Warehouse finance provides funding secured by eligible goods stored under defined custody, control and valuation arrangements. The lender relies on the inventory, documents and controls that govern release.
How is availability calculated?
Assume eligible warehouse goods have an approved value of $500,000 and a 60% advance rate. Gross availability is $300,000. A $25,000 reserve reduces illustrative net availability to $275,000.
Illustrative warehouse-finance calculation
| Calculation step | Amount | Method |
|---|---|---|
| Eligible goods value | $500,000 | Approved valuation |
| Gross availability | $300,000 | $500,000 × 60% |
| Reserve | ($25,000) | Facility deduction |
| Net availability | $275,000 | $300,000 − $25,000 |
Actual funding depends on facility caps, liens, commodity risk, insurance, aging and release terms.
What controls protect the lender?
Controls may include approved warehouses, warehouse receipts, collateral management, insurance, inspections, release authorization and periodic valuation.
Warehouse finance vs. general inventory finance
Warehouse finance emphasizes goods held under specified storage and control. Inventory finance can cover a broader range of stock locations and structures.
What should a borrower review?
Check eligible goods, valuation, advance rate, storage fees, release process, audit rights, security, insurance and events of default.
