Borrowing against inventory?

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March 15, 2026

by a searcher from University of Oklahoma - Michael F. Price College of Business in Oklahoma City, OK, USA

Anyone have experience using inventory-backed loans for working capital? I'd love to hear how it went, pros/cons, and recommendations for lenders that work well with small main street businesses. Thanks!
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Reply by a professional
from The University of Georgia in Atlanta, GA, USA
It's a pretty standard asset backed lending (ABL )practice for working capital, just need to ensure the inventory is accurate and you have good controls around the accounting of inventory (ins and outs). If you don't have good controls around inventory you can get upside down quickly!
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Depending on what the inventory is, there may be financing options. If it is inventory that has general market value and can be used by many, then there are options. If the inventory is for a specific customer and does not have more general uses, then it can be very hard to finance inventory. Most inventory lenders also want the A/R as collateral that way they control the full collection cycle as that inventory eventually turns into A/R. You could use SBA financing if you need a smaller amount as there is an SBA express line of credit that goes up to $500,000 and does not require a borrowing base. I would be happy to discussion options. You can reach me here or directly at redacted
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