Clothing business finance for fashion brands, garment makers and textile mills

Usually with a blend of the founder's own money, a start up loan and, once orders are coming in, trade or stock finance. A first run means paying for samples, fabric, trims and labels, the factory deposit and the balance before goods ship, then freight and import VAT, often three to six months before the first sale. A lender to a brand with no trading history leans on the founder's personal credit, a realistic forecast and evidence of demand such as preorders, a waiting list or a stockist's order. With a trading record behind it, a brand can use trade finance to pay the factory against a confirmed order and stock finance to carry finished garments until they sell. We source lenders for clothing brands at each stage and can say early which route fits.

What deposit do clothing manufacturers ask for?

It depends on the factory and the country, but a deposit of 30% to 50% when the order is placed, with the balance due before the goods leave the factory, is a common arrangement for a new brand. Buyers with a history can sometimes move to payment against shipping documents or on credit terms. Minimum order quantities decide how much cash is tied up, and smaller UK cut, make and trim units can accept lower minimums than large overseas factories, usually at a higher price per piece.

• Samples. Budget for more than one sampling round, since fit changes delay bulk production and push back the date money returns.
• Currency. A factory quoting in US dollars or euros leaves the order open to exchange rate moves between deposit and balance.
• Landed cost. Freight, duty and import VAT added to the factory price give the true cost of each garment.
• Sell through. Lenders like to see what share of an earlier drop sold at full price.

The British Business Bank sets out who can apply for a Start Up Loan. Our start up business loans page covers new brands, trade finance explains paying a factory against an order, and stock finance covers garments waiting to sell. Instant Quotes matches a clothing business to panel lenders before any credit search.

Yes. Opening a shop brings a lease deposit and legal fees, a fit out with rails, lighting, changing rooms and a till system, opening stock and the first months of rent and wages before sales settle. An unsecured business loan or a start up loan can fund the launch, fit out finance spreads the cost of the shop fit, and once card takings build up, a merchant cash advance repaid from sales can fund new season stock. Lenders look at the owner's retail experience, the location and footfall, the lease length and any break clause, and the buying budget for the first two seasons. We arrange finance for independent fashion retailers opening a first or further shop.

Do I need a licence to sell clothes in the UK?

No licence is needed to sell clothing from a shop, but the goods have to meet consumer law. Textile products sold in England, Scotland and Wales must be labelled with their fibre composition, and the retailer shares responsibility with the manufacturer for getting the label right, so stock bought from overseas suppliers should be checked when it arrives. Children's nightwear must meet its own fire safety rules, and the shop still needs the usual set up such as registering with HMRC, insurance and any consent the council requires for signs or changes to the shopfront.

• Open to buy. Holding back part of the stock budget for repeat orders of lines that sell well protects cash.
• Lease terms. A short lease or an early break clause limits how long a lender will spread the fit out.
• Online sales. A web shop alongside the boutique spreads risk, and lenders count both channels.
• Card records. Taking card payments through one provider builds the record needed for finance repaid from takings later.

GOV.UK explains the rules on textile labelling. Our fit out and refurbishment finance page covers the shop fit, merchant cash advance explains finance repaid from card sales, and retail business loans covers shops more widely. Instant Quotes shows which panel lenders might fund a boutique fit out.

A clothing brand commits to a season long before it sells a garment. Designs are signed off, fabric is booked, and the factory usually wants a deposit with the order and the balance before goods ship. Goods then spend weeks in transit, clear customs and arrive in a warehouse, and only then does selling begin. Wholesale customers pay on trade terms after delivery; online customers pay at once but return a share of what they buy. A brand running two main seasons plus drops can have production for the next season in progress while still waiting for cash from the last.

UK manufacturers face a different version. A garment factory or mill carries yarn, fabric and trims, pays wages weekly, and is paid by brands on credit terms. Many depend on a small number of brand customers whose orders vary season to season.

• A large wholesale order. A department store or online retailer places an order bigger than the brand's cash can produce.
• Paying overseas factories. Deposits and pre-shipment balances in dollars or euros, with currency risk on top.
• Peak season stock. Building stock for autumn and Christmas, when most annual sales happen for many brands.
• Reshoring production. Moving some production to UK factories for speed and traceability, which needs new supplier relationships and sometimes machinery.
• Equipment for decoration and making. Multi-head embroidery machines, direct-to-garment and direct-to-film printers, heat presses, automated cutting tables, knitting machines and looms.
• Corporate workwear contracts. Uniform suppliers holding stock for a client's staff, often embroidered with that client's logo and unsaleable elsewhere.

Garments and fabric imported into the UK can attract import duty as well as import VAT, depending on the product and where it was made. The rates for each commodity code are on the UK Trade Tariff, and getting the code wrong can mean unexpected bills when goods land. Factories in Asia commonly invoice in US dollars, so a weaker pound between order and payment raises your cost. Trade finance providers can often pay in the supplier's currency, and some arrange forward contracts to fix the rate. Letters of credit and other tools for overseas sourcing are explained in our import and export funding guide.

The biggest risk in clothing finance is funding a season that does not sell. Borrowing to produce more than you can reasonably sell at full price turns a stock problem into a debt problem, and a revolving facility can quietly carry unsold stock from one season to the next. Be cautious about personal guarantees on large seasonal lines, and price in currency and duty before committing to an order. Alternatives include agreeing smaller initial runs with fast reorder capacity, made-to-order or pre-order models, negotiating longer payment terms with factories, and equity investment for brands with strong growth. If an HMRC bill coincides with a production peak, compare a VAT loan with Time to Pay.