The Founder's Guide to Inventory Financing for Consumer Brands

If you're a consumer brand founder scaling into mass retail, your biggest obstacle isn't getting the retailer to say yes. It's having the cash to fulfill the order once they do.

This guide breaks down what inventory financing actually is, how different types compare, and how to know which option makes sense for your brand.

Understanding the Retail Cash Flow Problem

Mass retailers like Target, Walmart, and Ulta require substantial inventory volume upfront but typically pay on net 60-120 day terms. Meanwhile, your manufacturers need payment within 30 days, freight companies want payment on delivery, and fulfillment centers expect their fees promptly.

For brands in the $500K-$5M revenue range, this timing mismatch creates a cash flow gap that can prevent you from seizing growth opportunities. You might have proven demand, strong margins, and confirmed purchase orders, but without capital to fund production, that retailer placement remains out of reach.

Comparing Your Financing Options

Bank Loans Traditional bank loans require strong personal guarantees, collateral, and established credit history. The application process is lengthy, approval rates for early-stage brands are low, and debt sits on your balance sheet regardless of whether retail orders materialize. Interest accrues immediately, and repayment schedules rarely align with retailer payment cycles.

Venture Capital or Private Equity VC and PE provide substantial capital but require giving up equity and often board seats. While this makes sense when you need strategic guidance and long-term growth capital, it's an expensive way to finance inventory. You're trading permanent ownership for what should be a temporary cash flow solution.

Revenue-Based Financing Repayment is a percentage of monthly revenue, which avoids equity dilution but comes with high effective interest rates. Repayment isn't tied to specific inventory cycles, so if a retail order gets delayed, you're still on the hook for payments based on overall revenue.

Purchase Order Financing PO financing provides funds against confirmed purchase orders. This addresses the right problem but often comes with high fees, requires the PO to be finalized (not just committed), and may not cover all supply chain costs.

Non-Dilutive Inventory Financing Purpose-built for retail scaling, this category is designed specifically to solve the cash flow timing mismatch. Key features include:

• Pre-PO Flexibility: Funds production based on retailer commitments before the PO is formally issued
• Full Supply Chain Coverage: Covers manufacturing, freight, and fulfillment costs, with capital flowing directly to suppliers
• Retailer-Aligned Repayment: Repayment timing matches retailer payment cycles
• Zero Equity Dilution: You maintain 100% ownership

How Lunr Capital Works

Lunr Capital operates in the non-dilutive inventory financing category- meaning, no shares of your company are exchanged for the financing we provide . Our team comes from both retail and finance backgrounds, so we understand production cycles, retailer terms, and supply chain cash flow.

Our evaluation focuses on your financials, the retail opportunity, and the retailer commitment. We typically move from application to funding in a few weeks.

We structure deals based on your lowest cost of goods sold rather than wholesale price. Funding ranges from $250K to $5M+ per cycle. We work with both direct retail models and distributor models (if distributor payment terms are strong).

Beyond capital, brands gain access to our retail network, data-driven insights, and hands-on operational support.

Who Should Consider Non-Dilutive Inventory Financing

This financing structure makes sense if you:

• Have been in operation for at least 1 year with proven demand
• Generate $500K+ in trailing 12-month revenue
• Maintain healthy margins
• Have confirmed or imminent opportunities at national retailers
• Want to preserve equity or maintain full ownership

We're category-agnostic and work with brands in food, beverage, beauty, pet, toys, kids, personal care, cleaning, household, sporting goods, and outdoor.

When Other Options Make More Sense

Non-dilutive inventory financing is purpose-built for retail scaling, but it's not right for every situation:

• Primarily DTC with no near-term retail plans: Revenue-based financing tied to online sales may be more appropriate
• Need capital for brand building, product development, or team expansion: Venture capital or traditional loans make more sense
• Need strategic guidance and network access as much as capital: Bringing on investors may be worth the equity cost

Making the Decision

Ask yourself these questions:

What do I need the capital for? If the answer is "to fulfill specific retailer orders," inventory financing is likely your best bet.

What's my timeline? If a retailer is waiting on inventory, options built for speed matter more than those with lengthy approval processes.

What am I willing to trade? If preserving equity is a priority, non-dilutive options become more attractive.

How does repayment align with my cash flow? If repayment timing doesn't match retailer payment cycles, you may create more cash flow problems than you solve.

Getting Started with Lunr

Our process is straightforward:

1. Apply and connect your financials
2. Our team reviews your opportunity and structures a deal fit for your company
3. Once approved, we send funds directly to your suppliers with repayment aligned to retailer payment schedules

Ready to explore whether non-dilutive inventory financing makes sense for your brand? Apply here or reach out at info@lunrcapital.com.