2026 Complete Guide
5 ways to finance a distribution business: SBA 7(a), equipment financing, invoice factoring, credit lines and term loans. Amounts, rates and timing for each.
Buying or refinancing the building? SBA 504, bank and CMBS options for the real estate itself are in our guide to warehouse loans.
Warehouse & Distribution financing
Each serves different warehouse and distribution needs
Best for: Acquiring a warehouse facility, building purchase, major expansion projects $500K+
Best for: Forklifts, pallet racking, conveyor systems, loading dock equipment, refrigeration
Best for: B2B distributors waiting 30–90 days on large retailer or wholesale invoices
Best for: Inventory buildups, payroll, peak season surge, emergency operating costs
Best for: WMS software, fleet expansion, dock upgrades, 3PL buildout, any operational growth
Side by side
| Loan type | Amount | Rate | Term | Approval |
|---|---|---|---|---|
| SBA 7(a) Loan | $50K–$5M | 8.5–11.5% APR | 10–25 years | 30–60 days |
| Equipment Financing | $25K–$1M | 6.5–20% APR | 2–7 years | 1–5 days |
| Invoice Factoring | $25K–$2M | 1–5% per 30 days | Per invoice (30–90 days) | 3–7 days |
| Business Line of Credit | $25K–$500K | 8.75–45% APR | Revolving | 3–14 days |
| Business Term Loan | $50K–$1M | 7.5–45% APR | 1–5 years | 3–14 days |
Typical ranges, updated September 2026. Your terms depend on your revenue, credit, time in business and the lender.
Worked example
Example: a distributor fits out leased space with pallet racking and four forklifts for an assumed $360,000, creating 2,000 pallet positions. Assumptions for illustration only: 10% down and a 5-year equipment loan at 9% (inside today’s 6.5–20% range), computed with the payment formula of our commercial mortgage calculator.
| Amount | |
|---|---|
| Racking + four forklifts (assumed) | $360,000 |
| Down payment (10%) | $36,000 |
| Equipment loan, 5 years, 9% | $324,000 — $6,726/mo |
| Per pallet position, per month (2,000 positions) | about $3.36 |
Compare that with what each pallet position earns or saves — storage fees charged to customers, or outside storage you stop paying for. Racking installed in a leased building is hard to repossess, so some lenders treat it differently from forklifts; ask before you assume both are financed the same way. For buying the building, see our warehouse property guide.
FAQ
Common questions about warehouse and distribution financing
Equipment financing covers forklifts, racking, conveyors, and dock equipment (1–5 days, 600+ credit). Invoice factoring bridges the 30–90 day payment gap from large retailers and wholesalers. SBA loans are best for facility acquisition. Lines of credit cover inventory buildups and peak season surges.
Usually with an equipment loan; some lenders treat racking installed in a leased building differently from forklifts because it is harder to recover. In our example, $360,000 of racking and four forklifts with 10% down over five years at 9% costs about $6,726 a month — about $3.36 per pallet position for 2,000 positions.
Distributors often invoice large clients with 30–90 day payment terms. Factoring converts those invoices to immediate cash — 85–95% advance within 24–72 hours at 1–5% per 30 days. No debt added to balance sheet. Approval based on your client's credit, not yours. Best for $25K+ in monthly receivables.
Yes. SBA 504 loans are purpose-built for commercial real estate — 10% down, 25-year terms, and below-market rates. SBA 7(a) loans also finance warehouse acquisition up to $5M. A qualified appraiser must value the property. Lenders evaluate the building's condition, lease terms, and your business's ability to service the debt.
Lines of credit are the most cost-effective — draw for Q4 inventory buildup, repay after peak season. Inventory financing uses stock as collateral for advances of 50–80% of inventory value. Apply and set up your line of credit in Q2 so it's ready for Q3–Q4.
Equipment financing covers forklifts (electric, propane, reach trucks), pallet racking systems, conveyor belts, loading dock levelers, refrigeration systems, inventory management hardware, and fleet vehicles. Approval in 1–5 days at 6.5–20% APR. Most lenders finance 80–100% of equipment cost.
Equipment financing: $25K–$1M per loan. SBA loans: up to $5M. Lines of credit: $25K–$500K. Invoice factoring: $25K–$2M based on receivables. Term loans: $50K–$1M. Your borrowing capacity is typically 15–20% of annual revenue for term products, and up to 85% of receivables for factoring.
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