What Is Commercial Distribution Finance?
Last updated: Dec 2025
Written by Michael Pajar | Director
If you sell goods through a wholesale, distribution, or dealer model, cash flow can feel backwards.
You may need to pay suppliers upfront, hold stock, and wait to get paid later. That gap is where businesses get stuck.
Commercial Distribution Finance is one way to fund that gap.
This guide explains it in plain English — and what to do if your bank (or a specialist lender) said no.
What commercial distribution finance means (simple definition)
Commercial Distribution Finance (CDF) is a type of business funding that helps you buy stock without paying the full cost upfront.
In plain terms:
A funder can help pay for goods from your supplier
You then pay the funder back later
Often after the stock is sold, or once customer payments start coming in
People also call it:
distribution finance
distributor finance
inventory finance
dealer finance (common in some industries)
Why businesses use it
Businesses usually look for CDF when:
Stock is expensive (or you need more of it)
Suppliers want COD or short terms
Big orders come in, but cash is tied up
You’re growing and stock is the bottleneck
How it works (step-by-step)
Every provider is different, but the flow is usually like this:
You place an order with a supplier (local or overseas)
You show the funder the key documents (usually invoices / purchase details)
The funder pays the supplier (fully or partly)
You receive the goods and sell them
You repay the funder over the agreed term
The whole point is to keep orders moving without your cash being crushed at the worst time.
If the bank said no — it doesn’t always mean you’re “not eligible”
In my experience, a “no” is often about fit, not effort.
Banks and conservative lenders can say no because:
Your business is too new
Turnover is inconsistent
Margins look tight on paper
Stock is hard to value or slow to sell
Your reporting is light (no clean BAS, no clear trading pattern)
The facility structure doesn’t match your supply chain
What matters: the story has to make sense and the documents have to support it.
What lenders usually want to see (so it’s not a blind application)
Most CDF-style facilities want evidence of:
A real trading business (ABN/ACN and actual revenue)
A clear buy-sell cycle (what you buy, who you sell to, and how you get paid)
Proof you can manage supplier and customer payments
Business bank statements (most business funders rely on these)
If you’ve been declined already, it helps to fix the “why” before trying again.
Where trade finance fits (and how it’s different)
A lot of people mix up these terms.
Trade finance (simple)
Trade finance is often used when you’re buying goods and want the supplier paid on time, but you want more time to pay.
In some setups, this can allow supplier payment now, with repayment later (sometimes much later, depending on the facility — your product notes mention terms that can extend out significantly, even up to 210 days in some cases).
Trade finance is commonly used for:
import purchases
big stock orders
suppliers that demand COD
Some trade finance structures do not require letters of credit (depending on the provider and deal setup).
What “supply chain finance” means (and why it can be powerful)
Supply chain finance is usually about paying suppliers earlier, while giving you longer to pay.
In the product notes you provided, supply chain finance is positioned as:
allowing early supplier payments
with terms up to 120 days 1c5f2c61-18df-4398-a8f4-f2e8ad3…
and sometimes structured so it’s not treated like new debt (off-balance sheet), depending on structure and accounting treatment 1c5f2c61-18df-4398-a8f4-f2e8ad3…
It can be useful when your goal is to:
stabilise supply
negotiate better supplier terms
reduce pressure on cash flow without “chasing loans”
(Always confirm accounting treatment with your accountant — don’t assume.)
So… is commercial distribution finance “trade finance”?
Sometimes they overlap.
A clean way to think about it:
Commercial distribution finance: funding to buy/hold stock through a distribution channel
Trade finance: funding linked to purchasing goods and paying suppliers (often import-focused)
Supply chain finance: supplier-payment optimisation (early pay to supplier, longer terms for you)
In the real world, businesses often use a mix, depending on:
whether you buy local vs overseas
supplier terms (COD vs 30/60/90 days)
how quickly you sell stock
whether customers pay fast or slow
Who this is best suited to (and who it’s not)
This type of funding is usually a better fit if you:
buy goods for resale (wholesale, distribution, dealer)
have repeat supplier orders
have steady monthly turnover (your notes reference minimum turnover expectations for some facilities)
have a real supply chain (not one-off trading)
It’s often not a fit if:
the business is pre-revenue
stock is unclear, unproven, or hard to verify
you can’t show a consistent trading pattern
What this guide will NOT cover (to keep it simple)
This article won’t cover:
invoice finance structures
equipment finance
general unsecured business loans
This is only about funding stock and supplier payments in a distribution-style business.
What to do next (especially if you’ve been declined)
If you want to explore whether CDF (or a related structure) could fit your business, the fastest safe step is to do a quick pre-check.
Check Eligibility (30 sec) → /check-eligibility
That gives me enough to tell you:
whether it’s worth pursuing
what the likely “decline reasons” might be upfront
what you’d need to improve before another attempt
No hype. Just clarity.
Quick FAQs
What is distribution finance?
A funding option that helps distributors/wholesalers buy stock and manage the time gap before sales are collected.
What is meant by commercial finance?
Business funding used for business purposes (not personal lending). It can include working capital, stock funding, and trade-related facilities.
What is distributor financing?
Another term for distribution finance — funding linked to buying stock for resale through a distributor model.
What if I’ve already been declined?
A decline usually means the lender didn’t like the structure, documents, or risk profile. It doesn’t always mean there are no options — but it does mean you should fix the “why” before applying again.
Final note (plain-English disclaimer)
This is general information only. It’s not financial advice and doesn’t guarantee approval. Every lender assesses each business differently.
