The deal is good. The timing is not.
Suppliers offer their best prices to buyers who can commit big and pay quickly. A manufacturer clearing a production run. An importer with a container that a customer backed out of. A wholesaler offering a pre-season price to anyone who pays before the price rise. A competitor's stock at a liquidation sale. A distributor offering a better tier if you double your order.
The saving can be significant, and over a season it can make a real difference to your margin. But the offer usually comes with a deadline and a condition: pay now, or pay in full upfront. If your cash is tied up in existing stock, debtors or a recent project, the deal goes to someone else.
Why trade credit and banks do not fit
Trade credit providers usually want years of financials, check credit history and set limits based on your past orders, not this opportunity. A bigger limit takes time to approve. A bank facility commonly takes up to three months or more, by which time the deal has closed. Inventory and cash flow lenders may move quicker but often lend smaller amounts and want frequent repayments while the stock is still sitting in the warehouse.
How Equity Tap funds a bulk stock purchase
Equity Tap lends from $50k to $5m for one to twelve months, secured by a first mortgage, second mortgage or caveat over residential or commercial property anywhere in Australia. We secure the loan against property, not the stock, so the amount is not limited by what a stock lender would advance against your inventory.
The exit is the sale of the stock. As it sells over the term, the proceeds repay the loan. Because stock takes time to move, the repayment structure matters:
- Interest for up to the first six months can be prepaid or added to the loan, so there are no scheduled payments in that period. The stock has time to sell before the loan needs attention.
- The term can match the selling season, from one month to twelve months.
- You can repay as you sell, so you only carry the loan for as long as you need it.
Interest is not waived. Each loan is priced on your individual circumstances, aiming for the sharpest rate available for that situation, with the full cost shown before you proceed.
Running the numbers before you call
A stock deal only makes sense if the saving and the extra sales outweigh the cost of the funding. We make sure you fully understand the loan, the costs and the exit before you proceed, and it helps to work through these steps first:
- Work out the saving. What would the same stock cost at your normal price and order size?
- Estimate the sell-through. How long will it realistically take to sell, based on past seasons?
- Get our full cost. We show the full cost of the loan for your term before you proceed.
- Compare. If the saving and margin clearly beat the cost of funds, the deal stacks up.
- Plan for a slow season. Think about what happens if sales are slower than expected.
Our guide to working capital business loans covers how stock fits into the bigger cash flow picture.
Who uses stock funding
| Business type | Typical opportunity |
|---|---|
| Retailers | Pre-season or pre-Christmas bulk buys at a lower unit price |
| Wholesalers and distributors | A full container or production run offered at a discount |
| Trade suppliers | Buying ahead of a manufacturer's price rise |
| Hospitality and food businesses | Bulk buying of non-perishables or equipment |
| Automotive and machinery dealers | Buying a block of vehicles or machines from a dealer or auction |
What we need
- ID for borrowers and guarantors
- Property details and existing mortgage balances
- The supplier's offer, quote or invoice showing the deal and deadline
- A short note on how and when the stock will sell
We do not need tax returns, BAS, profit and loss statements, an accountant's letter or bank statements. We do not order a valuation before approval. No credit check is made at initial assessment, so a thin trade credit file or a past decline is not automatically a problem.
How quickly it can happen
Conditional approval can often be given on the phone and a term sheet issued in about 30 minutes once we have the scenario. Eligible loans can settle in as little as 24 hours, often in time to pay the supplier before their deadline. We never guarantee approval or timing, so call as soon as the offer lands.
For example, a hardware retailer offered a substantial discount on a full year's supply of a fast-moving product line, if paid upfront before the manufacturer's price rise, might take a six-month second mortgage over a commercial property, pay the supplier in full, and repay the loan as the stock sells through the year.
When stock funding is about survival, not savings
Sometimes the issue is not a discount but a supplier who will only resume supply if an overdue account is cleared and future orders are paid upfront. That is a crisis scenario rather than an opportunity, and we cover it on avoiding a business crisis. For other time-limited deals, see opportunity funding.
Brokers
A client with a supplier deadline needs a quick answer. Send the scenario through our broker page and deal directly with the lending team.
Take the deal
Apply online or call 1300 123 024 with the supplier's offer in hand.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
Can I borrow to take advantage of a supplier discount?
Do you lend against the stock itself?
Will I have to make repayments before the stock sells?
My trade credit limit is too low. Does that matter to you?
How fast can I pay the supplier?
What if the stock sells slower than I expect?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.