Financing for 100% of Supplier Costs (Fast)
PO financing enables a business to finance 100% of it's supplier's cost to fulfill an order.
Here's a typical scenario:
- You have a new or existing business
- You have a purchase order to produce or deliver "hard goods" to a credit worthy business (or Government Agency)
- You DO NOT have the capital to fulfill the order
How it Works
The typical transaction involves a small or mid sized business that needs to fulfill a large order for a larger company, but for various reasons doesn't meet a bank's standards for a loan or line of credit because the business is too young, has limited or poor credit or the last few years have been unprofitable.
Purchase order lenders can help because they are more concerned with the credit quality of your customer and the purchase order from your customer provides the collateral needed to consumate the transaction.
Is it ideal? Yes and no.
Yes, because it enables you to:
- Fulfill your customer's order
- Further cement or establish your relationship with your customer
- Pave the way for future referrals from satisfied clients
- Make a profit
No, because the costs are higher than a typical bank line of credit, but given the alternative - telling the customer that you cannot help them and forfeiting potential future business - it's an excellent solution.
Other Benefits of Purchase Order Finance:
- Fast Funding
- Allows sales growth without use of existing capital
- No need to take on bank debt
- No need to raise capital by giving up equity
- Speeds delivery time to customers
- Enables fulfillent of larger orders
- Allows businesses in turnaround or with limited capital to fulfill orders
"Hard Goods" Only
PO Financing is for "hard goods" only and it is most often utilized by:
- Wholesale Businesses
- Import Businesses
- Export Businesses
- Government Contractors
- Many others
Work In Progress Purchase Order Financing
Manufacturers are also eligible for a lesser know type of PO financing called "Work in Progress Purchase Order Financing" where a manufacturer imports a product (often raw materials) and then uses it in the manufacturing process of another product to be delivered to a customer.
This is a riskier, more difficult to approve type of financing, but it is available for transactions involving established entities.
Please contact us at 1-800-414-5285 for more information.