Inventory financing is funding for stock bought ahead of sales, usually secured by the inventory itself. Larkridge Funding Group, a small-business funding broker in Decatur, Illinois, explains how it works, how UCC liens and floor plan arrangements fit in, and how it compares with factoring and credit lines, then introduces Macon County requests to lending partners, which make credit decisions and set rates and terms.
| Used for | Merchandise and materials bought before they sell |
|---|---|
| Collateral | Usually the inventory itself, under a UCC lien |
| Repaid by | A schedule, or as items sell (floor plan) |
| Partners look at | Stock reports, sales history and supplier terms |
| Local context | 326 retail and 104 wholesale employers in Macon County, IL (CBP 2023) |
| Who decides | The lending partner. Larkridge's job ends at the introduction |
| Address | 134 N Merchant St, Decatur, IL 62523 · (217) 296-7415 |
Stock on the shelf, cash out the door
Every store and distributor pays for goods before customers pay for them. Inventory financing covers that interval: a partner advances money to buy stock, and the stock stands as security. When the goods sell, the proceeds repay the financing, either on a fixed schedule or item by item.
The main risk is stock that does not sell. Slow-moving goods still have to be paid for, and their value as collateral falls the longer they sit. Inventory financing works best for goods with a sales record you can show.
Retail and wholesale in Macon County, Illinois
Retail trade had more employer establishments than any other sector in Macon County in 2023: 326, with 4,483 paid employees and about $154.1 million in annual payroll. Of those 326, 138 had fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Wholesale trade added 104 establishments and 2,951 employees. Another 576 retail businesses operated with no paid employees in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024).
A small store with a handful of staff often buys stock with the same money it uses for payroll and rent. Separating the two, so that stock is financed against itself, can make both easier to manage.
How the lien works
Inventory financing is usually secured by a lien on the inventory, recorded through a UCC financing statement filed with the state. Anyone else lending to the business can then see that the partner holds a claim over the stock. It can also affect later borrowing: another lender looking at your business will see the filing and may ask for it to be released or subordinated before offering anything secured by the same stock.
Ask what the lien covers. Some cover only the financed inventory; others reach all business assets. A blanket lien can make the next funding request harder than it needs to be.
Floor plan financing, explained
Floor plan financing is a form of inventory financing for high-value items that are individually identified, such as vehicles, boats, large appliances or machinery. The partner pays the supplier for each unit, and the business repays that unit's amount when it is sold. Interest or fees often accrue while the unit sits unsold, and partners may audit the stock periodically to confirm what is on hand. It suits dealers more than general retailers.
Inventory financing or factoring
The two are often confused. Inventory financing borrows on goods still waiting to be sold. Factoring sells invoices for goods or services already delivered, so a factor pays you part of the invoice value now and collects from your customer later. A business that sells on account to other businesses may consider factoring; a store that sells over the counter has no invoices to factor, so inventory financing or a line of credit is the usual route.
Inventory financing or a credit line
| Inventory financing | Line of credit | Working capital loan | |
|---|---|---|---|
| Secured by | The stock itself | Often a general business lien | Often a general lien and a guarantee |
| Best for | Large, identifiable stock purchases | Smaller, recurring purchases | A one-time gap |
| Repayment | Per item sold, or on a fixed schedule | Repay draws; limit refills | Fixed payments, short term |
A store that restocks a little every week may find a business line of credit simpler. Before you finance stock, work out what it already costs to hold: inventory carrying costs for Decatur, Illinois retailers takes you through that arithmetic.
Paperwork that helps an inventory request
- An inventory list or report from your point-of-sale or accounting system
- Sales records that show how fast the stock moves
- Supplier invoices and payment terms
- Bank statements for recent months
- Your state tax registration, if you sell taxable goods
Retailers are often asked for their Illinois tax registration; the Illinois REG-1 and MyTax guide explains why it appears in a funding file. All six options are compared on the comparison page, sector notes sit on the industries page, county figures on our Decatur, IL page, and the process on how a request works.
By Larkridge Funding Group · Updated