Inventory Financing After Bank Rejection | Canada

Summary (TL;DR)

Bank said no? You still have options. Canadian eCommerce brands routinely fund inventory with non-bank tools that prioritize sales velocity, margins, and clear launch calendars over traditional covenants. The quickest paths are a Working Capital Loan for single, time-boxed pushes; a Business Line of Credit for rolling restocks; MCA if most revenue is card-based and you want repayments tied to sales; Factoring for wholesale invoices; and Asset-Based Lending (ABL) when you have meaningful inventory/AR to leverage. Clean documentation = 24–48h decisions in many cases. Start by sizing the gap in our calculator, then pick the structure that matches your cash-conversion cycle.

Why “no” from a bank isn’t the end

Traditional lenders underwrite to covenants, collateral, and multi-year financials. eCommerce is different: seasonality, rapid SKU changes, paid-media ramps, and platform fees can make bank files look “thin” despite strong revenue. Alternative facilities focus on recent sales, contribution margin, sell-through timelines, and verifiable POs—the variables that actually drive your ability to turn goods into cash.

The fastest options (at a glance)

A simple 3-step path to funding

1. Quantify the gap
   List SKUs, units, landed costs (product + freight + duties + brokerage + packaging), and exact pay-by dates vs. expected cash-in dates. Model 6/12/18-month options in the calculator.
2. Apply with an eCom-ready file
   Upload 3–6 months business bank statements, Shopify/Stripe/POS processor reports, a use-of-funds paragraph tied to SKUs/margin, and (if applicable) retailer POs or supplier pro-formas.
3. Choose structure by cash cycle

• Fixed, time-boxed push → Working Capital Loan
• Rolling restocks → Business LOC
• Card-heavy DTC, variable remittances → MCA
• Wholesale terms → Factoring
• Larger, asset-backed scale → ABL, or step-down later via Business Refinancing

What underwriters look for (so you fund faster)

• Revenue consistency: trailing 3–6 months gross sales, refunds, and chargebacks.
• Gross margin & turnover: realistic sell-through schedule (weeks on hand by SKU).
• Supplier readiness: pro-formas, MOQs, lead times, INCOterms, and freight mode.
• Cash-flow coverage: how the facility amortizes from contribution margin—even in a downside case (e.g., slower ads, higher returns).

Want the sharpest pricing? Be open to Secured Loans or plan a post-launch refinance once velocity stabilizes.

Playbooks that work in practice

• Peak-season buy: 12-month Working Capital Loan to land the big inbound; small LOC for mid-season top-ups.
• DTC + wholesale mix: Keep DTC inventory on LOC/MCA; factor wholesale invoices so Net-60 doesn’t starve reorders.
• SKU expansion: Launch with an Unsecured Loan for speed; consolidate into a Term Loan or ABL after 2–3 months of clean sell-through.
• Ops upgrade: Finance racking, label/pack, or conveyors separately via Equipment Financing so inventory capital stays focused on product.

Documentation checklist (copy/paste)

• 3–6 months business bank statements (PDFs; all operating accounts)
• Shopify/Stripe/POS sales reports; refund/chargeback history
• Supplier quotes/pro-formas, freight & duty estimates
• If wholesale: recent POs and customer payment terms
• One-paragraph use-of-funds and timeline to cash conversion

Cost control: three fast levers

• Match term to turnover: If your average sell-through is 10–14 weeks, avoid 24-month debt unless pricing is compelling.
• Blend tools: Keep inventory on LOC/loan; use Factoring only for the invoices that truly slow cash.
• Refinance the peak: After launch, step down cost via a lower-rate secured or term facility.

Case study (realistic scenario)

A Vancouver DTC brand was declined by its bank ahead of holiday. We sized a 12-month Working Capital Loan to landed cost and contribution margin, plus a Business LOC for rolling reorders. Two retailer POs were factored, accelerating cash on Net-45 terms. The brand hit in-stock dates, cut air-freight premiums by planning earlier, and refinanced three months later to lower blended cost as velocity normalized.

FAQ

Will a previous bank rejection disqualify me?
No. Alternative underwriting weighs recent sales, margins, and clear inventory plans more than long covenants.

Which tool fits card-heavy online sales?
An MCA maps remittances to sales. For predictable pushes, a Working Capital Loan keeps budgeting simple.

How big can my facility be?
We size to recent deposits, margin, turnover, and supplier timelines. Larger needs may suit ABL.

Can I finance freight, duties, and packaging too?
Yes—include them in your use-of-funds. Term loans and LOCs can cover total landed cost.

What if a retailer pays me in 45–60 days?
Submit those invoices under Factoring to turn AR into immediate cash.

Can I lower cost later?
Yes—once velocity stabilizes, we can consolidate or refinance into a lower-cost term or secured facility.

Next step

Map your next drop with numbers, not guesswork. Run scenarios in the calculator, then contact our credit analysts to align the facility with your launch calendar and margin plan.

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