Quick answer
Wholesalers and distributors borrow to buy stock in bulk, pay suppliers before customers pay them, take on new product lines or accounts, and fund warehouse equipment and vehicles. Lenders read stock turn, debtor quality, the gap between supplier and customer terms, gross margin and existing security over stock. Trade, inventory and invoice finance are common; property security opens larger amounts.
Key points
- The gap between paying suppliers and being paid drives cash needs.
- Debtor quality matters as much as sales volume.
- Supplier retention of title may already sit over your stock.
- Thin margins leave little room for slow-moving lines.
- Common uses
- Bulk stock, terms, warehouse
- Lenders focus on
- Stock turn, debtors, margin
- Unsecured options
- Typically $5k – $500k
- Property-secured
- $20k – $5m
A wholesaler sits in the middle of the supply chain, and the middle is where cash gets squeezed. Manufacturers and importers want paying in 30 days or upfront; retailers, trade customers and hospitality venues expect 30, 45 or 60 days. In between, stock sits on pallets in the warehouse. Lenders look at how long that whole cycle takes and how safely the business carries it.
What do wholesalers and distributors borrow for?
- Bulk and seasonal stock. Buying deep before peak demand, or locking in a supplier discount.
- Supplier terms versus customer terms. Paying suppliers on time while customers take longer.
- New product lines and exclusive agencies. Opening stock and marketing for a new brand.
- Large new accounts. Stocking up for a retail chain or a big trade customer.
- Warehouse equipment. Forklifts, racking, pallet jacks, cool rooms and scanners.
- Delivery vehicles. Vans and light trucks for local distribution.
- Moving to a bigger warehouse. Fit-out, bond and relocation costs.
How lenders read a wholesale business
The cash conversion cycle. Days of stock on hand plus days to collect from customers, minus days you take to pay suppliers. The longer the cycle, the more working capital the business needs. A lender may calculate it from your financials even if you never have.
Stock turn and slow lines. Wholesale margins are often slim, so a range of slow-moving lines can wipe out profit. Lenders like to see stock reporting that shows what’s moving and what’s aging.
Debtor quality. Who your customers are matters as much as how much they buy. An aged debtors list showing established customers paying within terms supports larger facilities. Debtors drifting past 60 or 90 days do the opposite.
Security over stock. Suppliers often register retention of title interests, and existing lenders may hold a general security. A search of the PPSR shows who already has a claim. New lenders need to know where they’d sit.
Wages and overheads. Warehouse and delivery staff are a fixed cost. From 1 July 2026, Payday Super requires super to be paid with each pay run, which moves cash out of the business sooner.
Holding back on a big order because the warehouse budget is tapped out? See if your business qualifies — enquiring doesn’t touch your credit file.
Which facility fits a distributor?
| Facility | What it funds | Suits |
|---|---|---|
| Trade finance | Paying suppliers for specific orders | Bulk and seasonal buying |
| Import finance | Overseas supplier payments and landing costs | Distributors importing their range |
| Inventory finance | Stock held in the warehouse | Businesses with steady stock turn |
| Debtor finance | Cash tied up in customer invoices | Wholesalers selling on account |
| Property-secured loan | Larger needs, warehouse purchase | Growth and expansion |
Many established distributors pair two: trade or import finance on the buying side and debtor finance on the selling side, so cash flows through the whole cycle without a gap.
The new-account dilemma
Landing a big retail chain or a national trade customer is a milestone, but it changes the business overnight. The new account may want stock held on hand, longer payment terms, promotional allowances and delivery to many sites. Meanwhile your suppliers still want paying on their usual terms.
Lenders look at whether you’ve modelled it: how much extra stock you’ll hold, how long the new customer will take to pay, and what the margin looks like after allowances and freight. A short cash forecast covering the first few months of the new account turns a nervous application into a confident one.
Documents a lender will want
- Business bank statements for six to twelve months
- Aged debtors and creditors lists
- Stock report showing value, turn and aged items
- Key supplier and customer agreements
- BAS, financial statements and tax returns
Red flags in wholesale applications
- Stock growing faster than sales.
- Debtors aging past terms, or one customer making up most of the book.
- Supplier accounts on stop or regularly paid late.
- Margins squeezed by freight and allowances that weren’t priced in.
- ATO arrears, considered case by case.
What lenders typically ask distributors
- What do you sell, and who are your main customers?
- How long does stock sit in the warehouse on average?
- What are your supplier and customer payment terms?
- Do any suppliers hold retention of title over your stock?
- What will the funds help you achieve?
Illustrative example
Illustrative example: a food and beverage distributor supplying cafés and independent grocers wins a regional supermarket group. It needs to double stock on core lines and will wait about 45 days for payment from the new customer, while its own suppliers want payment in 30. It sets up a $300k debtor finance facility over its customer invoices and uses trade finance for a $120k bulk order from an overseas supplier. The two facilities cover both ends of the cycle as the new account ramps up.
If you also sell direct to consumers online, the e-commerce business loan guide covers how lenders read online stock and payouts. For neighbouring industries, use the industry finder.
When should a distributor arrange finance?
Timing in wholesale is mostly about the buying calendar. If your peak is Christmas, orders with overseas suppliers may need to be placed and paid for in winter, months before retailers start reordering. If you supply hospitality, the run-up to summer is when venues stock up. Arranging a facility before those buying windows lets you negotiate with suppliers from a position of strength, often securing better pricing for paying promptly.
The other trigger is a change in your customer base: a new chain, a government panel, or an export opportunity. Applying while negotiations are underway — rather than after the first purchase order lands — gives a lender time to understand the deal and gives you certainty before you commit to stock.
How is pricing set?
There’s no single price. Lenders weigh trading history, debtor quality, stock turn, security and the structure of the facility. Debtor and trade finance usually involve a service fee and a charge on funds drawn, while term loans carry an establishment fee and property-secured loans may add legal and valuation costs. Ask how each fee works so you can compare facilities fairly, and check how flexible the facility is when sales swing with the seasons.
Ready to fund the next order?
When the opportunity is a bigger account or a better buying deal, the right facility lets you say yes without starving the rest of the business. Start with a 60-second enquiry; no credit check is involved in asking. We won’t spray your details across a list of lenders. A real person will review how your business buys and sells and call you to talk it through. Please fill the form in accurately — turnover, terms and the amount — so the first option we raise fits your cycle.
Frequently asked questions
What finance suits a wholesaler waiting on customer payments?
Invoice or debtor finance is often the natural fit, because it advances against what customers already owe. A line of credit also works for smaller businesses with steady trading.
Can I borrow to buy a large stock order at a discount?
Yes. Trade finance, inventory finance or a short-term loan can fund a bulk buy. Lenders look at how quickly that stock will sell and whether the discount outweighs the cost of carrying it.
Will my suppliers' retention of title affect finance?
It can. Many suppliers register retention of title over goods until they're paid. Lenders search the PPSR to understand who has a claim over your stock before lending against it.
Do lenders care about the customers I sell to?
Very much. Selling to established retailers, trade businesses or government on clear terms reads well. A debtor book concentrated in one or two customers is a risk.
Can I finance forklifts and racking?
Yes. Warehouse equipment is commonly funded through equipment finance or a chattel mortgage, separate from working capital.