Business Loans for Wholesale and Distribution: Inventory, Warehouse and Fleet
Learn about financing options for wholesale distributors including inventory financing, warehouse expansion loans, fleet financing, and working capital for distribution businesses.
Financing the Wholesale Distribution Industry
Wholesale distributors operate on thin margins with substantial capital tied up in inventory, warehousing, and transportation. Success requires maintaining adequate inventory to meet customer demands while managing cash flow through extended supplier and customer payment terms.
Whether you distribute food products, building materials, industrial supplies, or consumer goods, understanding your financing options helps you compete effectively and grow your distribution network.
Common Financing Needs
Distribution businesses require capital across multiple operational areas.
- Inventory purchases and bulk buying opportunities
- Warehouse expansion or new facility acquisition
- Delivery fleet vehicles and trucks
- Material handling equipment (forklifts, racking, conveyors)
- Working capital for payment term gaps
- Technology systems for inventory management
- Temperature control equipment for perishables
- Acquisition of competitors or new territories
Best Loan Products for Distributors
Multiple financing products address different wholesale distribution needs.
| Loan Type | Best For | Amount Range | Typical Terms |
|---|---|---|---|
| Inventory Financing | Stock purchases | $50,000-$5M | 6-24 months, 8-18% |
| Equipment Financing | Forklifts, racking | $25,000-$500K | 3-7 years, 6-12% |
| Commercial Fleet Loans | Delivery trucks | $50,000-$2M | 3-6 years, 5-10% |
| Commercial Real Estate | Warehouse purchase | $250,000-$10M | 10-25 years, 5-8% |
| Business Line of Credit | Working capital | $50,000-$1M | Revolving, 7-20% |
| SBA 7(a) | Comprehensive needs | $100,000-$5M | 10-25 years, 5-10% |
| Invoice Factoring | Cash flow timing | Based on AR | 1-3% per month |
Inventory Financing Solutions
Inventory represents the largest asset for most distributors. Specialized inventory financing helps you maintain adequate stock levels and take advantage of supplier discounts.
- Asset-based lending using inventory as collateral
- Inventory lines of credit with flexible draws
- Floor plan financing for serialized inventory
- Purchase order financing for large orders
- Trade finance for international suppliers
- Seasonal credit lines for peak inventory needs
Lenders typically advance 50-70% of inventory value, depending on the type of goods. Finished goods with established market value qualify for higher advances than raw materials or slow-moving inventory.
Qualification Requirements
Distributors can access financing with the following typical requirements.
| Factor | Inventory Financing | Equipment Loans | SBA Loans |
|---|---|---|---|
| Credit Score | 600+ | 620+ | 680+ |
| Time in Business | 1 year | 2 years | 2 years |
| Annual Revenue | $500,000+ | $250,000+ | $100,000+ |
| Gross Margin | 15%+ | Less critical | 20%+ |
| Inventory Turns | 4+ per year | N/A | Evaluated |
| Down Payment | 0-20% | 10-20% | 10-20% |
What Lenders Evaluate
Lenders assess distributors on industry-specific factors that indicate operational health.
- Inventory turnover rates and aging
- Customer concentration and payment history
- Supplier relationships and credit terms
- Gross margins and operating efficiency
- Warehouse utilization and capacity
- Delivery capabilities and service levels
- Market position and competitive advantages
- Working capital management and cash conversion cycle
Example Scenario: Regional Food Distributor
A regional food distributor generates $4 million in annual revenue with 18% gross margins. They need $400,000 to expand their fleet (3 refrigerated trucks at $85,000 each) and add a second warehouse location.
They secure an SBA 7(a) loan for $400,000 at 8.5% over 10 years, with monthly payments of approximately $4,950. The expansion allows them to add $1.2 million in annual revenue, with the loan payment easily covered by the additional margin.
Distribution operates on thin margins, typically 15-25%. Factor loan payments into your operating costs carefully. A $500,000 loan at 10% adds roughly $6,500 monthly to your operating expenses.
Ready to Grow Your Distribution Business?
Wholesale distributors have access to specialized financing that understands inventory-intensive businesses and the capital requirements of maintaining delivery capabilities.
Get matched with lenders experienced in distribution industry financing, from inventory credit facilities to fleet and warehouse expansion loans.
Ready to explore your options?
See what financing you qualify for in minutes — no impact to your credit score.
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
Third-Party Lenders: All loan products are offered by independent third-party lenders. Liminal Lending Co. is an Independent Sales Organization (ISO) and receives compensation from lenders for successful referrals. Terms and conditions of any loan are between you and the lender.
Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.