01
Pre-season build (retail)
A homewares or fashion retailer placing pre-Christmas, pre-back-to-school, or pre-snow stock orders. A short-term loan or seasonal line of credit fits.
Reason to borrow
Buy stock or inventory for sell-through across the season.
Funding the gap between paying suppliers and selling through stock or inventory. The structures NZ retailers, wholesalers, and hospo operators use, indicative weekly costs, and three borrower scenarios.
Last reviewed 5 May 2026
Indicative repayment
Weekly
$1,052/week
$4,560 /month $4,723 total interest
$50,000
$5,000 $500,000
1 year
6 months 5 years
17.00% p.a.
8% (secured) 30% (unsecured)
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
Your $50,000 scenario
1 year at 17.00%. Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
Educational
Indicative only. Why we say this
Quick answer
What you need to know about stock and inventory finance.
- Test the maths first is the margin (or supplier discount) larger than the cost of credit? If not, rethink the buy.
- Four common structures short-term loan, line of credit, supplier credit, stock-secured facility.
- Indicative 12% to 22% p.a. unsecured. Stock-secured facilities sit lower; supplier credit can effectively price near zero.
- Match term to turn fast-turn stock fits a line of credit; slow-turn or seasonal stock fits a term loan or seasonal facility.
What it is
Bridging the supplier-payment-to-sell-through gap.
Stock and inventory finance is short-term borrowing used to fund the working-capital gap between paying suppliers for stock and the sell-through that converts that stock to cash. The pattern is most common in NZ retail, wholesale and distribution, hospitality, and trade-supply businesses where stock-on-hand and stock turn drive the cash cycle.
NZ businesses commonly use four structures: a short-term loan timed to the stock cycle, a revolving line of credit drawn at each restock, supplier credit terms negotiated direct with the supplier, or stock-secured facilities for larger and more stable inventory positions.
The first test is always the cost-of-credit-versus-margin question. A 5% supplier early-payment discount on a $50K order beats a 6-week unsecured loan at most NZ rate bands; a 1% discount commonly does not. The accountant or broker conversation typically runs that maths before settling on a structure.
Typical amount
$10K to $300K
Term
6 to 18 months
Security
Often unsecured
Rate band
12% to 22% indicative
Common scenarios
When NZ businesses borrow to buy stock.
02
Bulk-buy supplier discount
A 5% discount on a $60K order means $3,000 saved. A 12-week loan to fund the bulk buy at indicative 18% p.a. costs around $1,250 in interest.
03
Container shipment from offshore
An importer paying offshore suppliers in advance with 6 to 10-week sea-freight lead times. Trade finance or a short-term loan covers the in-transit gap.
04
Hospitality F&B build-up
A Wellington restaurant building cellar, dry-store, and produce inventory ahead of summer trading or a special event.
05
Trade-supply restock cycle
A plumbing or electrical merchant maintaining a $200K parts inventory across 8 to 10 stock cycles per year. A line of credit suits the rhythm.
06
Wholesale large customer order
A wholesale supplier landing a large customer purchase order requiring upfront stock-build. The PO value supports a short-term loan or invoice-finance hybrid.
Structures
Three structures that fit stock finance in NZ.
Line of credit
Pre-approved revolving limit drawn at each restock and repaid as stock sells through. Interest only on the drawn balance.
- Rate band: 12% to 20% on drawn
- Suits: Trade-supply, fast-turn retail
Short-term loan
It is taken once for a defined stock build and repaid across 6 to 18 months as the stock sells through.
- Rate band: 14% to 22% unsecured
- Suits: Pre-season builds, container imports
Stock-secured facility
Lender registers PPSR security over identified stock items and advances an indicative 30% to 50% of stock value.
- Rate band: 10% to 16% indicative
- Suits: Wholesale, trade-supply, distributors
Decision matrix
Which structure fits which stock scenario.
| Feature | Line of credit | Short-term loan | Stock-secured | Supplier credit |
|---|---|---|---|---|
| Fast-turn retail (weekly cycle) | Best fit | Inefficient | Works | Best fit |
| Pre-season seasonal build | Works | Best fit | Marginal | Marginal |
| Container import (6-10 wk) | Works | Best fit | Works | No (offshore) |
| Bulk-buy with discount | Best fit | Best fit | Works | Best fit |
| Trade-supply parts inventory | Best fit | Inefficient | Best fit | Works |
| Wholesale large PO | Works | Best fit | Marginal | No |
| New business, no history | Marginal | Best fit (specialists) | No | Marginal |
Worked scenarios
Three NZ stock-finance scenarios.
Retail
Wellington fashion retailer, pre-Christmas build
A Cuba Street fashion retailer placing $80K of summer-season orders across September and October. Sell-through runs November through February at a 55% blended margin.
Structure: $80,000 short-term loan at indicative 17% p.a. across 9 months. Total interest ~$6,000. Stock generates ~$176K revenue at 55% margin = ~$97K gross margin. Loan amortises as stock sells through.
Indicative figures
- Loan amount
- $80,000
- Term
- 9 months
- Indicative rate
- 17% p.a.
- Weekly
- ~$2,240
- Total interest
- ~$6,000
Trade supply
Hamilton plumbing merchant, line of credit
A Te Rapa plumbing merchant maintaining $180K of parts inventory across 8 to 10 turns per year. Restock orders run $20K to $30K every 4 to 5 weeks.
Structure: $100,000 line of credit at indicative 15% p.a. on drawn balance. Average drawn balance ~$60K. Annual interest cost ~$9,000.
Indicative figures
- Approved limit
- $100,000
- Average drawn
- ~$60,000
- Indicative rate
- 15% p.a. on drawn
- Annual interest
- ~$9,000
- Term
- 2 years revolving
Wholesale and import
Christchurch importer, container shipment
A Sydenham-based outdoor-equipment importer paying a Vietnamese supplier $120K for a container of pre-summer stock. Sea freight lead time runs 7 weeks; sell-through follows 8 to 12 weeks.
Structure: $120,000 short-term unsecured loan at indicative 16% p.a. across 12 months. Total interest ~$10,500.
Indicative figures
- Loan amount
- $120,000
- Term
- 12 months
- Indicative rate
- 16% p.a.
- Weekly
- ~$2,505
- Total interest
- ~$10,500
Lenders to know
NZ lenders that fund stock finance well.
Best for fast unsecured for stock builds
Prospa
Our finance partner. Small Business Loan suits container imports and pre-season builds; Line of Credit suits recurring restock cycles.
Indicative rate band:12% to 22% p.a.
Read onBest for NZ-bank stock loans up to $250K
Heartland Bank
Registered NZ bank. Open for Business serves online unsecured stock loans.
Indicative rate band:12% to 20% p.a.
Read onBest for short-term stock funding for harder profiles
BizCap
Short-term unsecured and caveat-secured lending for SMEs the major banks decline.
Indicative rate band:15% to 28% p.a.
Read onBest for inventory and import-finance specialists
GetCapital
Australasian alternative lender with NZ presence. Suits container imports and inventory builds.
Indicative rate band:12% to 22% p.a.
Read onWhen it goes wrong
Default scenarios on stock finance.
Stock not selling through
A pre-season build does not clear in the expected window. The loan continues amortising while the stock ties up further working capital.
What happens:Loan continues on schedule. Stock holding cost runs alongside loan interest. Margin compression strains the next cycle's buying power.
PPSR enforcement on stock-secured facility
On formal default of a stock-secured facility, the lender enforces the PPSR security. Stock is realised through trade auction or wholesale sale.
What happens:Lender realises stock under PPSR enforcement. Shortfall is pursued under the personal guarantee. Trading is materially disrupted.
Supplier credit lost alongside loan default
Where a stock-finance default coincides with supplier credit being withdrawn, the business loses both the loan facility and the supplier-terms relationship.
What happens:Loss of supplier credit terms compounds the cash impact. New stock requires upfront cash. Operating runs harder while the business tries to rebuild trade-credit relationships.
Stock turn and stock holding cost are the structural numbers behind every stock-finance decision. The accountant or sector specialist conversation typically tests the cost of credit against expected margin and turn.
Eligibility
What lenders assess on a stock purchase.
Stock is a difficult asset to lend against on its own, because forced-sale values are low and inventory can be sold without the lender knowing. Most New Zealand stock funding is therefore unsecured, or secured by a general security agreement over the business rather than by the stock itself.
That means the assessment falls back on the business. Turnover and its stability, gross margin, the credit files of the business and its directors, and existing commitments all carry weight, and a director guarantee is close to universal.
Where the stock is bought against confirmed orders rather than on speculation, the application is materially stronger, and saying so explicitly in the purpose statement is worth doing. A lender reading "stock for the Christmas season" is assessing a forecast; one reading "stock against $180,000 of confirmed wholesale orders" is assessing a receivable.
Stock turn is the figure lenders look for and businesses least often have to hand. A business that turns its inventory six times a year presents very differently from one that turns it twice, because the second is holding cash in the warehouse for six months at a time and the loan term has to accommodate that.
Trade finance and import facilities are worth pricing alongside a general loan where the stock is imported, because they are structured around the shipping cycle rather than around a fixed monthly schedule.
Common pitfalls
Five things that catch New Zealand businesses here.
None of these appear in a rate comparison, and each is common enough to be worth naming before an application rather than after one.
Funding stock that does not turn
Borrowing against inventory that sits for six months means paying interest across the whole holding period. Stock turn is the figure that decides whether the margin covers the finance cost.
Ignoring the margin arithmetic
The comparison that matters is the finance cost against the gross margin the stock generates, not against the purchase price. Thin-margin stock funded at an indicative 18% can consume most of what it earns.
Seasonal stock on a flat term
Stock bought for a season and sold within it suits a facility repaid across that season. A three-year term on Christmas stock is still being repaid two Christmases later.
Currency movement on imports
Where stock is bought in a foreign currency, the exchange rate between order and payment changes the landed cost. Forward cover is available and is a separate conversation from the finance.
Over-ordering against a forecast
Lenders will commonly fund what is asked for. Stock bought against confirmed orders carries a different risk from stock bought against an expectation, and only one of them has a repayment source attached.
Worked example
A Hamilton outdoor retailer funding a pre-season buy.
Suppliers require the summer range to be ordered in August and paid in September. The stock sells from late October through February. That is a gap of roughly two months between paying and beginning to sell, and around five months before the range is largely cleared.
The order is $140,000 at cost, expected to generate around $260,000 of revenue at an average gross margin near 46%, which is roughly $120,000 of gross margin.
A $140,000 facility across 9 months at an indicative 16% carries a weekly repayment near $3,900 and costs roughly $9,100 in total interest on these assumptions. Against $120,000 of gross margin, the indicative finance cost is about 7.6% of the margin the stock generates, which is the arithmetic that decides whether the buy works rather than the headline rate.
The exposure is the sell-through assumption. Where the range moves at 70% of forecast rather than at forecast, the margin falls to roughly $84,000 while the repayment schedule does not move at all, and the residual stock ties up cash into the next buying cycle.
Indicative figures
- Stock at cost
- $140,000
- Expected revenue
- ~$260,000
- Gross margin
- ~$120,000
- Term
- 9 months
- Indicative rate
- 16% p.a.
- Total interest
- ~$9,100
- Finance cost as share of margin
- ~7.6%
Indicative only, based on the assumptions stated above and excluding establishment and account fees. Sell-through rates vary by season and by range, and the comparison changes materially where stock does not clear as forecast.
The number that decides it
The comparison that matters is the finance cost against the margin rather than against the purchase price.
A 16% facility on stock sounds expensive against a 9% asset finance rate, and the comparison is not the useful one. What matters is the finance cost as a proportion of the gross margin the stock generates, because that is what the borrowing is being repaid from. On a 46% margin range clearing within nine months, an indicative 16% facility consumes under a tenth of the margin. On a 12% margin range that sits for eighteen months, the same rate can consume most of it. Stock turn and gross margin decide whether a stock facility works, and both are figures the business already has.
Two funding shapes
A term facility and a revolving one behave differently on stock.
Term facility
One purchase, one schedule.
A term loan drawn once against a specific buy suits a defined purchase with a defined selling period: a seasonal range, an opportunity buy at a supplier discount, or an initial stocking order for a new line.
The repayment schedule is fixed and does not respond to how quickly the stock sells, which is the point. The business knows the weekly cost from the outset and can set it against the expected margin before committing.
The cost is that interest accrues on the full amount from day one, including on stock that has already sold and been paid for. On a range clearing early, a term loan continues charging on money the business no longer needs.
Revolving facility
Continuous buying, continuous funding.
A line of credit or a trade facility suits a business buying stock continuously rather than seasonally. It is drawn as orders are placed and repaid as stock sells, with interest charged only on the balance outstanding.
For a business with steady stock turn, that alignment materially reduces the cost against a term loan of the same size, because the balance falls as the inventory converts to cash rather than staying flat until the schedule catches up.
The trade is a line fee on the full limit whether it is used or not, and a facility that sits near its limit all year is a term debt at revolving pricing. The test is honest average utilisation across twelve months rather than the peak.
Import specifics
What changes when the stock comes from overseas.
Most stock funded in New Zealand is imported, and imported stock carries costs and timing that domestic purchases do not. Three of them commonly surprise a business buying internationally for the first time.
The payment point sits well before the selling point. Suppliers frequently require payment against documents or before shipping, and sea freight from Asia to New Zealand runs several weeks before the goods clear customs. The funding period therefore starts earlier and runs longer than the domestic equivalent.
Landed cost is not the invoice. Freight, marine insurance, customs duty where it applies, GST on importation, port charges and inland transport all add to the figure, and on lower-value goods those can be a substantial proportion. Funding only the supplier invoice commonly leaves the business short at the point the goods arrive.
Currency movement between order and payment changes the cost in a way no facility addresses. Forward exchange contracts and other hedging arrangements manage that exposure and sit with a bank rather than with the finance provider, and on thin-margin goods the movement can exceed the entire finance cost.
Trade finance facilities and letters of credit are structured around this cycle specifically, releasing funds against shipping documents rather than on a fixed schedule, and they are worth pricing alongside a general term facility rather than instead of it.
The test
Stock turn and margin decide whether stock funding works.
Two figures answer the question, and both are commonly already to hand. Stock turn is how many times a year the inventory sells through and is replaced; gross margin is what each sale contributes after cost of goods. A range turning six times a year on a 45% margin generates margin fast enough that an indicative 16% facility consumes a small fraction of it. A range turning twice a year on a 15% margin does not, and the same facility can absorb most of what the stock earns. Running those two numbers against the finance cost before ordering is a ten-minute exercise, and it is more useful than any comparison of lenders.
Ageing stock
What happens to inventory that does not sell.
Stock funding assumes the inventory converts to cash, and the risk sits entirely with the business rather than with the lender. Where a range moves at a fraction of forecast, three things happen at once: the margin that was to repay the facility does not arrive, the repayment schedule continues unchanged, and the cash is tied up in a warehouse rather than available for the next buying cycle. Discounting to clear reduces the margin further, and holding for the following season means a full year of finance cost against goods that may be less saleable by then. The practical protections are ordering against confirmed demand where possible, sizing the first order of an unproven range conservatively, and agreeing return or exchange terms with suppliers before ordering rather than after the stock has failed to move.
References
Sources
- Stats NZ: Retail trade survey
NZ retail seasonality and inventory framing.
- IRD: Trading stock
Tax treatment of trading stock for inventory framing.
- PPSR (NZ)
Where stock-secured facilities are registered.
- Reserve Bank of NZ: Lending data
NZ business-lending volume context.
- MBIE: Small business statistics
NZ SME structure context for stock-finance framing.
FAQ
Buy stock or inventory, NZ small-business questions answered
Can a NZ business borrow specifically to buy stock?
Yes, stock and inventory finance is one of the most common short-term-loan purposes in the NZ market. Lenders treat it as a defined working-capital gap. Retail, wholesale, hospitality, and trade-supply businesses make up the bulk of stock-finance volume.
How much can I borrow against stock?
Indicative amounts run $10,000 to $300,000 for unsecured short-term loans across most NZ alternative lenders, with stock-secured facilities running larger for established wholesalers and distributors.
What rate applies to stock or inventory finance in NZ?
Indicative rates on unsecured short-term loans for stock commonly sit in the 12% to 22% per annum band. Stock-secured facilities (PPSR over identified inventory) typically price below the unsecured band.
Should I borrow or take a supplier early-payment discount?
The maths is the trigger. A 5% discount on a $50K order saves $2,500. A 6-week loan funding the early payment at indicative 18% p.a. costs around $1,040 in interest. In that scenario the discount route wins.
How long should the loan term be?
Common terms run 6 to 18 months and ideally match the sell-through window of the underlying stock. Term-to-turn match is the standard discipline.
Is interest on a stock loan tax-deductible?
Interest on a loan used to buy trading stock for the business is generally deductible against business income in New Zealand, subject to the accountant's confirmation.
Can stock be used as security for the loan?
Stock-secured facilities are available in the NZ market through some specialist lenders, with the security registered on PPSR over identified stock items. Advance rates typically run 30% to 50% of cost value.
What documents are needed for a stock-finance application?
Standard documents are NZBN, business owner ID, the last 6 months of business bank statements, and a brief on the stock build, supplier, and expected sell-through.
How does stock finance work for a brand-new retailer?
First-year retailers face a harder application because the sell-through has not been demonstrated. Lenders commonly prefer 6 to 12 months of trading history before serious stock-finance facilities open.
Can I get stock finance for an offshore (imported) container?
Yes, container imports are a common stock-finance scenario in NZ. Lead times of 6 to 10 weeks are typical, so the term is sized to the in-transit period plus the local sell-through window.
What happens if the stock does not sell through as planned?
On a term loan, the schedule continues regardless of stock-turn performance, so the borrower wears the cash impact through end-of-season clearance or carry-over. On a stock-secured facility, the lender has PPSR recovery rights.
Are there pitfalls specific to stock borrowing?
Common pitfalls include skipping the cost-of-credit-versus-margin maths, overstocking against a slow turn, ignoring supplier credit as a cheaper alternative, and stacking restock loans across cycles instead of running a line of credit.
Related
Related reading
Working capital loan
The broader category that stock and inventory finance sits inside.
Read onBusiness line of credit
The structure that fits recurring restock cycles best.
Read onSeasonal cash flow
The companion reason for pre-season stock builds.
Read onClothing and fashion retail
Winter-summer inventory cycles and supplier deposit timing are the canonical retail-stock pattern.
Read onE-commerce business loans
Peak-season inventory builds across Shopify and Amazon channels with 30-60 day freight cycles.
Read on