Abstract: The decision problem of inventory pledge financing considering enterprise′s sales effort is investigated. A stochastic market demand model which is impacted by sales effort of capital constrained medium or small retail enterprises is established; and the enterprise′s optimal inventory pledge volume decision and sales effort decision, and the bank′s optimal inventory pledge ratio decision under risk neutral and loss aversion situations are investigated; the impact from sales effort on inventory pledge volume is analysed. It is concluded that the retail enterprise′s sales effort brings positive effect to the financing participants, and the retail enterprise will thus enlarge its inventory pledge volume to gain more loan, and the bank can level up its loan volume from enlarging inventory pledge ratio to gain larger revenue.