SBA lenders approved 128 7(a) loans to toy and hobby goods wholesalers from October 2023 through June 2026, $57,980,800 from 49 lenders. The median loan was $150,000, level with the national $150,300, but 11.7% of loans were $1 million or more and the 90th percentile was $1,473,750. The median rate was 10.5% against 10.25% nationally. Acquisitions were 4.7% of loans at a median of $981,250, and there were 9 SBA 504 loans. Lenders decide these loans on the seasonal cash cycle, retailer concentration and how quickly the inventory could be sold if demand turned.
| Measure | Toy and Hobby Goods and Supplies Merchant Wholesalers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 128 | 162,355 |
| Median loan | $150,000 | $150,300 |
| Middle half of loans | $69,250 – $370,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 11.7% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.75% – 11.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 6 (4.7%) | 16,849 (10.4%) |
| Median acquisition loan | $981,250 | $693,000 |
| Lenders that made these loans | 49 | 1,648 |
| SBA 504 loans (real estate, equipment) | 9 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 128 (Oct 2023 – Jun 2026), from 49 lenders
- Median loan
- $150,000 (national $150,300)
- Loans of $1 million or more
- 15 (11.7%)
- Median rate at approval
- 10.5% (national 10.25%)
- Acquisitions
- 6 loans (4.7%), median $981,250
- SBA 504
- 9 loans, median $742,000
The approvals, read against the national figures
Toy and hobby goods merchant wholesalers (NAICS 423920) buy and resell toys, games, puzzles, hobby and craft supplies, models, collectibles and trading cards, and in some states consumer fireworks, to retailers, specialty shops and online sellers. The median loan supported only 2 jobs, which suggests that alongside established regional distributors the code holds many small importers and marketplace sellers that buy from factories and wholesale to shops.
| Figure | Toy and hobby wholesalers | What it tells a borrower |
|---|---|---|
| Loans / total / lenders | 128 / $57,980,800 / 49 | A good number of lenders for the size of the market |
| Median loan | $150,000 | Level with the national $150,300 |
| Middle half of loans | $69,250 to $370,000 | Inventory and working capital |
| 90th percentile | $1,473,750 | A heavy top end for a code with a 2-job median |
| Loans of $1 million or more | 15 (11.7%) | Established distributors borrowing at scale |
| Median rate (middle half) | 10.5% (9.75% to 11.5%) | A little above the national 10.25% |
| Fixed-rate share | 14.8% | Most loans float with the base rate |
| Median term | 120 months | Ten years, the working-capital maximum |
| SBA Express | 39.1% | Small inventory loans and lines |
| Start-ups / franchises | 8.6% / 0.8% | Mostly operating businesses |
| Acquisitions | 6 loans (4.7%), median $981,250 at 10.13% | Under half the national 10.4% share |
| SBA 504 | 9 loans, median $742,000 | Owner-occupied warehouses or long-life equipment |
The cash cycle a lender underwrites
A large share of the year's toy sales happens in the weeks before the holidays, and the wholesaler's cash moves well ahead of them. A lender sizing a loan here is really asking how deep the trough gets and whether the business climbs out of it every winter.
| Season | What happens | Cash position |
|---|---|---|
| Late winter and spring | Orders placed with factories, often with a deposit; retailers book holiday programs | Cash going out to suppliers, little coming in |
| Summer | Goods land and are paid for; warehouse fills | The deepest point: most cash sits in inventory |
| Early fall | Shipments to retailers; invoices issued on terms | Inventory turns into receivables |
| Winter | Retailers pay, less returns, markdown allowances and chargebacks | Cash comes back; the line should be paid down |
Because the need is seasonal, a ten-year term loan is often the wrong tool for most of it. A revolving line that rises with inventory and falls with collections fits the cycle; a term loan fits the permanent part of working capital and anything long-lived. See seasonal lines of credit and SBA CAPLines. SBA Express, 39.1% of loans here, goes up to $500,000 with a 50% guaranty and can be a revolving line, which suits a small importer funding one season at a time.
The lender also reads whether the business climbs out. A wholesaler that ends each winter with its line nearly repaid shows the season worked. One that carries last year's inventory into the spring is financing unsold goods with new debt, and a lender will want to know what that inventory is and what it will fetch.
What the receivables and inventory are worth to a lender
Asset-based lenders typically advance 80% to 90% of eligible receivables, and receivables more than 90 days past invoice are typically ineligible. Two features of the toy trade cut into that. Large retail customers take deductions for returns, damaged goods, late shipments and markdown support, which lenders call dilution and reserve against. And many wholesalers sell a large share to a few chains; borrowing bases commonly cap any single customer at 20% to 25% of eligible receivables, so a distributor whose biggest customer is far above that borrows less against it.
Inventory typically advances at up to 85% of net orderly liquidation value, or roughly half of cost, and toy inventory tests that formula. A licensed item tied to last year's film, a fad product after the fad, or a trading card line whose market value has fallen can liquidate far below cost. Evergreen games, craft supplies and hobby staples hold value better. Expect an appraiser or field examiner to age the inventory by product line; see inventory advance rates and net orderly liquidation value.
Show inventory by product line and age. A lender will lend more against a warehouse of evergreen games than against last season's licensed toys at the same cost.
Suppliers, licenses and import costs
Most toys are made overseas, so the wholesaler carries freight, duty and currency costs between order and sale, and changes in import tariffs can move landed cost after the retail price is set. Lenders read gross margin across several years to see whether the business has passed those swings through to customers or absorbed them.
Distributors of licensed product and exclusive brands raise a second question. A license agreement usually sets minimum royalties, requires the licensor's approval of products and customers, and runs for a fixed term; an exclusive distribution agreement with a manufacturer can end at renewal. A lender wants to know which revenue depends on which agreement, and when each one expires. Where a distributor needs to pay factories before its own customers pay, purchase order financing can fill the gap for large orders.
Buying a distributor, and buying a warehouse
Six loans financed a change of ownership, 4.7% of the code's total against 10.4% nationally, at a median of $981,250 and a median rate of 10.13%. In a distributor purchase, a large share of the price is inventory and receivables, not goodwill, so the lender and buyer care about the count, the valuation of slow stock, and the working capital delivered at close. The timing matters too: a purchase that closes in late summer inherits the season's peak borrowing on day one.
License and distribution agreements often cannot be assigned without consent, and a licensor may treat a change of ownership as a reason to renegotiate; see change-of-control consents. The SBA rules apply as in any change of ownership: at least 10% of total project costs as equity, a seller note counted toward it only on full standby for the life of the loan, no earnout, and an independent business valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000. From 1 October 2026 a purchase must show 1.25x coverage on historical results and needs financial due diligence, and one of $3 million or more excluding real estate needs a quality of earnings report.
Nine SBA 504 loans went to this code, at a median of $742,000; for a distributor the usual project is a warehouse. 504 finances owner-occupied real estate, typically 50% from a bank, 40% from the CDC and 10% from the borrower, and the business must occupy at least 51% of an existing building. For a distributor that has outgrown a leased warehouse, the comparison is monthly occupancy cost against rent, with a small down payment; see SBA 7(a) vs 504.
Preparing the file
Start with the SBA list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of any notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. A toy or hobby wholesaler should add the working-capital documents a line lender would ask for:
- An AR aging by customer, with days outstanding
- An AP aging, including deposits owed to factories
- An inventory report by product line and age, with licensed goods marked
- Monthly sales and inventory balances for two years, which show the seasonal cycle
- Deduction and return history for the largest retail customers
- License and distribution agreements, with expiry dates
SBA requires debt service coverage of at least 1.15x, and 1.0x globally including the owners. Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and takes it to lenders in its book: 278 write SBA 7(a) and 504, and 235 write asset-based loans and lines, for files where a borrowing base fits better. On SBA loans the lender pays Transparent, not the borrower.
Common questions
- Can a toy wholesaler use an SBA loan for inventory?
- Yes. Inventory and working capital are the main uses of SBA loans in this code. For the seasonal part of the need, an SBA Express line or a CAPLines facility usually fits better than a ten-year term loan.
- How much will a lender advance against toy inventory?
- Inventory typically advances at up to 85% of net orderly liquidation value, or roughly half of cost. Licensed and fad items can be worth much less in liquidation, so the advance depends on what the inventory is and how old it is.
- Do retailer chargebacks affect my borrowing base?
- Yes. Returns, markdown allowances and deductions reduce what receivables actually collect, and lenders reserve against that dilution. A clean record of deductions by customer helps the lender set a fair reserve.
- How large are SBA loans to buy a toy distributor?
- The 6 acquisition loans in the period had a median of $981,250 at a median rate of 10.13%. Much of the price is usually inventory and receivables, so the working capital delivered at close matters as much as the purchase price.
- Can I sell mostly on online marketplaces and still get an SBA loan?
- Yes, but lenders will ask for marketplace payout reports alongside bank statements, and for evidence of how returns, fees and account holds affect cash. Dependence on one marketplace is read like dependence on one customer.