01 / Understand
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.
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.
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 Loans
A 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 takeaway: The property purchase is workable only if the business can still buy, deliver and collect on the goods that generate repayment.
Dedicated to wholesale and distribution businesses
Download your niche underwriting package.
Use this dedicated Excel workbook with its lender guide and document checklist. Read the workbook instructions, replace illustrative assumptions with your evidence, and keep the guide beside your analysis.
Model scope and limitations
This model combines business and property cash, deducts listed business obligations, and tests the cash remaining for proposed property debt. It does not calculate standalone landlord NOI or establish lender-defined global coverage.
Receivable, inventory and trade-payable balances use current monthly sales/product costs times entered days divided by calendar days. Their signed changes reconcile accrual sales/costs to cash once. This simplified balance proxy is not actual aging, a borrowing base or proof of available credit. Replace opening balances with reconciled records.
Order demand is capped by entered fulfillment capacity. Average sales are net of returns/credits and exclude sales tax. Inventory excludes consigned or unowned goods and should reflect obsolete-stock adjustments.
- 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.
- Legal, licensing, environmental, engineering and lender-specific recognition require actual diligence.
Excel .xlsx · PDF .pdf · No email required. Preparation materials do not constitute a loan offer or a lender’s document requirements.
Package reviewed by Jason Taken ·
Next: gather your lender documents ↓Related core asset model
Compare the existing core workbook.
The scope below describes the related core asset workbook. The dedicated niche package above has its own instructions and limitations.
The Owner-occupied commercial property workbook summarizes supported combined cash and debt; Industrial is the lease framework for an unrelated landlord.
Model scope and additional analysis
It does not build SKU inventory, borrowing-base eligibility, customer credit limits or fulfillment capacity.
Prepare an additional schedule: Add inventory/receivable/payable aging, actual credit availability and seasonal cash/relocation schedules.
Test property-level loan sizing · Check post-closing liquidity
Questions to prepare for a lender
Use these questions to organize a financing discussion. A lender sets its own credit requirements and determines which evidence applies to your transaction.
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.
References: OCC: Accounts Receivable and Inventory Financing
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.
References: SBA: 504 Loans
03 / Prepare
Build your document checklist.
Check off what you have. Your selections stay on this page while it is open; they are not sent to Jaken Finance Group or analytics.
References: OCC: Accounts Receivable and Inventory Financing
References: SBA: 504 Loans
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Print uses your browser’s PDF option. Checklist selections are for your preparation, not a lender’s completeness determination.
Continue the learning path.
Owner-occupied debt: when no intercompany rent satisfies both entities
Test the operating company’s sustainable rent against the property’s standalone debt requirement before relying on strong global coverage.
Case: Owner-user warehouse purchase with an operating expansion
Determine whether the business can fund the property transition. Includes hypothetical global cash-flow and occupancy transition schedule.
Owner-user expansion: fund the operating ramp as well as the building
Combine expansion operating losses, new debt service and working capital in a monthly funding plan before projected sales arrive.
Sources and applicability
The references support the specific points identified above. Preparation questions, checklists and hypothetical decisions are the publication’s analysis, not instructions issued by the source or a lender.
- OCC: Accounts Receivable and Inventory FinancingAssessing 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 LoansHow 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 research and preparation. Published by Jaken Finance Group. Reviewed by Jason Taken on 2026-10-21. Report a correction.