Part of a regional apparel trade
The Los Angeles Fashion District, formerly the Garment District, is a business improvement district in downtown Los Angeles. It caters to wholesale selling and has more than 4,000 overwhelmingly independently owned and operated retail and wholesale businesses selling apparel, footwear, accessories and fabrics. Long Beach, in the same county and with a population of 466,742, is part of the same regional trade. A cut-and-sew shop in Long Beach may buy fabric and trims from Fashion District sellers and sell finished goods back into the same wholesale network.
The cycle of a production order
- Sample and quote. The maker spends on pattern work and sample yardage.
- Order placed. A buyer commits, often with a small deposit or none.
- Fabric and trim purchase. Suppliers want payment on or shortly after order, sometimes in advance.
- Cut, sew, finish and pack. Operators are paid weekly, often by the piece.
- Ship and invoice. The buyer pays on wholesale terms, commonly 30 days or more.
Wholesale terms in numbers, for illustration
A shop accepts a 2,000-unit order at $14 a piece, a $28,000 invoice. Fabric and trims cost $10,500, and sewing labor, finishing and freight add another $9,000. That is $19,500 out before the shipment, with a payment of $28,000 arriving 45 days later. If the shop has two orders of this size in the same month, the outlay doubles. The invoice is profitable, and the cash is still stretched. These figures are an example and not our terms.
What changes the picture
| Factor | Effect on cash |
|---|---|
| Minimum fabric orders | Ties cash up in rolls that may exceed the order |
| Seasonal selling windows | Fall goods are made in summer, spring goods in winter |
| Chargebacks and returns | Reduce the amount that finally arrives |
| Piece-rate labor | Paid immediately and cannot wait for the buyer |
| Equipment failure | A broken industrial machine halts the line |
Chargebacks, returns and the money that never arrives
Wholesale apparel sales sometimes come with deductions: a retailer claims a quality issue, a late shipment or a compliance error, and takes a chargeback from the payment. A maker who counted on the full invoice amount to pay the next fabric order now has a smaller deposit than planned. A few of those in a month can matter more than a slow week of sales.
Makers who keep a working-capital cushion can absorb a chargeback without stopping production. It also lets them say yes to a larger order when one comes in, instead of declining because they cannot front the fabric. In the statements, this appears as deposits that are lower than the invoices they correspond to, and a short note in the application can make the pattern easy to read.
Funding paths and the application
Fabric buys, labor and freight fall under working capital. Sewing machines, cutting tables and finishing equipment fall under equipment financing. An uneven order pipeline may fit a revenue-based approach.
We fund from $25,000 to $5,000,000, with funding in as little as 24 hours after the file is complete. A FICO score of 500 or higher is considered, no tax returns are required, and we read about three months of business bank statements. The application takes around five minutes with a soft credit pull. Sole proprietors can apply, including independent designers who manufacture their own line. Start the application.