Inventory Financing vs. Revenue-Based Financing: A Guide

In 2025, small and mid-sized businesses, particularly those in the consumer packaged goods (CPG) industry, are seeking more flexible funding options to manage inventory and cash flow. Traditional loans often come with stringent repayment terms, personal guarantees, and limitations on how funds can be used. Two emerging funding options gaining traction are Revenue-Based Financing (RBF) and Inventory Financing with Kickfurther. Let’s take a closer look at how these options compare and which might be the best fit for your business.

Revenue-Based Financing

Revenue-Based Financing provides businesses with capital in exchange for a percentage of future revenues until the agreed-upon repayment amount is met. This model is particularly appealing for CPG brands that experience seasonal fluctuations, as it allows for flexible repayment schedules that align with sales performance.

Advantages of Revenue-Based Financing

• Flexible Payback Structure: RBF repayments are directly tied to sales performance. If a company experiences a strong revenue month, it pays back more; during slower months, it pays back less. This flexibility makes RBF a useful option for businesses with cyclical or seasonal sales patterns.
• Upfront Capital: Businesses receive significant upfront funds that can be allocated toward large inventory purchases, marketing campaigns, or other necessary expenses, leveraging future revenue for immediate growth.
• Non-Dilutive: Unlike venture capital or equity financing, RBF does not require business owners to give up ownership stakes in their companies.
• No Personal Guarantees: Business owners do not need to provide personal assets as collateral, reducing personal financial risk.

Disadvantages of Revenue-Based Financing

• Limited Funding: The amount of capital available is directly tied to revenue. Businesses with lower sales volumes may struggle to secure the necessary funds to support large-scale inventory needs.
• Best for Short-Term Investments: RBF is ideal for expenses that quickly generate returns, such as inventory and marketing. It is not a suitable solution for ongoing operational expenses like staffing.
• Costly Repayments: Since payments are taken directly from sales revenue, businesses must be prepared for consistent withdrawals. This can create a cash-flow strain, especially if revenue projections are not met.

Inventory Financing

Inventory financing allows businesses to leverage the resources of a financing partner to pay for inventory production. This type of financing is especially helpful for businesses that experience significant delays between paying for inventory and receiving payment from future sales.

With inventory financing, the products produced act as the collateral for the financing, which means that if the business reports an inability to repay the funding, the inventory can be sold to cover the debt. This can provide a level of security for the financing partner, which can result in more favorable terms for the business.

One of the key benefits of inventory financing is that it can be customized to address a business’s exact manufacturing, shipping, and sales timelines. Some providers even offer payment terms that align with natural cash flow cycles, meaning that no payment is required until the inventory sells. This can help to improve a business’s cash flow and reduce the risk of running out of working capital.

Inventory financing can also be helpful for businesses that want to receive volume-based discounts by placing larger orders to support all of their sales channels. This works best when done on a regular basis, such as quarterly, and can help to prevent stock-out issues that can stifle growth.

Inventory Financing with Kickfurther

For businesses in the CPG space looking for a more tailored inventory funding solution, Kickfurther presents a unique alternative. Unlike traditional financing or revenue-based, Kickfurther enables companies to secure up to 100% of their inventory costs with payment terms that align with actual sales performance.

Why Choose Kickfurther?

• No Immediate Repayments: Businesses do not start paying back until their inventory sells, allowing them to manage cash flow more effectively.
• Non-Dilutive Capital: Kickfurther does not require business owners to give up equity, preserving ownership and control.
• Not Considered Debt: Since Kickfurther funding is not classified as a loan, it does not appear as debt on financial statements. This can be advantageous when seeking additional funding or negotiating valuation with investors.
• Fast and Large-Scale Funding: Kickfurther can fund entire inventory orders quickly, helping businesses meet supplier deadlines and keep up with demand.

How Kickfurther Works

Kickfurther connects businesses with a community of buyers who fund their inventory needs. Once funded, businesses receive their inventory without taking on debt. As sales occur, businesses repay buyers, typically with an agreed-upon profit margin. This structure ensures that payments are only made as inventory is sold, reducing financial strain on the business.

Which is Best for Your Business?

Final Thoughts: Which Option is Right for You?

For CPG brands and product-based businesses, maintaining sufficient inventory levels is critical for growth. Kickfurther’s ability to provide up to 100% of inventory funding without immediate repayments can be a game-changer for a growing brand. However, brands that need capital for multiple operational needs beyond inventory may find Revenue-Based Financing to be a more versatile solution.

As brands navigate 2025, the demand for flexible, growth-oriented financing solutions will continue to rise. Whether you choose Revenue-Based Financing or Kickfurther, the key is selecting the funding option that best aligns with your sales cycle, growth strategy, and cash flow management needs.