What Is Floor Plan Finance? How Inventory Finance Works for Dealers
Working Capital
Floor plan finance · Limits and curtailment · For dealers and wholesalers
Floor plan finance funds the stock a dealer or wholesaler holds until it sells. This guide covers how a unit is drawn and paid out, what bailment and curtailment mean, what a stock audit checks, how the financier's PPSR security sits beside your bank, how to size a limit, what it costs, what lenders assess and how to switch if the facility stops fitting.
Quick Answer
Floor plan finance is a revolving facility that pays for stock an Australian dealer or wholesaler holds for sale. Each unit is drawn against a limit, the financier keeps security over it, and the unit is paid out when it sells. It does not automatically mean 100% of every purchase price is funded: the advance, payout deadline, curtailment rules and audit terms are set by the facility. The real cost is driven by how long stock sits.
Also called: floorplan finance, inventory finance, stocking finance, dealer floor plan or wholesale finance. In Australia "inventory finance" is also used for short-term unsecured loans to buy stock, which work differently.
What is floor plan finance, and is it the same as inventory finance?
Floor plan finance is a revolving facility that pays for the stock an Australian dealer or wholesaler holds for sale, unit by unit, with the financier holding security over that stock until each unit sells. It is not always the same as inventory finance: that name covers floor plans, but lenders also use it for short-term unsecured loans to buy stock, so check which one you are being offered.
The PPSR's guidance for the motor trade puts the first meaning plainly: if you are a dealer, you may be able to get finance using your floor stock as collateral, and a variety of consignment and finance leasing arrangements may be used. On the PPSR, inventory means personal property used in the ordinary course of business by an entity with an ABN, including property held for sale or lease, property held to be provided under a contract for services, and property held as raw materials or work in progress.
A floor plan typically covers:
- New, used and demo stock, and imported stock once it has landed.
- Vehicles, caravans and campers, boats and motorcycles.
- Agricultural, outdoor power and materials handling equipment.
Each unit usually arrives with the dealer invoice behind each unit, and that invoice is what the financier pays against.
The second meaning is a different product. Online lenders also sell short-term unsecured loans called "inventory finance" that a business uses to buy stock. Those are repaid on a fixed schedule rather than unit by unit, and the lender does not hold the stock as its security in the same way; see short-term unsecured stock loans. Wages, rent and seasonal gaps are a separate question again, covered under funding the business around the stock.
One more name clash: residual stock loans are property loans against completed but unsold apartments, not this.
Sources: PPSR, Automotive industry guidance, no date shown; PPSR, Glossary of terms, no date shown. Both read 2 October 2026. Government overviews, not legal advice.
How does floor plan finance work, unit by unit?
Floor plan finance works in a loop: the financier pays for a unit, the dealer pays interest on that unit while it sits on the floor, and the dealer pays it out when it sells, which frees the limit for the next unit. It works like how a revolving limit works on a line of credit, except each draw is tied to a specific unit.
- The limit is approved. The financier sets a total limit for stock and the rules for drawing against it.
- A unit is ordered or acquired. For new stock the financier usually pays the manufacturer or supplier directly. Used and trade-in units are often added after the dealer buys them, and the amount advanced can be less than the full price.
- The unit is drawn against the limit. Interest starts on that unit.
- The unit sits on the floor. It stays identified to the facility, usually by serial number or VIN.
- The unit sells and is paid out. The dealer pays the financier for that unit within the time the facility sets.
- The limit frees up. The repaid amount is available for the next unit.
What happens when a unit sells?
The dealer pays out that unit's balance to the financier, generally from the sale proceeds, within the time the facility agreement allows. Each financier sets its own payout clock, and it matters because a sold unit that has not been paid out is still using the limit and is exactly what an audit looks for.
What does selling out of trust mean?
Selling out of trust means selling a financed unit and not paying out the financier within the agreed time. It is usually a default under the facility, because the financier's security in that unit has gone to the buyer while the money has stayed with the dealer. Stock audits are designed to find it.
Can the floor plan financier take a sold unit back from the buyer?
Generally the floor plan financier cannot take a unit back from a customer who bought it in the ordinary course of the dealer's business. The PPSR says a buyer takes free of security interests the seller has granted if the goods are sold in the ordinary course of the seller's business and are the kind the seller ordinarily sells. That is why the financier's protection after a sale is the payout, not the unit, and why selling out of trust is treated so seriously. It also explains why a unit still on the lot can show a registration on a PPSR search: that registration is the floor plan.
Source: PPSR, Retail industry guidance, no date shown, read 2 October 2026. General information, not legal advice; whether a particular sale was in the ordinary course of business is a question for your solicitor.
A used vehicle dealer sells a financed car on a Friday and uses the cash for wages before paying out the unit. The car is gone but the facility still shows it on the floor. That is selling out of trust. The next audit finds the gap, and depending on the agreement it can end the facility.
Illustrative only. Not a statement about any lender or facility.
How is floor plan finance different from trade finance, a working capital loan or a line of credit?
Floor plan finance pays for stock while it is held for sale; trade finance pays a supplier before the stock arrives, invoice finance funds the gap after a sale on credit terms, and a working capital loan or line of credit funds the business around all of it.
The government's own overview of funding options lists a line of credit and trade finance as ways to fund inventory; floor plans sit alongside them for stock that is held for sale. For the step before the stock arrives, see buying the stock from an overseas supplier; for the step after a sale on terms, see after the sale, the invoice; and for a facility repaid from card takings, see how a merchant cash advance works.
| Facility | What it pays for | When it is repaid | Security usually taken | Best fit |
|---|---|---|---|---|
| Dealer floor plan | Each unit of stock held for sale, drawn unit by unit | When that unit sells, plus any curtailment on aged units | Security over the financed units, usually a PMSI registered on the PPSR | Dealers in serial-numbered stock |
| Wholesaler inventory line | Stock on hand, up to a limit set against eligible stock | Revolves as stock sells and is reported | Security over the stock, with regular stock reports | Wholesalers and distributors carrying many lines |
| Trade finance | Paying a supplier, often offshore, for a specific order | From the sale of the goods or at the end of a short facility term | Varies by lender, often over the goods or the business | Importers paying for stock before it lands |
| Working capital loan | The business around the stock: wages, rent and seasonal gaps | On a fixed repayment schedule | Unsecured, or secured over the business or property, varies by lender | Cash needs that are not a specific unit of stock |
| Business line of credit | Any business purpose up to a limit | Repaid and redrawn as cash comes in | Often property or business assets, varies by lender | Uneven cash flow across the year |
| Invoice finance | The gap after a sale on credit terms | When the customer pays the invoice | The invoices themselves | Businesses selling to other businesses on terms |
Sources: business.gov.au, Choose your funding, last updated 18 February 2026, read 2 October 2026; otherwise Switchboard broking experience, October 2026. Facility terms vary by lender.
What is a bailment or consignment stock arrangement, and how is it different from a floor plan loan?
A bailment or consignment arrangement differs from a floor plan loan in who owns the stock. Under a loan-based floor plan the dealer usually owns the stock and the financier takes security over it; under bailment or consignment the financier or supplier keeps ownership and the dealer holds the stock to sell. In Australian motor dealing, "bailment" is also used loosely for floor plan drawdowns, so read the agreement, not the label, to see who owns the stock.
The ATO uses the two words together. Its GST guidance describes floor plan arrangements (bailment) as what motor vehicle dealers use to finance their trading stock, and its worked examples show a dealer taking delivery under a bailment and paying its finance company once each vehicle sells. Where a manufacturer pays a dealer an incentive on a floor-planned vehicle, the ATO has separate GST and luxury car tax guidance, and ruling GSTR 2014/1 deals with those payments. How any of it applies to your arrangement is a question for your accountant.
One manufacturer's arrangement, described in a notification lodged with the ACCC in 2017, shows how this works. It describes a floor plan facility as a wholesale finance arrangement with a third-party financier that enables a dealer to buy stock for its retail business. Under that arrangement, when the dealer orders a unit the financier acquires ownership of it and, in effect, rents it to the dealer for the period it remains on the shop floor, and dealers must use the nominated financier. That is the applicant's own description, not an ACCC finding.
The PPSR describes a commercial consignment as one where the consignor keeps some kind of interest, such as ownership, in the goods it delivers, the consignee is tasked with selling, leasing or otherwise disposing of them, and both deal in those goods as part of their normal business. Separately, the PPSR says a lease or bailment is a PPS lease where the lessor or bailor is regularly engaged in the business of leasing or bailing and the term is more than two years, or up to two years with renewals that can or will take it past two years, or indefinite once the bailee has had continuous possession for at least two years. For a bailment, the bailee must provide value. If a lease or bailment started before 20 May 2017, other rules apply. These rules are about personal property generally, and the same register covers leases of equipment you keep.
| Question | Loan-based floor plan | Bailment or consignment stock |
|---|---|---|
| Who owns the unit until it sells | Usually the dealer, once the financier has paid for it | The financier or the supplier |
| What the financier registers on the PPSR | A security interest over the units it funds, usually claimed as a PMSI | The owner registers its interest so its ownership holds up against other creditors and a liquidator |
| What the dealer pays for | Interest on each drawn unit, plus any curtailment and fees | The charges the agreement sets for holding the stock, and the price of each unit when it sells |
| What happens to unsold stock | It stays the dealer's, and the debt on it stays owed | It stays the owner's, and the agreement sets whether it can be returned or recalled |
| What the dealer's accounts show (ask your accountant) | Usually the stock as an asset and the facility as a liability | Depends on the agreement; your accountant decides the treatment |
Sources: PPSR, Leases, bailments and consignments, no date shown; PPSR, PPSR glossary, no date shown; PPSR, Hire and rental case study, no date shown. All read 2 October 2026. ACCC public register, exclusive dealing notification, lodged 15 September 2017, read 2 October 2026; an applicant's notification, not an ACCC finding. ATO, Third party motor vehicle incentive payments, last updated 31 May 2017, and Examples: working out the GST, both read 2 October 2026. General information, not tax advice.
Why does the owner of bailed stock register on the PPSR?
The owner of bailed or consigned stock registers on the PPSR because an unregistered owner can lose the goods to a liquidator. In a PPSR case study about a hired truck, the owner's arrangement ran long enough to be covered by personal property law but was not registered on the Personal Property Securities Register. When the hirer went into liquidation, the liquidator was entitled to keep or dispose of the vehicle, and the owner became an unsecured creditor that may see a small portion of the sale proceeds, if any. The case study is general information, not legal advice.
Which kind of arrangement you have decides who should register and how. How a bailment or consignment is treated for GST and in your accounts is a question for your accountant, and what the agreement means for who owns the stock is a question for your solicitor.
What is curtailment, and why does aged stock cost more?
Curtailment is a scheduled part-payment of a unit's balance once it has been unsold past an age the facility sets. The longer a unit sits, the more of its balance the dealer pays down from its own cash, and the more interest it has carried on the rest.
The day an unsold unit turns old is set in the facility agreement, not by law, and each financier sets its own schedule. Some facilities also step up the price on aged units, so aged stock costs more twice: once in the cash it ties up and again in the interest it carries. That is why dealers watch stock age as closely as sales. Where curtailments arrive in a slow month, some businesses look at cash to meet a curtailment rather than discounting stock they would rather hold.
A regional caravan dealer has one new van that sits unsold past the facility's curtailment point. The dealer pays part of the van's balance down while interest keeps running on the rest. It then weighs discounting the van to clear it against carrying it into the next selling season.
Illustrative only. Not a statement about any lender or facility.
What does a floor plan stock audit check?
A floor plan stock audit checks that every financed unit is physically there, or has been paid out if it has sold. An auditor arrives with the financier's stock list and works through it unit by unit.
- Serial number or VIN against the facility report, for every unit.
- Units sold but not paid out, which is selling out of trust.
- Demo and loan-car use, and whether it is within what the facility allows.
- Condition and location, including units held at another site.
- Documents for traded-in or used stock, so the financier knows what it is funding.
Audits are usually unannounced, and how often they happen is set by the financier. Imported units are checked the same way once they land; see how lenders handle serial numbers and landed stock.
What if a financed unit is off-site or missing during a stock audit?
Off-site stock should still be recorded in the facility and capable of being verified. If an auditor cannot locate a financed unit, the dealer generally needs to show where it is, prove that it has been sold and paid out, or explain the discrepancy under the facility's audit and default rules. A unit at another approved yard, with a customer for an allowed demo or temporarily away for repair is different from a sold unit whose payout has not reached the financier, but the dealer needs records that prove the difference.
The agreement decides how quickly a discrepancy must be resolved and what happens if it is not. A missing or unaccounted-for unit can lead to an immediate payout request, tighter availability, a limit freeze or a wider review of the facility, depending on the financier and the facts.
The financier's audit is not the same as the year-end valuation of trading stock for tax. The ATO lets a business value each item of trading stock at year end at cost, market selling value or replacement value, and you can choose a different method each year for different items. Which method suits your stock is a question for your accountant.
Source: ATO, Valuing trading stock, last updated 7 May 2025, read 2 October 2026. General information, not tax advice.
What security does the financier take, and how does it sit with your existing bank?
A floor plan financier usually registers a purchase money security interest (PMSI) over the stock it funds. Registered on time, a PMSI can rank ahead of your bank's general security agreement over the same stock, even though the bank registered first. That is why your bank's own facility terms usually require its consent before you give another financier security.
The PPSR, which business.gov.au describes as a government register of security interests in personal property, defines a lender PMSI as a security interest granted to secure funds lent by a secured party and used by the grantor to acquire the collateral. A seller PMSI secures the price owed to the seller. The PPSR says a PMSI generally gives priority over other security interests in the same property, even if they registered on the PPSR first, provided it is registered on time and the PMSI box is ticked. Its priority rules put it this way: a perfected security interest that is a PMSI takes priority over a perfected security interest that is not a PMSI, and otherwise perfected interests rank from earliest registration date to latest. A bank holding a general security agreement over all present and after-acquired property is usually in that second group. For the wider picture, see what a general security agreement lets a lender take.
Why does registration timing decide priority?
PMSI priority depends on timing: it only exists if the financier registers within the window the PPSR rules allow. The PPSR's timing rules say a PMSI over inventory must be registered before the grantor gets possession of the goods, and a PMSI over goods that are not inventory within 15 working days of possession. Miss the window and the financier loses the PMSI priority. The PPSR glossary identifies a motor vehicle by its VIN, chassis or manufacturer's number and a watercraft by its hull identification or official number, which is how each financed unit is pinned to the register.
Business facilities commonly also carry a director's guarantee and a general security agreement, depending on the financier and the business; neither is a given on every facility.
| Security | What it covers | When it must be registered | How it ranks |
|---|---|---|---|
| Floor plan financier's PMSI over inventory | The units the financier funds | Before the dealer takes possession of the stock | Generally ahead of an earlier general security agreement over the same stock, if registered on time with the PMSI box ticked |
| Existing bank's general security agreement | All present and after-acquired property, including stock | No PMSI deadline; it ranks from its registration date | By registration date against other non-PMSI interests; behind a perfected PMSI over the same stock |
| Supplier's retention of title | Goods supplied but not yet paid for | Before possession, where the goods are inventory and a PMSI is claimed | A PMSI if registered and claimed on time; otherwise ranked like any other perfected interest |
| Director's guarantee | A director's personal promise to pay the business's debt | Not registered on the PPSR | Not a PPSR security interest; it gives the financier a claim against the director personally |
Sources: PPSR, Do you have a purchase money security interest; PPSR, PPSR timing rules; PPSR, Which security interest has priority; business.gov.au, Key financial terms, last updated 9 July 2024. PPSR pages show no date. All read 2 October 2026. Simplified; priority between two financiers is a question for your solicitor.
A distributor's bank holds a general security agreement over all its assets, and the distributor wants a separate inventory line from another financier. The new financier registers its interest before the stock arrives. Under the bank's own facility terms, the distributor needs the bank's consent, and the two financiers agree in writing who is paid from which stock.
Illustrative only. Not a statement about any lender or facility.
How does inventory finance work for wholesalers and distributors?
A dealer floor plan usually funds identifiable units such as vehicles, caravans or equipment one by one. Inventory finance for a wholesaler or distributor more often works against a borrowing base: a pool of eligible stock on hand, with slow, aged or obsolete lines excluded or discounted and regular stock reports required. A warehouse of cartons cannot be audited unit by unit the way a car yard can, so the financier relies more heavily on inventory reports, eligibility rules and periodic field audits. The PPSR's guidance for the wholesale industry says the register makes it easier for wholesalers to borrow against inventory and stock because financiers can see the interests already registered against those goods.
- Eligible stock. Current, saleable lines the financier is prepared to lend against.
- Ineligible stock. Aged or obsolete lines, consigned-in stock the business does not own, and stock in transit where the facility excludes it.
- Stock reports. Regular reports of what is on hand, which reset what can be drawn.
- Field audits. Periodic checks that the reports match the warehouse.
How fast that stock turns into cash depends on the trade terms you give customers. Some wholesalers fund their receivables instead of their stock, as the comparison table above sets out, and some pair an inventory line with a business line of credit alongside it.
Imported stock needs one extra distinction. A standard floor plan may only start once eligible goods have landed and can be identified to the facility, while trade or import finance can fund the earlier supplier-payment and shipping leg. Some facilities may cover both stages, so an importer should ask exactly when the financier starts funding: purchase order, bill of lading, arrival in Australia or delivery to the dealer.
Also ask what the advance is calculated against. A facility that funds the supplier invoice does not automatically fund every part of landed cost. Depending on the product, freight, insurance, customs duty and import GST may need to be funded separately or included in a different trade-finance limit. The ATO says GST on imported goods is 10% of the value of the taxable importation, which is the customs value plus any customs duty, the cost of transporting the goods to their place of consignment in Australia, the insurance for that transport and any wine equalisation tax. That tax calculation is not a statement that a floor plan lender will finance those amounts.
Sources: PPSR, Wholesale industry guidance, no date shown; ATO, GST and imported goods, read 2 October 2026. General information, not legal or tax advice.
What does floor plan finance cost, and what is floor plan interest?
Floor plan interest usually accrues daily on each unit's drawn balance, so the cost of a unit depends on how long it sits. The real cost is not just the headline interest rate: compare interest on each drawn unit, establishment or facility fees, PPSR or per-unit administration charges, audit costs, curtailments, any higher pricing on aged stock and the cost of switching or closing the facility.
| Cost line | When it applies | What drives it |
|---|---|---|
| Interest on drawn units | From the day a unit is drawn until it is paid out | How long each unit sits |
| Curtailment payments | Once a unit passes the age the facility sets | Stock age; it is your cash, even though it reduces the debt |
| Facility or line fees | On the limit, where charged | The size of the limit, not how much is drawn |
| Audit fees | Each audit, where the financier passes them on | How often the financier audits |
| PPSR or per-unit administration | When a unit is added, registered, released or otherwise administered, where charged | How many units move through the facility and the financier's fee schedule |
| Aged-stock pricing | On old units, where the facility steps up the price | Stock age |
| Establishment or documentation costs | At set-up, where charged | The financier |
| Exit, discharge or transfer costs | When the facility is refinanced or closed, where charged | The agreement and how many registrations or units need to be transferred or released |
Does floor plan finance cover 100% of the stock price?
Not necessarily. The amount funded against each unit depends on the financier, whether the stock is new or used, the asset type, its age and the facility structure, and the Australian lender pages we read on 2 October 2026 did not publish an advance rate. Some facilities may require the dealer to contribute part of the purchase price. Ask for the advance rate separately for new stock, used stock, trade-ins, demonstrators and imports rather than assuming one percentage applies to everything.
How do you work out what one unit costs to carry?
One unit's carrying cost is its drawn balance multiplied by the annual interest rate, divided by 365, multiplied by the days it sits on the floor, plus any fees and curtailment timing that land while it waits. Run that sum for your average days on the floor and again for your slowest stock, then compare offers on those two numbers rather than on headline rates. A floor plan that is cheaper on paper can cost more if its curtailment starts earlier than your stock usually sells.
On a unit with a $60,000 drawn balance, every percentage point of annual interest costs about $49 for each 30 days the unit sits. Multiply that by your facility's rate: the same unit costs three times as much interest at 90 days as at 30 days. Then add any facility, per-unit or audit charges, and any curtailment that falls due. This is arithmetic, not a market rate or a quote.
If the unit's expected gross margin is $6,000, each percentage point of annual rate uses about 0.8% of that margin for every 30 days on the floor, before other holding costs. A unit that sits three months instead of one triples that bite, which is why stock turn can matter more than a small difference in headline rate.
Which floor plan terms should you get in writing before you sign?
Before you sign a floor plan, get the commercial rules in writing. The product name and headline rate are not enough to compare two facilities:
- The advance rate, meaning the share of each unit's price the financier pays, separately for new, used, demo, trade-in and imported stock where those categories differ.
- The payout deadline, meaning how many days you have to pay out a unit after it sells.
- The curtailment schedule, meaning the age at which curtailment starts and how much is due at each step.
- The audit terms, meaning how often audits happen, what evidence is required for off-site stock and who pays the audit cost.
- Aged-stock pricing or availability, meaning whether the price steps up or the amount funded falls as stock gets older.
- Minimum-interest or minimum-holding rules, if any, so a fast sale does not create an unexpected minimum charge.
- Facility, per-unit, PPSR, exit and transfer fees, including what is payable when you refinance or close the line.
The lender pages we read on 2 October 2026 describe how a facility works but publish none of these numbers, so the written facility schedule is the only reliable way to compare two offers.
We can talk through what a facility would cost for your stock. If you would like a read on how a financier would see your business first, you can check your eligibility in a couple of minutes.
How big a floor plan limit do you need?
The floor plan limit you need is roughly the number of units you carry at any one time multiplied by what you pay for each, plus room for seasonal peaks and new models arriving before old ones sell. The number of units you carry depends on how fast you sell, so the same dealer needs a bigger limit when stock slows down.
| Step | What to work out | Where to find it |
|---|---|---|
| 1. Monthly sales | How many units you sell in an average month | Your dealer management system or sales records |
| 2. Days on the floor | How many days an average unit sits before it sells | A stock ageing report |
| 3. Units carried | Monthly sales multiplied by average days on the floor, divided by 30 | Steps 1 and 2 |
| 4. Average cost per unit | What you pay for a typical unit, not what you sell it for | Your dealer invoices |
| 5. Base limit | Units carried multiplied by average cost per unit | Steps 3 and 4 |
| 6. Peak room | Extra for the busiest season and for new models landing before old stock clears | Last year's stock levels by month |
A caravan dealer sells 10 vans a month and each sits for 45 days on average, so about 15 vans are on the floor at any time. At an average cost of $60,000 a van, that is about $900,000 of stock to fund before any seasonal peak. If the average slips to 75 days, the same sales need about 25 vans on the floor and about $1.5 million.
Illustrative arithmetic only. Not a lender limit, an offer or an indication of approval. The financier sets the limit and may advance less than the full cost of each unit.
Slow stock raises the limit you need at the same moment it makes a financier more cautious, which is why proving your stock turn is the strongest part of an application. If the limit you need is bigger than the floor plan alone will fund, the cost of carrying each unit tells you whether the gap is worth funding another way.
Can your floor plan limit or pricing change at review?
Yes. A floor plan is an ongoing facility, so the financier can review the limit, pricing or conditions under the rights in the agreement. Current sales, stock ageing, audit results, financial performance and how reliably sold units have been paid out can all affect that conversation. Stronger turnover and a well-controlled facility can support a larger permanent or seasonal limit; slower stock, reporting problems or audit issues can lead to tighter availability, extra conditions or a lower limit.
Do not wait for the existing line to be full before asking for more room. If the next model release or selling season will lift stock on hand, take the financier a forward stock plan, recent sales, ageing and the limit calculation above early enough for the review to finish before the deliveries arrive.
Who is floor plan and inventory finance for?
Floor plan and inventory finance suit businesses that buy stock to sell it, have the trading history and records to show how fast it sells, and borrow for a business purpose.
Usually a fit
- Independent dealers of used vehicles, caravans and campers, boats, motorcycles, machinery and outdoor power equipment
- Wholesalers and distributors holding stock for resale
- ABN businesses with trading history and stock records
Look elsewhere
- Franchised dealers whose dealer agreement names the floor plan financier
- Businesses buying equipment to use rather than to sell
- Cash needs that are not stock
- Consumer or PAYG borrowers, which we do not serve
Equipment a business keeps and uses is buying equipment to use, not to sell, and cash tied up in equipment already owned can sometimes be released through a sale and leaseback. A franchised dealer's agreement may name the floor plan financier, as the 2017 notification in the bailment section shows.
A new dealer without trading history is a harder file, because a floor plan is priced on proven stock turn. Industry experience, a trader licence, your own capital in the stock and a smaller starting limit all help a financier say yes.
This is business-purpose credit. ASIC says that if a loan is not predominantly for personal, domestic or household purposes, it is not regulated under the National Credit Act, and that loans to companies are not subject to the credit legislation. Dealers also need the right trading licence: in Victoria, for example, Consumer Affairs Victoria says that generally, if you deal in four or more cars per year, you need a motor car trader licence. Other states set their own rules. You can check whether your business fits before you talk to a financier.
Sources: ASIC, FAQs: Does the credit legislation apply?, last updated 20 October 2020; Consumer Affairs Victoria, Apply for a motor car trader licence, last updated 30 June 2026, Victoria only. Both read 2 October 2026. Not legal advice.
What gets a floor plan approved, and what gets it declined?
Financiers look for stock that turns, records that prove it, and security they can register and rank. A decline letter usually traces back to one of those three: stock that sits, figures that cannot show how fast it sells, or a bank facility that leaves no room for a second financier's security.
In the stock facility files we see, the fix is usually preparation rather than a different lender. Floor plan establishment can take longer than a simple unsecured business loan because the financier also needs to understand the stock controls, PPSR position, any bank consent, reporting process and how sold units will be paid out.
How long does floor plan finance take to approve and set up?
Some current Australian providers advertise approval in days for straightforward floor plan files, but there is no single market-wide turnaround. A clean existing dealer with current financials, a clear stock report and no security conflict can move much faster than a new dealer, an importer needing pre-landed funding or a business whose bank must consent to another financier's security. The practical clock is not just credit approval: establishment is finished when the limit, security, reporting process and first eligible draw are all ready.
What should you have ready before you apply for a floor plan?
Before you apply for a floor plan, have the documents that prove where your stock comes from, how fast it sells and what security is already registered against the business.
- Your dealer or trader licence, where your state requires one.
- The dealer, distribution or supply agreement, showing where stock comes from and whether it names a financier.
- Recent financial statements and BAS.
- A stock ageing report and sales history from your dealer management system.
- Details of existing finance, including what your bank's facility terms say about giving security to someone else.
- A PPSR search against your own business, so you know every registration a new financier will find.
- Your own limit estimate, worked out as in how big a floor plan limit you need.
What changes day to day after a floor plan is established?
After settlement, the facility becomes an operating process rather than a one-off loan. Each eligible unit has to be added or identified to the facility, sold units need to be paid out inside the agreed window, stock records have to reconcile to what is physically on the yard or in the warehouse, and aged units need to be watched before curtailments arrive. Depending on the agreement, the dealer may also need to maintain specified insurance, provide regular reports, use the financier's portal or inventory system and allow unannounced stock inspections.
- Add new units correctly, with the invoice, VIN, serial number or other identifier the financier requires.
- Pay out sold units promptly, rather than using those sale proceeds elsewhere.
- Reconcile the floor plan to the dealer management system, so the financier's list and your stock list agree before an audit.
- Watch stock age, because slow units can trigger curtailments or tighter availability.
- Plan seasonal increases early, before deliveries arrive and the existing limit is already full.
From our broking, indicative
Based on the published floorplan terms of a non-bank lender on our panel (page modified 10 December 2025, read 2 October 2026) and our broking on business-purpose secured facilities, as of October 2026. What that panel lender publishes:
- It works with manufacturers, distributors and dealer networks.
- It finances new, used, demo and imported stock.
- Interest is charged only on what is drawn.
- Curtailment structures are tailored, with adaptable repayment schedules.
We also read the published floorplan pages of two more Australian lenders, one bank-owned and one specialist non-bank, on 2 October 2026:
- Both describe the same loop: the financier pays the manufacturer or distributor for delivered stock, and the dealer repays when the unit sells.
- The bank-owned lender says a limit may be increased for seasonal peaks.
- The specialist lists what it assesses: financial stability, trading history, industry experience, inventory turnover and reporting systems.
- Neither page publishes an advance rate, a payout deadline after sale or the age at which curtailment starts.
What most often stalls a floor plan file when we place one:
- No dealer or distribution agreement showing where the stock comes from.
- A bank facility whose terms prohibit further security, with no plan for consent.
- Stock turn that cannot be shown from the dealer management system or the accounts.
- Sold units not paid out on time.
Indicative only. Terms move with lender appetite and are re-dated at each review. Not a quote, an offer or an indication of approval, and no lender is named or recommended. Not financial advice.
If you hold stock and want to know how a financier would read your file, talk to us about your stock facility. Three numbers get the first conversation most of the way: units you sell a month, average days a unit sits, and average cost per unit.
How do you switch floor plan financiers, and what happens if your limit is cut?
You can switch floor plan financiers voluntarily, or because a limit has been cut or a financier is leaving the market. In either case the safest sequence is to secure the replacement limit before the old facility constrains new stock. The new financier usually agrees which existing units it will take over, pays out the old facility and takes security over those units; the old financier then ends the registrations that no longer secure anything.
Dealers usually look at switching when the limit no longer matches the yard, used or imported stock is being excluded, curtailments do not fit the actual sales cycle, service or reporting has become unworkable, or the business needs a seasonal or permanent increase the current financier will not provide. Those are different from a forced exit after an audit breach, and a new financier will ask which situation it is.
It has happened across the whole market. During the global financial crisis two large financiers stopped offering dealer floor plan finance in Australia, and the federal government set up a special purpose vehicle to keep funding available to eligible dealers until 30 June 2010. A cut can also be one financier changing its appetite for a stock type, or a response to a poor audit.
- Get a payout figure for every unit. Ask the current financier for each unit on the facility and its balance.
- Search the PPSR against your own business. See every registration the new financier will need cleared or ranked.
- Agree the new limit and the units it takes over. The new financier decides which existing units it will fund.
- Refinance the units. The old facility is paid out, usually in one settlement, and the units move onto the new one.
- Check the old registrations are ended. The PPSR's timing rules say a registration over serial-numbered goods must be ended within 5 business days after the security interest is no longer perfected, usually when the debt is repaid.
- Sort your bank's consent where its facility terms require it, as set out in how floor plan security sits with your bank.
A limit cut because a financier changed its appetite is a different file from one cut after an audit found units sold out of trust. If the change is voluntary, start before the old limit is full; if it follows an audit issue, document exactly what happened, what was corrected and how the control will be different under the replacement facility.
Sources: PPSR, PPSR timing rules, no date shown; Parliament of Australia, Senate Economics Committee, car dealership financing inquiry report, chapter 2; carsales, news report, 22 December 2008. All read 2 October 2026.
Floor plan finance pays for stock held for sale, one unit at a time: the financier pays for the unit, the dealer pays interest while it sits, and the unit is paid out when it sells. Aged units attract curtailment, audits check every unit is there or paid out, and the financier's PMSI, registered before the stock arrives, can rank ahead of your bank's general security agreement, which is why the bank's consent matters. The limit you need is the units you carry multiplied by what each costs, and it grows when stock slows.
Key takeaway: the cost, the limit and the risk of a floor plan all come down to how fast your stock turns, so prove your turn, pay out every sold unit on time and sort your bank's consent before you apply.Frequently asked questions
Floor plan finance is a revolving facility that pays for stock a dealer holds for sale, unit by unit. Each unit is drawn against a limit, the financier holds security over it, and the unit is paid out when it sells. See what a floor plan covers.
Floor plan finance works in a loop: the financier pays for the unit, the unit is drawn against the limit, interest runs while it sits on the floor, and the dealer pays it out when it sells, which frees the limit for the next unit. See the unit-by-unit steps.
In a car dealership, the floor plan is the facility that pays for the cars on the lot. Each car is drawn against the dealer's limit and paid out when it sells, and the financier audits the yard to check every financed car is there or paid out. See what a stock audit checks.
Here is an example of floor plan financing: a caravan dealer draws each new van against its floor plan and pays interest while it sits. When one van goes unsold past the facility's curtailment point, the dealer pays part of its balance down and weighs discounting it against carrying it. See how curtailment works on an aged unit.
Not always. The share of each unit's price a financier advances depends on the financier, the stock type and the facility, and the Australian lender pages we read on 2 October 2026 did not publish one. Ask for the advance rate separately for new, used, trade-in and imported stock. See how advance rates work.
Floor plan financing interest is the interest charged on each drawn unit's balance, usually accruing daily, from the day the unit is drawn until it is paid out. The longer a unit sits, the more it costs. See what a floor plan costs in total.
A floorplan payment is the payment that clears a unit from the facility when it sells, paid within the time the agreement sets. It also covers any curtailment payments due on units that have aged. See what happens when a unit sells.
Some Australian providers advertise approval in days for straightforward files, but the full setup can take longer where bank consent, PPSR priority, new-dealer history, imported stock or reporting systems need to be sorted. Establishment is complete when the limit, security and first eligible draw are ready. See what controls the timeline.
A rough floor plan limit is the number of units you carry at any time multiplied by your average cost per unit, plus room for seasonal peaks. Units carried is monthly sales multiplied by average days on the floor, divided by 30. The financier sets the actual limit. See how to estimate a floor plan limit.
Floor plan finance in Australia is provided by banks, finance companies linked to vehicle and equipment manufacturers, and specialist non-bank lenders. A franchised dealer can be required to use the financier its dealer agreement names; independent dealers usually choose their own. See who floor plan finance is for.
A new dealer can apply for floor plan finance, but without trading history it is a harder file because the financier cannot yet see proven stock turn. Industry experience, the right trader licence, your own capital in the stock, clean supplier arrangements and a smaller starting limit can help. See what to have ready.
Ask for the advance rate, payout deadline after sale, curtailment schedule, audit frequency and cost, aged-stock pricing, facility and per-unit fees, and any exit or transfer charges in writing. Those terms can matter more than the headline rate. See which terms to compare.
Paying cash saves finance cost but ties up working capital; a floor plan preserves cash but charges interest and fees while each unit sits. Compare the complete carrying cost of an average and a slow unit with what the same cash would otherwise do in the business. See what one unit costs to carry.
Inventory finance is finance for stock a business holds or buys to sell. In Australia it means two things: stock-secured lines for dealers and wholesalers, where the stock is the security, which this guide covers, and short-term unsecured loans used to buy stock, which work differently. See how unsecured stock loans compare.
For a wholesaler or distributor, inventory financing usually works as a limit set against eligible stock on hand, with slow or obsolete lines excluded, regular stock reports and periodic field audits. See inventory lines for wholesalers.
An inventory loan is a loan or line used to buy or hold stock. Depending on the product it is secured over that stock, like a floor plan, or unsecured and repaid on a fixed schedule. See which facility funds which part of the stock cycle and working capital loans for business owners.
Curtailment means scheduled part-payments on a unit that has remained unsold past an age set by the facility. It reduces the financier's exposure to aged stock but uses the dealer's cash before the unit has sold. See curtailment and aged stock.
Selling out of trust means selling a financed unit and not paying out the financier within the agreed time. It is usually a default under the facility and is one of the things stock audits are designed to find. See selling out of trust explained.
Generally not if the customer bought the vehicle in the ordinary course of the dealer's business. The PPSR says a buyer can take free of security interests the seller granted in goods of the kind it ordinarily sells. That is why prompt payout after sale matters. See the ordinary-course rule.
Sometimes, but not every floor plan starts that early. A standard floor plan may begin once eligible stock has landed, while trade or import finance can cover the purchase-order and shipping leg; some providers combine both. Ask whether funding starts at purchase order, bill of lading, arrival or delivery. See how imported stock fits the cycle.
Secure the replacement limit first, get a unit-by-unit payout from the current financier, agree which stock the new financier will take over, settle the old facility, then check the old PPSR registrations are ended. Start early if the change is voluntary; a forced exit after an audit issue needs a clear explanation and control fix. See the switching steps.
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