- Short answer
- Bankable with turns and a long lease
- Best fit
- Line of credit against inventory
- Also fits
- SBA 7(a) for acquisition or buildout
- Once bankable
- ABL on a borrowing base
- What decides it
- Inventory turns and remaining lease term
- Usual disqualifier
- Lease shorter than the requested term
Turns, not margin
A store selling at thin margin with fast turns generates far more cash than one holding rich margin on stock that sits. Lenders extending against inventory care about how quickly it converts, because slow stock is collateral that is quietly losing value on your shelf.
Know your turns by category, not just in aggregate. Most retailers have one department carrying the business and another quietly absorbing capital. A borrowing base will discount the second one heavily, and you should know which is which before a lender tells you.
The lease is a credit term
This is where retail files die. A lender will not write a ten-year note against a location with three years of lease left, because the business cannot operate without the site and relocation destroys the customer base you built.
Confirm remaining term including options, confirm the options are yours to exercise, and confirm the landlord will sign a collateral access agreement so the lender can reach inventory in a default. That last item surprises people late in the process.
What a borrowing base counts
- Current, sellable inventory at cost — the core, typically advanced at 50% to 65%.
- Seasonal stock gets discounted outside its season.
- Aged and clearance inventory is usually excluded entirely.
- Consignment stock is not yours and never counts.
- Wholesale receivables, if you sell to other retailers, are often the best asset on the list.
Reconciliation matters more than in most industries
Retail is cash-intensive, and lenders check that POS totals, merchant settlements, sales tax filings and deposits agree. Gaps between those four are the fastest way to lose credibility on an otherwise good file, and they are usually bookkeeping rather than anything worse.
Where retail files get declined
- Remaining lease shorter than the loan. The most common single reason.
- Slow turns with aged stock carried at full cost on the balance sheet.
- POS and deposits that do not reconcile.
- Cash-basis books with inventory expensed on purchase.
- Stacked advances, which retail is targeted for heavily because of daily card volume.
Send us the file either way. Send inventory by category with ageing and your lease, and we will tell you what a base supports. Either way you get the memo, and you will know our fee before you commit to anything.
Why retail sees the most solicitation
Card volume is visible to processors, and processors sell that visibility. Retailers with steady daily settlement receive more advance offers than almost any other sector.
Inventory is usually the way out. A line against a borrowing base of sellable stock replaces the advance with a facility that costs a fraction as much and does not take a cut of every sale.
We do not originate advances, and we will not stack you. But refinancing out of them is something we place regularly — and it is usually the step that has to happen before anything cheaper becomes possible. Send the funding agreements and three months of bank statements.
Common questions
- Is a retail business bankable?
- Bankable with turns and a long lease
- What financing fits a retail business best?
- Line of credit against inventory
- What do lenders look at for retail businesses?
- Inventory turns and remaining lease term
- Why do retail businesses get declined?
- Lease shorter than the requested term
Industries with the same answer
These businesses look nothing alike, but the product that fits them is the same one — and usually for the same structural reason.