically based on a percentage of sales, which means businesses can align their payments with revenue cycles. This flexibility is especially helpful during slower months, as it reduces financial strain while keeping operations running smoothly.
How is revenue-based financing different from traditional loan repayment methods?
Revenue-based financing, such as the solutions provided by Onramp Funds, adjusts repayment amounts based on a percentage of your sales. This means payments are flexible and decrease during slower sales periods, making it a great fit for businesses with fluctuating cash flow.
In contrast, traditional loans typically require fixed monthly payments, regardless of how much revenue your business generates. This can strain cash flow during off-peak seasons or slower months, especially for eCommerce businesses that experience sales variability.
How can eCommerce businesses figure out the right amount of inventory financing to grow without overextending their budget?
To determine the right amount of inventory financing, eCommerce businesses should evaluate their cash flow, sales history, and growth goals. It's essential to strike a balance between accessing enough funding to scale operations and avoiding unnecessary debt.
Onramp Funds helps businesses calculate their financing needs by assessing monthly revenue and structuring funding offers that align with their cash flow. This ensures businesses can invest in inventory or marketing confidently while maintaining financial stability. Flexible repayment options tied to sales performance make it easier to manage repayments without straining resources.
