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Financing Your Import Shipments from China

Here's the dirty little secret when it comes to importing from China- you need money to import products! So how exactly do you finance your shipments from China? Aside from cash in the bank, there's several other creative ways to finance your products.

First Thing's First: How Much Money Do You Need?

Lets imagine you want to sell $20,000 worth of tennis rackets. You intend to mark these tennis rackets up 300%, meaning you will buy them for $10 and sell them for $30. So how much money do you need just to get these tennis rackets to your door step? Let's take a look:

Cost of Tennis Rackets: $6666
Duties (at 5.3%): $353
Freight & Misc: $400
Total Cash Needed: $7419

Where to Get Money to Import: Start Small and Bootstrap

If you want to sell $20,000 worth of tennis rackets, but don't have $7419, then consider importing a smaller shipment. If you want to sell $10,000 worth of rackets you would need roughly $3909 (assuming freight is fixed at $400).

BootStrapping is possibly the most common way to finance an importing business
Boot Strapping is possibly the most common way to finance an importing business

You will be left with roughly $6099 gross profit (which is probably more like $4000 after all of your expenses, but that's a topic for another day) and you can use this money to invest in your next shipment of tennis rackets. The less money you're able to resist taking out of your profits, the bigger your shipments can become and the bigger your business can become.

Where to Get Money to Import: A Bank Loan/Line of Credit, Small Business Loan

Since the Great Recession, banks have significantly tightened up. In my experience (and I would reckon, most others) almost no bank will give a loan or line of credit that is not personally secured. And your security means nothing without equity. So if you have $250,000 in savings, a bank will gladly give you a $30,000 Line of Credit. But if you have limited savings, you'll probably be out of luck.

Canada Small Business Loan
Government backed small business loans normally do not cover purchases of inventory.

Many governments, such as Canada's,  back Small Business Loans in partnership with financial institutions. Unfortunately, many of these loans can only be used for the purchase of land, equipment, or land improvements and explicitly forbid use for the purchase of inventory.

Where to Get Money to Import: Credit Cards

Since the Great Recession, there is one financier who is still giving out money: the credit card companies. Most credit cards allow you to get a cash advance at a terrible interest rate of 25% or so. I despise credit cards, but this is an option.

If you get a cash advance of $3909, you will pay roughly $81/month in interest. Assuming it takes you two months to receive your tennis rackets and a month to sell them (i.e. it takes you 3 months to repay the $3909) your profit will still look like:


Total Sale Price: $10,000


Cost of Tennis Rackets: $3333
Duties (at 5.3%): $176
Freight & Misc: $400
Credit Card Interest: $243
Total Expenses: $4152
Total Gross Profit: $5848

Where to Get Money to Import: Supplier Financed

When you buy from a wholesaler or manufacturer in your home country, often they will give you credit under Net 30/Net 60 terms (meaning you pay them 30 or 60 days after delivery). Why? Because they know that most businesses cannot afford to put the money up front to buy inventory and need to receive at least some money first from their customers before they can afford to pay them.

But here's a little secret: Chinese Suppliers will also give you credit.

For my two largest suppliers, I have the following payment terms:

  • Supplier #1: 50% payment upon shipment, 50% payment 30 days after receiving the shipment
  • Supplier #2: 75% payment upon shipment, 25% payment 30 days after receiving the shipment

Your supplier is putting a lot of trust in you if they accept such terms as they have very little recourse if you decided not to pay. Do not expect them to accept such terms until you have dealt with them for a couple of years (at least).  It's also good to gradually work your way up to greater and greater credit terms. Start by asking to pay for 100% of your order when it ships (opposed to the classic 30/70). After a few orders like that, propose 80/20 terms, 80% upon shipment, 20% after receiving the shipment and gradually increase this.

Where to Get Money to Import: Purchase Order Financing

There are many companies which will finance your purchase orders, and many of them also specialize in working with importers. The problem is that 1) You need a PO from a reputable vendor, 2) They will charge a very big interest rate.

How these things work is that if Walmart issues you a $50,000 PO to buy your Horse Saddles, you assign that PO to the Purchase Order Financier (i.e. they can collect directly from Walmart) and they give the $50,000 immediately, minus a large interest rate.

I spoke to one Financier, and they were willing to finance our Purchase Orders from one of our largest vendors, however, they wanted the following:

  • They would take 3% every 30 days based on the Purchase Order Value
  • Required a minimum PO of $30,000
  • Each shipment needed to be inspected prior to the Supplier being paid

Where to Get Money to Import: Angels (and a Word of Caution)

Many importers may rely on Angel money to finance their shipments, such as by having family and friends invest money. Money invested in inventory, IMO, is safer than investing on a startup and using the money to hire employees and pay for other business expenses, as inventory has some tangible value. However, it can be very difficult for Angels to recoup their money.

Imagine an Angel invests $50,000 for you to buy a shipment of products. Let's also imagine you have a very healthy net profit of 25%, so you make $12,500 after you sell out of the product. Fantastic! Maybe you and your Angel agreed to split the profit, so you both walk away with $6,250.

angel money
If you're considering accepting Angel money, you and your angel must be completely honest to each other and yourselves about how long it will take the money to be paid back.

But now what?

If you're running a business the chances are you want to import another shipment of this magical product you're making 25% on. So you borrow $50,000 from your Angel again. You sell out of the product again, you both take $6,250 and you borrow the $50,000 from your Angel one more time.

And the cycle continues.

You and your angel must be very forthright with each other about when he/she expects their money back. Anything less than 3-5 years+ for a repayment period is unlikely.

Other Ideas for Financing Your Shipments?

Have you had luck financing your shipments in any other ways? Loans? Grants? Or anything else? If so, please comment below.


Dave Bryant

Dave Bryant has been importing from China for over 10 years and has started numerous product brands. He sold his multi-million dollar ecommerce business in 2016 and create another 7-figure business within 18 months. He's also a former Amazon warehouse employee of one week.


  1. We found easy financing from PayPal $20k and Amazon $70k based on our a small percentage of our average years sales? This is much more then the Banks will offer without collateral?

    1. Yes, another good suggestion. The interest rate works oute very high but it’s more convenient and easy than the banks.

  2. Which U.S. Banks will finance a Purchase order from a reputable U.S. customer? So I can use this money to pay the supplier in China. Latter is vetted by and so the bank, myself and customer can verify quality of shipments.

    1. Purchase ordering factoring is a fairly common lending type for many banks. I would contact the bank you’re currently using.

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