Overseas factories usually want a deposit when you place an order and the balance before the goods leave port, so an online store can pay for a full production run months before it sells a single unit. For a Shopify or other ecommerce brand, the financing options to prepay overseas inventory orders are narrower than most guides suggest, because inventory lenders tend to lend against goods you already hold and traditional purchase order financing is built around a business customer's order. This guide follows one assumed import order from deposit to sale and shows which tool can fund each payment.
Why prepaid import orders fall between the usual inventory loans
Lenders that advance against inventory generally want stock they can count, insure and, if it comes to it, sell, and goods in a factory overseas don't meet that test. SBA's SOP 50 10 8.1 (effective October 1, 2026) shows the logic: for a Working Capital CAPLine borrowing base, it lists inventory "not located in the United States" as ineligible, along with inventory not under the lender's perfected first priority lien. Private lenders write their own eligibility rules, and they vary.
Purchase order financing is built for a business with a confirmed order from a creditworthy customer, as our purchase order financing guide explains, so a direct-to-consumer store usually has no qualifying order, though some ecommerce funders market PO-style funding paid straight to the supplier. If you also wholesale to retailers, their orders may qualify for that slice of the run.
That leaves your own cash, a general credit facility, better supplier terms or a bank letter of credit to cover the deposit and the pre-shipment balance.
What Incoterms and UCP 600 settle, and what your contract has to
Incoterms 2020 are, in the ICC's words, "a set of eleven three-letter trade terms" that clarify "the tasks, costs and risks involved in the delivery of goods from sellers to buyers," in force since January 1, 2020. The International Trade Administration's Incoterms page (checked November 2, 2026) lists what they leave out: they don't "reference the method nor timing of payment negotiated between the seller or buyer," and they don't say "when title, or ownership of the goods, passes from the seller to the buyer."
So an FOB quote tells you where delivery happens and when the risk of loss moves to you, and it says nothing about when your money is due. Put the deposit percentage, the event that triggers the balance and the documents you receive in exchange in writing on the proforma invoice or purchase contract.
UCP 600 governs documentary letters of credit. The ICC announced the rules in December 2006 with an implementation date of July 1, 2007, replacing a "reasonable time" for examining documents with "a maximum period of five banking days." In the U.S., UCC section 5-108 requires an issuer to honor a presentation that "appears on its face strictly to comply" with the credit and says the issuer isn't responsible for "the performance or nonperformance of the underlying contract." Banks "deal in documents only, not goods," as the ITA's Trade Finance Guide puts it, so the documents you require, such as an inspection certificate, are your quality control.
The four ways to pay an overseas supplier
The ITA's Trade Finance Guide (2022 edition) and its methods of payment page describe each method from both sides. Under cash-in-advance, "full or significant partial payment is required" before the goods ship.
| Payment method | When your money leaves | What the ITA guide says about your side | What can fund it |
|---|---|---|---|
| Cash-in-advance | At order and before shipment | "Least secure and most unattractive method for importers" | Cash, line of credit, term loan, revenue-based financing |
| Letter of credit | When complying shipping documents are presented | Risk is spread between exporter and importer | Your bank's LC facility, using your credit |
| Documentary collection | At sight, or on a future date you accept, in exchange for documents | You aren't obligated to pay before shipment | Supplier terms, then a line for the payment date |
| Open account | "Typically in 30, 60 or 90 days" after shipment | Among the most advantageous options for your cash flow | Supplier terms, with sales covering part |
New suppliers often start a buyer on cash-in-advance, and better terms tend to follow order history. The guide also says the importer's credit with its bank is used to obtain an LC and the importer "pays their bank a fee," so an LC often draws on the same credit capacity a line would.
A timeline of one assumed import order
All figures are assumptions, not quotes or market rates: a $60,000 order at the FOB price, a 30% deposit at order, the 70% balance due before shipment, 45 days of production, $9,000 of ocean freight, duties and customs broker fees paid on arrival, and sales that bring in $1,000 a day of cash after platform fees, ads and fulfillment once stock lands. Each payment is drawn on a line of credit at an assumed 12% simple annual interest on the daily balance (365-day year, no other fees).
| Day | Event | Payment | Line balance |
|---|---|---|---|
| 0 | Order placed, 30% deposit | $18,000 | $18,000 |
| 45 | Production done, 70% balance due | $42,000 | $60,000 |
| 50 | Goods loaded, bill of lading issued | None | $60,000 |
| 80 | Arrival: freight, duties, broker | $9,000 | $69,000 |
| 85 | Stock in the warehouse, sales start | None | $69,000 |
| 154 | Line repaid from 69 days of sales | None | $0 |
Interest under these assumptions:
- Days 0 to 44: $18,000 x 12% x 45/365 = $266.30
- Days 45 to 79: $60,000 x 12% x 35/365 = $690.41
- Days 80 to 84: $69,000 x 12% x 5/365 = $113.42
- Days 85 to 153: a balance falling $1,000 a day from $69,000 adds $793.97
- Total: about $1,864, or 3.1% of the order's invoice value
The peak need is $69,000, or 115% of the invoice, because freight and duties land before any sales do, so size a facility to landed cost. The cycle from deposit to a zero balance runs 154 days. And payment terms move the cost: if the supplier took the balance 30 days after the bill of lading date (day 80) instead of on day 45, the $42,000 would sit on the line 35 fewer days, saving $42,000 x 12% x 35/365 = $483.29 and bringing the total to about $1,381.
Overlapping orders stack: a second order's $18,000 deposit on day 60 lifts the balance to $78,000, and the day 80 arrival costs take it to $87,000 before the first unit sells.
Which financing options fit a Shopify seller's overseas inventory orders
| Option | Deposit at order | Balance before shipment | Freight and duties | What to check |
|---|---|---|---|---|
| Business line of credit | Yes | Yes | Yes | Whether a borrowing base excludes goods abroad |
| Term loan | Yes | Yes | Yes | Interest runs on the full amount from funding |
| Letter of credit | Generally no | Yes, against shipping documents | No | Bank fee and the credit it ties up |
| Supplier terms | Deposit often still due | Yes, if the supplier agrees | No | Usually earned with order history |
| Revenue-based financing | Yes | Yes | Yes | Total dollar cost and share of sales withheld |
| Purchase order financing | Usually only with a business customer's order | Same | Varies | Needs a creditworthy buyer's order |
| Inventory financing | Rarely | Rarely | Sometimes, once goods land | Can refinance a line draw after arrival |
A business line of credit matches the timeline because you draw each payment on its due date and pay the balance down as stock sells. If the limit rests on a borrowing base, ask how the lender treats goods in transit, since policies differ. Our guide on how big a business line of credit should be covers sizing.
A term loan can suit a one-time step up, such as a first full-container order, when you want a fixed payment schedule, though you pay interest on money that may sit idle until the balance comes due. Revenue-based financing, including offers inside a sales platform, can fund quickly against store sales, but it's often priced with a factor rate and repaid from a share of sales, so convert it to dollars as our factor rate vs. APR guide shows.
SBA's Seasonal CAPLine is another route for an established seller. Under SOP 50 10 8.1, the applicant must "have been in operation for at least 12 calendar months" and "be able to demonstrate a definite pattern of seasonal activity," and proceeds go "solely to finance the seasonal increases of accounts receivable and inventory." SBA-guaranteed lines often take longer to set up than private ones, so apply well ahead of the order.
What lenders review before funding an import order
Approval and terms vary by lender, and each weighs credit and repayment ability its own way. Have these ready:
- Business bank statements and your store platform's sales and payout reports
- The supplier's proforma invoice showing the Incoterms rule, the deposit and the balance trigger
- A landed-cost sheet: unit cost, freight, duties, broker and warehouse receiving
- Gross margin and sell-through history for the products you're reordering
- Current debts, including any revenue-based advances, since stacking affects approval
EQ Funding doesn't lend. One application through EQ goes to lenders who compete to fund it, and each lender decides after reviewing it, so you can set a line offer beside a term loan offer for the same order.