How can fast-growing e-commerce or logistics companies finance warehouse equipment?

Fast-growing e-commerce and logistics companies usually have the same problem: growth is eating cash faster than profits can catch up, and the warehouse is where the big cheques get written.

Here are the main ways those companies typically finance warehouse equipment, and when each one makes sense.

Start with: what are you actually financing?

Most lenders bucket “warehouse equipment” into a few categories, and how it gets financed depends on which bucket you’re in:

• Material handling: forklifts, reach trucks, pallet jacks, order pickers
• Storage systems: pallet racking, mezzanines, shelving, cantilever racking
• Conveyor & automation: conveyors, sortation systems, pick-to-light, AS/RS, robotics
• Loading dock & safety: dock levelers, dock doors, barriers, guard rails
• IT & controls: warehouse management systems (WMS), scanners, handhelds, RF infrastructure

Hard, moveable assets (forklifts, conveyors) are easiest to finance. Fixed fit-out (racking, mezzanines) and software can still be financed, but often through slightly different structures.

Equipment lease or term loan (core option for most builds)

For most fast-growing e-commerce or 3PL operations, the backbone is a dedicated equipment lease or loan on the big-ticket assets.

How it works

• You get a lump sum or vendor-direct funding to pay for forklifts, racking, conveyors, etc.
• You repay over a fixed term (often 36–84 months).
• The equipment itself is the primary collateral.

Why it works well for growth companies

• Matches payments to the life of the asset (you’re paying for the conveyor while it’s generating throughput).
• Keeps cash free for inventory, staffing and marketing.
• Easier to scale: you can add a new schedule as you expand to a second warehouse or install another line.

What lenders look at

• Time in business and revenue trajectory (they like strong month-over-month growth, even if margins are still catching up).
• Cash flow coverage (can the business afford the new payment on top of existing obligations?).
• Quality of the vendor quote (clear serial numbers/specs, realistic pricing, warranty, install terms).
• Personal guarantees and outside net worth for earlier-stage companies.

If you want a sense of payment ranges before talking to anyone, you can run scenarios in Mehmi’s online payment calculator and then adjust amount/term around your comfort zone.

Sale-leaseback on equipment you already own

If you scaled fast and paid cash for forklifts, reach trucks or racking early on, you may be sitting on trapped equity.

A sale-leaseback lets you:

• Sell those assets to a lender for cash now.
• Lease them back over a term (you keep using everything as normal).
• Use the proceeds to fund the next warehouse, automation upgrade or inventory push.

This is common for logistics and e-commerce operators that outgrew their original facility and need to fund a second site without diluting equity or taking on an expensive short-term loan.

At Mehmi, we often combine this with fresh financing on new equipment under our refinancing & sale-leaseback options, so you free up capital and upgrade at the same time.

Asset-based lending or equipment line of credit

Once you’ve built a meaningful asset base (forklifts, conveyors, rolling stock, even trailers), you can sometimes move to an asset-based loan (ABL) or equipment line of credit instead of one-off term loans.

How it works

• The lender sets a limit based on a percentage of the appraised value of your equipment (and sometimes receivables).
• You draw as needed for projects (new racking, extra forklifts, conveyor extensions).
• You pay interest only on what you use.

This can be powerful for fast-growing logistics/3PL operators that constantly need to add capacity for new contracts. Mehmi structures these through our Equipment Line of Credit & Working Capital partners when a client is adding equipment in phases.

Government-backed and bank term loans for fit-out

For major warehouse build-outs, you sometimes need to finance:

• Leasehold improvements: mezzanines, office build-out, dock work
• Mixed equipment + construction packages
• IT and WMS implementation

Banks and credit unions may fund this through:

• A commercial term loan secured by equipment and/or a personal guarantee.
• A government-backed small business program (like CSBFP) that allows financing of equipment and leasehold improvements through your bank.

These can work well if you have:

• 2+ years of financials
• Strong growth and manageable leverage
• Enough time to go through a more formal approval process

If you’d like to see whether a bank-style term loan or a private equipment lender is more realistic for your profile, feel free to contact our credit analysts and we can walk through both paths.

Pairing equipment finance with working capital tools

Fast-growing e-commerce and logistics companies rarely fund everything through equipment debt alone. The most sustainable setups pair asset finance with working capital facilities:

• Operating line of credit: to smooth seasonal swings and big inventory buys.
• Invoice factoring / freight factoring: for logistics firms waiting 30–60 days on big shippers or brokers; you can convert receivables to cash quickly and use that to cover down payments or the first waves of build-out. See Mehmi’s invoice factoring and working capital loan options aimed at transportation and logistics.
• Merchant cash advance or card-based funding: more common with DTC e-commerce brands that do high volumes on cards; can help cover deposits, but usually isn’t ideal as the main way to fund long-lived assets because of the higher effective cost.

The general rule I use as a credit analyst:

• Long-life warehouse assets → term debt or lease
• Short-term needs (inventory, marketing, labour) → revolving credit, factoring, or working capital loan

This keeps you from using expensive short-term money to fund a 7-year asset.

Credit packaging: how to make approvals smoother

Regardless of the product, underwriters for warehouse equipment are going to focus on:

• Clear equipment quotes (itemized, with install/shipping separated where possible)
• Recent business bank statements and financials showing growth and capacity to service debt
• Any major contracts that support your growth (3PL agreements, fulfillment contracts, enterprise customer wins)
• A realistic cash flow forecast that includes the new debt payments
• Proof of existing leverage (what you already owe and on what terms)

If you’re moving from a single 10,000 sq ft unit to a 60,000 sq ft facility, for example, it can be smarter to phase the financing:

1. Finance the essential racking and material handling to get the first portion of the warehouse live.
2. Add automation and mezzanines once initial volume is proven.
3. Layer in an operating line or factoring facility to support peak season.

We see many businesses try to finance the “perfect end state” on day one and struggle with approvals or over-leveraging. Staging the spend usually tests better from a credit perspective and keeps more options open for future raises.

If you’re looking at a specific warehouse build or expansion and want a second set of eyes on how to structure the financing mix (leases vs loans vs working capital), feel free to contact our credit analysts at Mehmi Financial Group. We can model different scenarios, show you the payment impact using our financing & leasing options, and help you avoid common pitfalls as you scale.

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