Floor plan finance (stocking finance)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

Floor plan finance is a revolving facility that funds a dealer's stock of vehicles, machinery or boats unit by unit, each advance repaid on that unit's sale. The lender, often a manufacturer's finance arm, takes security over each unit or keeps ownership under a bailment, which Australian and New Zealand law generally treats as a registrable security interest because in substance it secures payment, not as a PPS lease. It may require part repayments (curtailments) as units age and audits the yard by serial number. The worry is a unit sold out of trust: sold, the money spent, the advance unpaid. In the UK it is often called stocking finance.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.