The Holiday Math Changed
If you sell physical products, you already know this: the order you placed last October costs more this October. Tariffs have raised the cost of imported goods, and many suppliers have passed the increase straight through. It shows up in the data: in the NFIB's September survey, a net 31% of small business owners reported raising their average selling prices, more than double the historical average of 14%, and inflation was the second most-cited problem. [1]
Timing has shifted too. Import data shows U.S. businesses stocking up earlier to limit their tariff exposure, with surges starting as early as May rather than the usual late-summer rush. [2] That means some of your competitors already have their holiday stock, and suppliers have less flexibility on late orders.
Why This Is a Cash Flow Problem, Not Just a Margin Problem
Higher prices hurt your margins. But the bigger issue for most small businesses is timing.
Importers generally have to deposit estimated duties within 10 working days of their goods being released by U.S. Customs, long before most of those goods are sold. [3] If you also sell wholesale on 30-, 60- or 90-day terms, the gap between when cash goes out and when it comes back gets wider:
- October: Pay the supplier and the duties
- November–December: Sell through inventory
- January–February: Collect payment from wholesale customers
That's three to four months where your cash sits on shelves or in receivables. When the cost of each unit goes up, the size of that gap goes up with it.
Five Ways to Fund Holiday Inventory
1. Inventory Financing
The loan is secured by the inventory itself. It's designed for this exact situation, and approval depends more on the inventory and your sales history than on years in business.
Best for: Retailers and e-commerce sellers with a track record of selling through holiday stock.
2. A Business Line of Credit
Draw what you need in October, pay it down as holiday sales come in, and only pay interest on what you use.
Best for: Businesses that want flexibility and plan to repay within a few months.
Watch out for: Most lines are variable rate. Prime moved up to 7.00% after the Fed's September hike, and Fed officials have signaled another increase is likely by year-end. [4][5] Factor that in before you draw heavily.
3. Invoice Financing or Factoring
If wholesale customers owe you money, you can get an advance against those invoices now instead of waiting 60–90 days.
Best for: Wholesalers and brands selling to retailers on terms.
4. Purchase Order Financing
A lender pays your supplier directly to fill a confirmed customer order.
Best for: Businesses with large confirmed orders that are bigger than what they can fund themselves.
5. Short-Term Working Capital Loans
A fixed amount, repaid over a few months to a year.
Best for: A single, predictable inventory purchase.
Watch out for: Compare the total cost, not just the payment. Some short-term products are much more expensive than they look.
Before You Borrow: A Quick Gut Check
Ask yourself these questions before you finance a bigger holiday order:
- Did this product sell through last year? Financing inventory that doesn't sell turns a cash problem into a debt problem.
- Have you raised prices to reflect your new costs? If your margin has shrunk, make sure the order still makes money after financing costs.
- What happens if 20% doesn't sell? Know your plan for leftover stock before January.
- Are you buying earlier or buying more? Buying the same amount earlier is lower risk than buying more.
Smart Moves Retailers Are Making Right Now
- Ordering fewer SKUs in deeper quantities, focusing on proven sellers
- Negotiating split shipments, paying for half now and half in November
- Pricing for the new cost rather than absorbing it and hoping volume makes up for it
- Setting up financing before they need it, so a reorder in late November doesn't wait on approval
The Bottom Line
Tariffs have made holiday inventory more expensive and pushed more cash out the door earlier. The businesses that come out ahead aren't necessarily the ones with the most cash. They're the ones that line up the right financing early and match it to how their cash actually moves.
DirectCredit can match you with lenders that offer inventory, invoice and working capital financing, so you can compare options side by side before the holiday rush hits.
Sources
- NFIB, Small Business Economic Trends, September 2026
- Passport via Stacker, 6 trends shaping the 2026 e-commerce holiday season
- U.S. Customs and Border Protection, What is Entry Summary?
- Lendio, Current SBA Loan Interest Rates, October 2026
- Investinglive, FOMC Minutes: Most participants assessed another hike would likely be appropriate by year end
