5 Best Purchase Order Financing Companies for 2023
Tricia has nearly two decades of experience in commercial and federal government lending. Her expertise is highlighted throughout small business loan content on Fit Small Business.
Andrew has over a decade of experience in finance and mortgage lending. He shares his expertise in Fit Small Business’s financing content.
This article is part of a larger series on Business Financing.
The best purchase order financing companies should have easy qualification requirements and competitive fees. They should also have industry experience with a team of specialists who can improve your chances of getting approved. The providers on our list cater to businesses in a wide variety of industries, so you should find one that is well-suited for your needs.
Here are the five best purchase order financing companies:
- SouthStar Capital: Best overall for long repayment terms and low rates
- SMB Compass: Best for orders with high profit margins
- King Trade Capital: Best for large purchase orders (POs)
- 1st Commercial Credit: Best for established businesses
- Liquid Capital: Best for financing smaller orders
Best Purchase Order Financing Providers at a Glance
Estimated Fees Per 30 Days | Maximum Financing Amount | Required Profit Margin | Funding Speed | Repayment Term | |
|---|---|---|---|---|---|
 | 1% and up | $10 million | 20% | 2 to 5 days | Up to 120 days |
 | 1.5% to 3.5% | $10 million | 30% | 7 to 21 days | Up to 90 days |
 | 1.5% to 3.5% | $20 million | None | 7 to 10 days | Up to 90 days |
 | 1.5% to 5% | $10 million | 25% | 5 to 10 days | Up to 90 days |
 | 2% to 4% | $10 million | Varies | 3 to 7 days | Up to 90 days |
SouthStar Capital: Best Overall for Long Repayment Terms & Low Rates
If you’re a business owner looking for low rates or long repayment terms, SouthStar Capital is a good option to consider. It offers rates as low as around 1% per 30 days of financing and repayment terms up to 120 days.
It can structure its PO financing product as a revolving line of credit for more flexibility. It frequently works with government contractors and, unlike many other PO providers, it isn’t limited to funding orders for tangible goods. It also can include funding for certain services, such as those from information technology (IT) companies.
Qualification requirements are also flexible. The provider can work with different types of companies, including startups and businesses with no prior history of revenue. There’s no minimum required profit margin for a purchase order, although 20% is recommended to improve your chances of getting approved.
SouthStar Capital’s PO financing product is often combined with its accounts receivable (A/R) financing product. Once your business places an order with a supplier, the company will pay the supplier using PO financing. A/R financing can then be used to satisfy the PO financing debt.
To learn more or to apply, you can visit the SouthStar Capital website.
SMB Compass: Best for Orders With High Profit Margins
SMB Compass requires a profit margin of 30% on PO financing requests, which is the highest out of all the providers on our list. However, businesses that meet this requirement can qualify for 100% financing and low rates.
If you don’t want to have a lien placed on your other business assets, SMB Compass is also a good choice to consider for PO financing as it doesn’t require collateral. Rather, it considers the outstanding PO order itself as collateral.
The time needed to receive an approval for funding can range from seven to 21 days or longer, with domestic orders typically being reviewed more quickly than international orders. PO financing is offered from $25,000 to $10 million with rates as low as 1.5% for every 30-day period.
With SMB Compass, PO financing is available to a wide range of businesses. This includes those with bad credit, startup companies, government contractors, resellers, and wholesalers. Your ability to secure PO financing is more dependent on your client’s track record and creditworthiness.
The company offers a live chat on its website to answer general questions you may have. If you have questions pertaining to your specific business, you may be directed to call their toll-free number.
To learn more or to apply for PO financing, you can visit the SMB Compass website.
King Trade Capital: Best for Large Purchase Orders
Many of the companies King Trade Capital works with are businesses that expect to utilize around $2 million in financing throughout the year. It offers competitive rates, quick funding times, and flexible repayment terms, making it our pick as the best provider for businesses with large purchase orders.
Financing terms will vary on a case-by-case basis, but rates typically run from 1.5% to 3.5% for every 30-day period. Individual loan amounts generally range from $50,000 to $20 million, with most of the provider’s clients utilizing PO financing on orders with a profit margin of at least 20%.
Funding usually takes seven to 10 days as the provider must conduct a due diligence review of the order, with repayment terms usually ranging from 30 to 90 days. Similar to many other PO providers, your credit score isn’t a significant factor as a larger emphasis is placed on your client’s ability to repay you, rather than your company’s ability to pay.
King Trade Capital has more than 30 years of experience in PO financing and has a team known for being resourceful in finding the best solution for your business needs. Its leadership team comes from an entrepreneurial background rather than finance, so it is more likely to better understand your unique business challenges and needs.
You can contact King Trade Capital using the toll-free number on its website. Visit King Trade Capital to apply.
1st Commercial Credit: Best for Established Businesses
Unlike some providers, 1st Commercial Credit requires your business to have a proven track record of production to be eligible for PO financing. However, qualifying businesses can get competitive pricing and flexible loan terms, making it our pick as the best PO provider for established businesses.
1st Commercial Credit offers rates as low as 1.5% for every 30 days of financing. You can apply for amounts between $100,000 and $10 million. To be eligible, you must have a profit margin of 25% and must currently be factoring receivables. From the time you apply to your supplier receiving funds, it can take two to four weeks, with domestic orders typically requiring less time.
The provider offers financing for three different types of PO requests. It offers financing for finished goods, light assembly, and production finance. Each has its own separate set of qualification requirements.
Like many PO finance providers, application terms vary on a case-by-case basis. The provider’s most popular industries include staffing agencies, trucking companies, construction, manufacturing, medical providers, and produce distributors.
To learn more or to apply, you can visit the 1st Commercial Credit website.
Liquid Capital: Best for Financing Smaller Orders
Liquid Capital offers PO financing for as low as $25,000, making it a good option to consider for smaller orders. Finding a reliable PO financing provider can be difficult, and while other providers may offer lower loan amounts, we chose Liquid Capital because it also has other products, such as invoice factoring, that can be combined with its PO financing product to help you meet your business needs.
For example, if you place a large order with your supplier, Liquid Capital’s PO financing can be used to pay the supplier so that the goods can be produced and shipped to your customer. Invoice factoring could then be used to pay the PO financing balance.
One potential downside with Liquid Capital is that it reviews many of its applications on a case-by-case basis, so the exact qualification requirements can vary. You also may not know the terms of your loan until after you apply. However, it does have many industry partners it can refer you to for PO financing, improving your chances of finding a good financing solution.
Liquid Capital also offers asset-based lending, equipment financing, and other working capital financing products.
To learn more or to submit an application, you can visit the Liquid Capital website.
How We Selected the Best Purchase Order Financing Companies
In selecting the best PO financing companies, we considered the following:
- Rates and fees
- Minimum and maximum financing amounts
- Required loan qualifications
- Funding speed
- Time in business and minimum revenue requirements
- Ease of contacting a loan representative
- Customer reviews
Alternatives To Purchase Order Financing
PO financing isn’t always the cheapest option, and depending on the details of your order, it can take several weeks before your supplier receives the funds needed to deliver goods to your customer. Before you get a small business loan, here are some options to consider if you’re looking for lower rates or faster access to funds:
- Rollover for business startups (ROBS): A ROBS gives you the ability to access your retirement accounts tax- and penalty-free. It isn’t a loan so you’ll save money on interest charges. You’ll typically need to have at least $50,000 in retirement funds to qualify, and a company like Guidant Financial can walk you through the process.
- Small business line of credit: This gives you the ability to draw funds only when you need them. Once approved for the line of credit, you’ll have the flexibility to get access to cash within 24 to 48 hours. Bluevine is one of our best small business line of credit providers.
- Small Business Administration (SBA) loan: SBA loans can offer low rates. Startup businesses can also qualify, although rates may be a little higher. SBA loans are typically a good fit for businesses with good credit and don’t need funds quickly. An SBA broker like SBG Funding can work with you to find the best loan for your needs.
Frequently Asked Questions (FAQs)
How does purchase order financing work?
Purchase order financing pays your supplier so that it can deliver goods to your customer. Your customer will then pay the PO financing company, which will then issue you funds after deducting its fees. PO financing can be a good solution if you receive an order from a customer but don’t have sufficient cash to pay the supplier to complete the customer’s order.
Is it hard to qualify for purchase order financing?
PO financing can be easy to qualify for because it doesn’t have a large emphasis on your company’s credit or finances. Rather, PO financing looks at your supplier’s track record and ability to repay the loan.
Are all types of orders eligible for purchase order financing?
Only tangible goods are eligible for PO financing. However, some providers, such as SouthStar Capital, offer some funding for services.
Bottom Line
By being able to cover a large portion of supplier costs, PO financing can be a useful tool to increase your company’s ability to accept and process more orders from customers. Many providers of PO financing review applications on a case-by-case basis, and the companies in our guide offer a high level of customer service and the ability to customize solutions to your business needs. PO financing may not always be the best choice, though, so be sure also to consider other forms of financing and shop multiple lenders.
