What is unit stocking finance

What is unit stocking finance?

Stocking finance is method of finance designed to help businesses, particularly those such as car dealerships, finance the purchase of inventory to resell.

This type of financing allows businesses to acquire stock without tying up their own cash, freeing up capital that can be used for other areas of the business, such as day-to-day operations or growth. 

Stocking finance sets up a limited credit facility, which is then used by businesses, such as dealerships, to purchase stock. When something is sold, the portion of the loan used for that item is repaid, including fees and interest. The repaid funds can then be used to buy further stock, helping businesses maintain a consistent level of inventory.

Benefits of unit stocking finance:

• Improved cash flow
• Maintain stock level
• Quick funding access

Alternatives to stocking finance

Whilst stocking finance is a viable option for businesses such as car dealerships, there are alternative finance products that are flexible, not tied to the sale of the stock, and payment structures tailored to each business’ individual needs.

Unsecured Business Loan

An unsecured loan is a business loan granted based on the borrower’s creditworthiness, without requiring collateral. Ideal for businesses needing a quick and flexible financial solution, these loans rely on credit history, often requiring personal guarantees due to higher lender risk.

They also typically allow early repayment without added fees, making them suitable for short-term needs like bridging cash flow gaps or purchasing stock.

Benefits of unsecured business loans:

• No collateral required
• Quick approval process
• No early repayment fees

Revolving Credit Facility

A revolving credit facility gives businesses a flexible line of credit to draw from and repay over time. Once repaid, funds can be borrowed again as needed.

Interest is only on the amount borrowed, not the full credit limit. These facilities are typically short-term, often up to 12 months, and are used for cash flow, emergencies, or general business expenses. Extensions may be possible depending on the funder.

A revolving credit facility offers a quick, adaptable financing option for businesses needing short-term funds.

Benefits of a revolving credit facility:

• Access funds on demand
• Interest only paid on borrowed amount
• Helps to manage business cash flow

Applying for stocking finance or alternatives

MAF Finance Group can compare offerings from a wide selection of banks and alternative funders to provide you with a solution suited to your requirements.

If you would like more information or to get a quote, fill out the form below and we will contact you. If you want to speak to us directly, you can call us on 0115 958 6872 and a member of our team will be happy to talk to you. Alternatively, email us at [email protected].