Distribution Line of Credit
A revolving credit facility for distributors, sized against receivables and inventory, used to smooth seasonal swings and fund growth into new accounts.
Sized to the cycle
A distribution line is most useful when sized to the full cash cycle: inventory in, inventory sold, receivables collected. Lines sized only against AR usually leave the operator short during stocking season.
Pricing is generally Prime-plus, materially lower than factoring, but with monthly borrowing-base reporting and standard ABL covenants.
See how this structure is used in practice.
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