Your factory wants 30% upfront. Your biggest retailer pays 60 days after delivery. Somewhere in between sits a number you can't quite cover, and a decision you've been putting off: go to the bank, or finance the stock itself?
Most comparisons answer this badly. They line up two interest rates, declare the lower one the winner, and move on. That isn't how the decision actually gets made in a product business — because the thing standing between you and the order usually isn't the cost of money. It's when the money turns up.
This guide is for founders and finance leads at product businesses — brands importing finished goods, wholesalers and distributors, DTC and omnichannel teams — weighing a bank loan against inventory financing for a specific order. We'll cover what each one actually does, what each really costs, and how to tell which problem you've got.
Key takeaways
A bank loan gives you a lump sum against your business as a whole. Inventory financing pays for specific stock, tied to specific supplier invoices.
Banks usually offer a lower headline cost of money. They're also usually slower, and they usually want collateral, a personal guarantee, or both.
The real difference is timing. A better rate doesn't help if the money lands after your factory slot closes.
Inventory financing is priced per order rather than per year, so you only pay when you use it.
If you need long-term money for equipment, premises or refinancing, a bank is the right answer and will be cheaper. If you need to pay suppliers before your customers pay you, it isn't.
What inventory financing is
Inventory financing is a way to pay for stock before you've sold it. A financing partner covers the cost of your inventory — or pays your supplier directly — and you repay once the goods have landed or sold. It's tied to specific orders rather than to your whole balance sheet.
That last part is the bit that matters. A bank underwrites your company and hands you a facility. Inventory financing underwrites a transaction: this supplier, this invoice, this order, repaid on this date.
Some inventory financing takes your stock as security, which means the goods on your shelf are pledged to the lender until you've repaid. Some doesn't. Treyd doesn't — your inventory stays yours, and there's no charge over it. Worth checking, because the two arrangements get called the same thing.
That isn't the same as no security at all. Depending on your business, Treyd may ask for a personal guarantee in some cases. We often present more than one offer, so you can see the trade-offs side by side and pick the one that fits.
What a bank loan is, in this context
When product brands say "bank loan" they usually mean one of three things: a term loan, a revolving credit facility, or a business overdraft. All three give you general-purpose money against the strength of your business, repaid over time with interest.
Banks are good at this. They have the cheapest cost of capital in the market and they're not trying to hide it. What they're not built for is a brand that needs £84,000 released to a factory in Guangzhou nine days from now because the production slot moves otherwise.
The friction is structural, not a failure of service. A bank is underwriting your company for a year or more, so it wants last year's filed accounts, security it can fall back on, and time to get comfortable. That process runs in weeks. Purchase orders run in days.
Inventory financing vs a bank loan: the side-by-side
What it funds. Bank: your business, generally. Treyd: specific supplier invoices — stock, raw materials, packaging, freight, marketing.
Speed to first funding. Bank: typically several weeks. Treyd: if you provide all the information we need, we can approve you and fund your first invoice in as little as 24 hours.
What it's underwritten on. Bank: filed accounts, often a year old. Treyd: live accounting and bank data.
Collateral. Bank: usually required — assets, a debenture, or a personal guarantee. Treyd: no stock pledged as collateral. A personal guarantee may be needed in some cases — it depends on your business, and you'll often get more than one offer to choose from.
Who owns your stock. Bank: the lender may hold a charge over it. Treyd: you do.
Cost structure. Bank: interest over time, plus arrangement and sometimes exit fees. Treyd: one flat fee per financed invoice, shown before you accept.
Cost when unused. Bank: you often pay for the facility whether or not you draw it. Treyd: nothing — applying and holding a Treyd limit are both free.
Repayment. Bank: fixed schedule, often over years. Treyd: you choose the term, from 1 up to 5 months.
Limit changes. Bank: reapply. Treyd: re-underwritten on live data as you grow.
Best for. Bank: equipment, premises, refinancing, long-term assets. Treyd: paying suppliers before your customers pay you.
Why timing matters more than rate
Here's the honest version, and it's the part most financing content skips.
Measured purely as cost of money, a bank usually wins. Bank of England figures put the average effective interest rate on new loans to UK companies at 5.42% in June 2026 — and smaller businesses typically pay more than that average. Inventory financing costs more per pound borrowed. Anyone who tells you otherwise is hoping you won't do the math.
But cost of money is the wrong measure when the constraint is timing, for a simple reason: you don't hold inventory financing for a year. You hold it for one order cycle and then it's gone. A facility priced at 8% a year that takes eight weeks to arrange is not cheaper than a fee you pay for 90 days on the order you're placing on Thursday. It's a different product solving a different problem.
The question worth asking isn't "which rate is lower?" It's "what does the slower option actually cost me?" Usually one of three things:
A smaller order. You order what your bank balance allows rather than what you can sell, which means a worse unit price and more spent per unit on freight.
A stockout in your best-selling line. Six weeks out of stock in your hero SKU costs more than any financing fee, and on marketplaces it costs ranking too.
The order you didn't take. The retail account you couldn't fund. That one's the expensive one, and it never shows up in a cost comparison.
"Cash flow is always the constraint — our growth is shaped by how fast we can fund and turn around inventory, the demand is not the issue." — Ville Rönkkö, Managing Partner, Nordic Beauty Inc.
A £120,000 order, funded two ways
A skincare brand places a £120,000 production order for Q4. Here's how the cash moves:
Day 0: supplier deposit, 30% — £36,000 out.
Days 0–60: production.
Day 60: balance due on shipping, 70% — £84,000 out.
Days 60–90: sea freight.
Day 150: retailers pay on 60-day terms — revenue in.
Cash out before cash in: about 150 days.
The bank route. Apply in July for stock landing in October. Assume the facility is approved — you'll likely give a personal guarantee, possibly a debenture, and you'll be drawing on filed accounts that don't show this year's growth. If approval takes six weeks, the day-0 deposit has already been paid out of your own cash or the slot has moved. The rate is good. The calendar isn't.
The Treyd route. You upload the supplier invoice to the Treyd platform. Treyd pays your supplier directly, in their currency, with the FX rate shown upfront — £36,000 on day 0 and £84,000 on day 60. You repay on a term you choose, from 1 up to 5 months, once the stock has landed and started selling. You see the flat fee before you commit to anything, and if you repay early that part of your limit frees up for the next order.
The order doesn't shrink to fit your bank balance. That's the whole difference.
When a bank loan is the better call
We'd rather say this now than waste your quarter.
You're buying an asset, not stock. Machinery, a warehouse, a fit-out. That's what term lending is for, and a bank will be cheaper.
You need general-purpose working capital. Payroll, rent, overheads. Treyd pays supplier invoices, not general expenses.
You want a permanent facility sitting there year-round. A revolving credit line does that job.
Your cash gap is on the other side. If the problem is customers who haven't paid yet rather than suppliers you need to pay, receivables financing fits better than inventory financing. Invoice financing for product businesses explained covers that.
You're pre-revenue. There's no trading history to underwrite yet.
Plenty of brands run both, and that's the normal end state: a bank facility for the base, inventory financing for the peaks and the opportunities the base won't stretch to.
When inventory financing is the better call
Your suppliers want payment before or at shipping, and your customers pay 30–120 days after delivery.
You're growing faster than your filed accounts suggest, so a bank is underwriting a version of your business that's a year out of date.
You've been offered an order you can't currently fund.
Your peak season needs stock in place months before the revenue arrives.
You don't want to pledge your inventory, or give up equity, to fund stock.
"Banks wanted collateral and weeks of paperwork." — Cranborne Audio
"We always self-funded until the gap got too big." — Potions Cauldron
What inventory financing costs with Treyd
Applying is free. Holding a Treyd limit is free. You pay one flat fee per financed invoice, and you see it before you accept — no interest accruing, no arrangement fee, no exit fee, nothing charged for a limit sitting unused.
In the UK, pricing ranges from 1.4% to 3% per month. Your rate depends on four things: the market you operate in, your repayment term, the strength of your financials (which also sets your Treyd limit), and your repayment history with Treyd.
What that looks like: at 1.8% per month, a £20,000 supplier invoice repaid over 3 months (90 days) costs £1,080 — 5.4% of the invoice, for the whole cycle.
Set that against an 8%-a-year bank loan and the annualized number looks higher. Set it against ordering 30% less stock at a worse unit price, and it usually doesn't. How much supplier financing really costs per order walks through that math properly.
Summary
A bank loan and inventory financing solve different problems, and the mistake is treating them as competing answers to the same one. Banks fix the cost of money and they're good at it. Inventory financing fixes the timing of it — the gap between paying your factory and getting paid by your customers — which is the gap that actually stops product brands from placing the order they know will sell.
If your constraint is timing, price the alternative honestly: not against the bank's rate, but against the order you'd otherwise place smaller, later, or not at all.
