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:
- Access to Funds: Get cash to purchase inventory or cover expenses.
- Flexible Repayments: Payments adjust based on sales, easing strain during slower periods.
- Eligibility: With Onramp Funds, you need $10,000 in average monthly sales and 6 months of selling history, plus a legal US business entity, and a store on one of 10 platforms, including 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 has a few steps. Here's how the process works:
1. Initial Application
Connect your online store and provide basic business details.
2. Review Offers
Review the funding offers you receive.
3. Receive Your Funds
With Onramp Funds, funds typically arrive in one to two business days.
Who Qualifies for Funding
With Onramp Funds, there is no personal credit check to see an offer. To qualify, your business needs to meet the following criteria:
| Requirement | Details |
|---|---|
| Monthly Sales | $10,000 in average monthly sales and 6 months of selling history |
| 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, Shopline, eBay, or Stripe |
Funding is sized to your combined sales and stated in your offer.
Payment Options Based on Sales
Onramp Funds offers repayment as a share of daily sales, a fixed schedule over 1 to 12 months, or a rolling cash line.
"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 [1]
Key features of this payment structure include:
- Repayment as a share of daily sales, which adjusts based on your actual revenue
- A fixed schedule over 1 to 12 months
- A rolling cash line
- A flat fee, disclosed upfront
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. This allows them to:
- Purchase inventory and handle day-to-day expenses
- Cover critical business costs
- Seize opportunities to expand
Funding can help close cash flow gaps and get businesses 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 [1]
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 [1]
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
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 [1]
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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 $10,000 in average monthly sales and 6 months of selling history |
| Payments adjust based on sales | Store must be connected to the funding platform |
| Payments can be a share of daily sales | Onramp Funds charges a fee as low as 9% of the funded amount ($4,500 on $50,000), flat, disclosed upfront, non-compounding, longer terms cost more. Subject to credit eligibility; rates and terms may vary. |
| Funds typically arrive in 1 to 2 business days | Consistent sales history is necessary |
| Can fund inventory and marketing | Store must operate on supported platforms |
| Access to working capital | 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
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 |
|---|---|
| Access to Capital | Funds typically arrive in 1 to 2 business days |
| 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 |
Get Started with Onramp Funds
Ready to secure working capital? Here's how Onramp Funds can help:
Application
Connect your store. With Onramp Funds, funds typically arrive in one to two business days.
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:
- $10,000 in average monthly sales and 6 months of selling history
- An active store on one of 10 supported platforms, including Amazon, Shopify, and Walmart
- A legal US business entity
As Torrie V. shares:
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" [1]
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?
Onramp Funds offers repayment as a share of daily sales, a fixed schedule over 1 to 12 months, or a rolling cash line. With the share-of-daily-sales option, payments decrease during slower sales periods.
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 sizes funding to your combined sales and states the amount in your offer.
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