Storage credits can be distinguished between „water financing“ and „dry financing.“ [5] The difference depends on when the lender receives its money from the date the real estate transaction takes place. During „water financing,“ the mortgage lender receives the funds at the same time as the loan closes, that is, before the credit documentation is sent to the stock lender. „Dry financing“ occurs when the stock credit provider receives credit documentation for verification before sending the funds. Inventory loans are commercial loans based on assets. According to Barry Epstein, a mortgage consultant, bank supervisors generally treat stock loans as lines of credit that give them a 100% risk-weighted classification. Epstein proposes that credit listing storage lines be classified in this way, in part because the time risk is days, while the time-risk risk for mortgages is in years. Loan storage lines play an important role in securing the mortgage market for real estate buyers, as many mortgage bankers would not be able to attract enough deposits to finance mortgages themselves. As a result, inventory financing allows lenders to provide mortgages at more competitive rates. [2] Unlike other types of credit, lenders derive more profit from the original fees than the dispersion of interest rates, because closed mortgages are quickly sold to an investor. A stock line of credit is made available to mortgage lenders by financial institutions. Lenders depend on the eventual sale of mortgages to repay the financial institution and make a profit. This is why the financial institution that provides the inventory line of credit carefully monitors how any loan with the mortgage lender progresses until it is sold.

The inventory finance institution accepts various types of mortgage security, including subprime and equity loans, residential or commercial real estate, including types of specialized real estate. In most cases, storage lenders make the loan available for a period of fifteen to sixty days. [3] Stock credit lines are generally rated libor plus spread to one month. [4] In addition, stock lenders generally apply a „haircut“ to line of credit advances, which means that only 98% – 99% of the loan amount is financed by them; initial lenders must provide the rest from their own capital. [4] When granting storage credits, a bank supports the application and approval of a loan, but receives the funds for the loan from a stock lender.