# Wholesale and distribution businesses Canonical: https://commercialdebtadvisory.com/property-types/wholesale-distribution/ Status: Published Publisher: Jaken Finance Group Version: 3e947412944090e670de10c7f404647067f5c3a32700c26190782a61d3bbd822 Receivables, inventory, warehouse capacity and relocation. ## The financing decision Can the operating company fund inventory and receivables while carrying its new property debt? A distributor can report growing sales while its cash is tied up in inventory and customer receivables. A warehouse acquisition should therefore be evaluated alongside the operating company’s purchasing, fulfillment and collection cycle. An investor leasing a warehouse to an unrelated distributor instead starts with lease income. The following analytical preparation framework is designed to make those distinctions clear, not to prescribe every lender’s requirements. ## What changes the analysis ### Inventory categories carry different cash risks Separate saleable current inventory, slow-moving stock, returned goods, consigned goods and customer-specific items. Reconcile the records to ownership and any lender liens. Show supplier concentration and return rights. A warehouse full of goods does not establish that those goods are owned, readily saleable or available as collateral for a new facility. ### The cash conversion cycle can be the binding constraint OCC’s receivables/inventory guidance examines the cash interval between purchases and collections. Build the subject distributor’s schedule using actual purchase terms, customer aging, credit notes and seasonality. Test a slower customer payment or inventory buildup without assuming unused revolver availability is unrestricted cash. The property down payment must coexist with the operating funds needed to replenish stock. Sources: occ-arif ### Fixed-asset financing does not automatically cover the expansion stock SBA’s 504 overview excludes working capital and inventory. If that route is considered, separate the property and qualifying asset proposal from the operating funding plan and verify actual program fit with the lender/CDC. In combined property/business analysis, eliminate intercompany rent while retaining external property costs, equipment obligations and all borrowing. Sources: sba-504 ## Questions to prepare for a lender ### Which inventory and receivables actually belong to the borrower? Provide ownership, consignment, lien and customer evidence; distinguish book value from supported realizable or borrowing-base value. ### What cash is required through the seasonal purchasing peak? Reconcile purchasing, receivables aging, collections, returns and payables to credit availability under the actual financing terms. Sources: occ-arif ### Can the larger facility operate without consuming the stock-purchase budget? Separate relocation, racking, systems, hiring and opening inventory from the property funding and committed operating liquidity. Sources: sba-504 ## Preparation checklist These are preparation suggestions; the lender determines the transaction-specific requirements. - [ ] Inventory aging, ownership and lien schedule: Separate consigned, customer-specific, slow-moving, returned and saleable owned stock. - [ ] Receivables aging and customer-concentration bridge: Explain overdue balances, credits, disputes, returns and major-customer payment terms. (Sources: occ-arif) - [ ] Supplier agreements and purchasing calendar: Show deposits, payment terms, minimum commitments and alternative sourcing. - [ ] Warehouse transition and fulfillment capacity plan: Price racking, systems, equipment, double occupancy and service disruption. - [ ] Sources-and-uses, revolver terms and combined debt/liquidity: Separate property uses from inventory/working capital and eliminate related-party rent once. (Sources: sba-504) ## Hypothetical decision ### Hypothetical: buying the building before peak stock arrives A seasonal distributor uses most of its available cash for a warehouse down payment. The base case shows adequate annual debt coverage, but the purchase occurs just before supplier payments peak. Add the inventory purchase calendar, actual revolver availability and customer collections to the monthly model. Compare a lower equity commitment or separate operating funding with the cash shortfall. The property purchase is workable only if the business can still buy, deliver and collect on the goods that generate repayment. ## Using the existing model The Owner-occupied commercial property workbook summarizes supported combined cash and debt; Industrial is the lease framework for an unrelated landlord. It does not build SKU inventory, borrowing-base eligibility, customer credit limits or fulfillment capacity. Additional schedule: Add inventory/receivable/payable aging, actual credit availability and seasonal cash/relocation schedules. Existing package: https://commercialdebtadvisory.com/models/owner-occupied/ ## Sources and applicability - occ-arif: [OCC: Accounts Receivable and Inventory Financing](https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/accts-rec-inventory-financing/pub-ch-accts-rec-inventory-financing.pdf) — Assessing the Borrower’s Operating Cycle, printed pages 15–16; Evaluating Collateral. Checked 2026-10-21. March 2000 handbook with March 2025 reputation-risk edits. Supports examining cash conversion and working-asset collateral in this lending context. No advance-rate or lender-policy threshold is adopted; niche scenarios are our analysis. - sba-504: [SBA: 504 Loans](https://www.sba.gov/Loans/504%20loans/) — How do I use a 504 loan?. Checked 2026-10-21. Supports the distinction between eligible fixed-asset uses and excluded working capital/inventory. This overview does not establish borrower eligibility or replace current program documents and lender/CDC review. AI-assisted preparation; publisher review status is recorded separately. ## Dedicated niche underwriting package Status: published Package version: 7dd793e9d63b5068bed4a4a2e39b29f719bcd33c5bb074ff4a67420e4334a836 - [Download dedicated Excel model](https://commercialdebtadvisory.com/downloads/niche-packages/wholesale-distribution-underwriting-model.xlsx) - [Download lender guide PDF](https://commercialdebtadvisory.com/downloads/niche-packages/wholesale-distribution-lender-guide.pdf) The existing model discussion above concerns the core asset workbook. Use this dedicated package's instructions and limitations for its niche calculations. - All numerical values are illustrative; no market facts or lender approval are asserted. - The twelve-month operating model omits taxes on investor returns and future refinancing costs except expressly entered items. - Author verification uses Artifact Tool recalculation, saved-XLSX reimport and separate JS arithmetic; independent application verification is recorded separately. - Legal, licensing, environmental, engineering and lender-specific recognition require actual diligence.