Inventory Financing in Durango, CO: Paying for Stock Before It Sells

What Is Inventory Financing, and What Counts as Inventory?

Inventory is anything bought to resell or to build into what is sold: shelf goods in a shop, parts in a repair bay, lumber and fixtures held by a contractor, bottles and kegs in a bar. Inventory financing pays for those goods before they are sold. It differs from a general working capital loan because the money is tied to specific stock, and the funder can track that stock and take it if payments stop.

Goods with a clear resale value and a record of selling are what funders lend against. Fashion that dates, perishable food and custom-built items carry more risk, and a partner can lend a smaller share of their cost or exclude them. A firm whose stock does not suit this structure can look at a business line of credit instead.

How Does Inventory Financing Work From Purchase Order to Sale?

Illustration only, invented figures: a Durango, CO outdoor goods shop places a $64,000 order. In this invented case a funder advances 80% of the cost, $51,200, straight to the supplier, and the shop pays the other $12,800 itself. The invented fee is 2.5% of the advance a month, $1,280, so if the goods sell through in 3 months the fee comes to $3,840 (our arithmetic).

1. The business shows the supplier's order or invoice.
2. The funder sets an advance rate: the share of cost it will pay.
3. The supplier is paid, and the goods arrive with the funder's interest recorded.
4. As goods sell, the business pays down the advance, by item or on a schedule.
5. Unsold goods past an agreed date can require a payment or a markdown plan.

Pre-Season Inventory Loans: Paying for Stock Months Before It Sells

Some businesses order months ahead because suppliers set early order dates. A pre-season inventory loan pays for that order and is paid down as the goods sell. The test a partner applies is simple: will the goods sell before the loan comes due? Illustration only, invented figures: stock costing $64,000 at a 45% gross margin should bring in about $116,364 if it all sells at full price (our arithmetic).

Read the agreement for what happens if goods are left over: a required payment on a set date, a fee extension, or the funder taking the goods. A business with a record of past sell-through can show it with last year's sales reports for the same lines.

Inventory Financing Lenders and What Each Will Lend Against

Specialty inventory funders lend against stock directly and track it closely, sometimes with regular counts. Banks can include inventory in an asset-based line of credit, setting part of the limit from stock on hand. Some suppliers offer their own terms, such as paying 60 or 90 days after delivery, which is financing too; set the total cost of each option side by side.

• The advance rate: the share of cost the funder pays.
• The fee or rate, and how often it is charged.
• How payment works as items sell, by item or on a schedule.
• Reporting: counts, stock lists or point-of-sale data.
• What happens to goods still unsold at the end.

How Floor Stock Financing Works for Dealers

Floor stock financing, also called floor plan financing, lends against individual high-value items on display: vehicles, trailers, equipment or furniture. Each item is financed when it arrives and paid off when it sells, and the funder audits the floor to match items to the loan. La Plata County, CO had 7 automobile dealers and 17 furniture and home furnishings stores with paid employees in 2023 (County Business Patterns 2023); dealers of this kind are the businesses floor plans are built for.

The cost builds the longer an item sits, so floor plans reward fast turnover. A dealer reviewing an offer should ask about curtailments, the payments due once an item has been on the floor for a set number of days.

Retail Stock in La Plata County, CO by the Census Counts

Retail trade had 285 employer establishments in La Plata County, CO in 2023, with 3,512 employees and $136.1 million in annual payroll; 39.3% had fewer than five employees (County Business Patterns 2023). Within retail were 29 building material and garden supply dealers, 26 clothing stores, 17 furniture stores and 12 grocery stores. Nonemployer Statistics, a separate program, counted 366 retail businesses without paid employees for 2024 (Nonemployer Statistics 2024).

Each of those stores buys stock before selling it. The retail page covers store funding in general, all six funding types are compared side by side, and the Durango, CO page has the county and ZIP counts.

By Aspenspring Business Loans · Updated October 22, 2026