Ecommerce & Digital
Business Funding for Wholesale Distributors
Wholesale distributors are caught between manufacturers who want to be paid on delivery and retailers who want to pay on net-30 or net-60 terms. Your entire business model depends on bridging that gap with working capital. Margins are thin, typically 10 to 25 percent gross, so the business only works at volume. Adding new product lines or territories requires inventory investment that may take months to pay back.
Common Uses
What Wholesale Distributors Use Funding For
- Fund large purchase orders from manufacturers to maintain adequate stock levels
- Extend net-30 or net-60 credit terms to retail customers without straining cash flow
- Lease warehouse space and invest in racking, forklifts, and inventory management systems
- Add delivery trucks and route drivers to expand your distribution territory
Funding Options
Best Funding Types for Wholesale Distributors
Invoice Factoring
Factor your retail customer invoices to close the gap between paying your suppliers and collecting from your buyers. Distribution factoring companies understand the thin-margin, high-volume nature of the business and price accordingly.
Inventory Financing
Borrow against your warehouse inventory to fund new purchase orders. Distributors carry large inventory positions that make excellent collateral as long as the products are not perishable or highly specialized.
Asset-Based Lending
Combine your receivables and inventory into a single revolving credit facility. ABL gives distributors higher advance rates than traditional lines of credit because the lender takes a security interest in both asset categories.
What Lenders Look For
Qualification Notes for Wholesale Distributors
Related Industries
Related Ecommerce & Digital Funding
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