6 Best Purchase Order Financing Companies in 2020

Purchase order (PO) financing is a working capital solution used to fund inventory for outstanding customer orders. Purchase order financing companies directly fund suppliers for the manufacture and delivery of products to your customer. Businesses then send invoices to their customers, who send their payments directly to the PO financing company.

Top 6 PO Financing Companies 2020

What Purchase Order Financing Is

Purchase order financing is a way for businesses to finance the inventory they need to fill an order. When you place an order using PO financing, your lender pays your supplier in cash or a letter of credit and covers the goods and shipping. Once your supplier delivers to your customer, the customer pays the invoice to the lender, and the business owner receives the difference.

How Purchase Order Financing Works

In a purchase order financing transaction, a business asks a lender to facilitate a transaction between its suppliers and its customers. After receiving an order from a customer, that order is presented to a supplier for a price quote. The quote is forwarded to the lender for approval, and capital is transferred to the supplier to fulfill the order.

If a company is using PO financing, once the lender approves its loan, the supplier completes the order and ships it to the customer, bypassing the business. Once your customer’s order is filled, you issue the customer an invoice that is payable to the lender. Once your customer pays the invoice, the lender deducts the financed amount and any additional fees and interest. You, the business owner, then receive the difference, and the transaction is complete.

Who Purchase Order Financing Is Best For

Purchase order financing is one of the best ways to finance growth for your business. If customer orders are outpacing your cash flow or your business is experiencing an unusual spike in demand, it’s a great solution. You could also take advantage of PO financing if you work with reliable suppliers and want to reduce the amount of capital tied up in shipping.

Purchase order financing is best for businesses that:

• Have an unusual spike in demand: If your business signed on a new distributor and demand for your product spiked, you’ll need a financing solution. You don’t want to risk losing a new distributor, and a traditional source of capital like a term loan may not be the best solution for a single large order.
• Work with reliable suppliers: Purchase order financing companies send funds to your suppliers. Although every supplier makes errors from time to time, the more experienced your supplier is, the more likely you will get funding. This can free up capital for other investments in the business.
• Are unable to keep up with orders as a startup: Newer businesses are always on the brink of running out of cash. Taking advantage of PO financing can be a low-cost way to fuel that growth while meeting customer demand.
• Want to reduce capital in shipping: Businesses using overseas suppliers often pay for goods long before they can invoice a customer. This means that while the goods are being shipped, your capital isn’t working for you. By financing your purchase orders, you can unlock that capital and use it to invest in your operations and marketing.

How We Evaluated Purchase Order Financing Companies

Business owners needing purchase order financing need to work with a lender that can provide enough funding and is comfortable working in their industry. Once you settle those two things, verify that the rates and fees of the PO financing solution are affordable. In addition to flexibility in financing by size and industry, we also considered qualification requirements, terms, and funding speed available from various providers.

The criteria we used to evaluate purchase order financing companies for businesses include:

• Industry experience: When your business uses purchase order funding for inventory, you are entrusting the financing company with the relationship of your supplier and customer. Therefore, it’s important to work with a reputable lender with years of experience.
• Loan amount: Funding amounts range from as low as $20,000 per order to $25 million. Your business should have the flexibility to fulfill its orders without having to work with additional lenders.
• Rates and fees: Most PO financing companies charge rates based on the time the invoice is outstanding. With delayed manufacturing, shipping, and customer payments, the costs increase, so the overall cost is important.
• Minimum qualifications: Unlike traditional business loans, your personal credit score is not a major deciding factor. However, PO financing companies look closely at the creditworthiness of your suppliers and customers as well as your profit margins.
• Funding terms: Your customers repay the purchase order financing when they settle the invoice. This means that most financing companies will restrict the number of days the total transaction can take to 90 days, which includes manufacturing and shipping.
• Funding speed: Every purchase order funding company we reviewed offers funding in one to two weeks. This is because it has to conduct due diligence of your business, suppliers, and customer before approval. Working with an experienced lender can reduce that time because it may already have relationships with your suppliers.

Based on the criteria outlined, we feel confident recommending eCapital as the best overall purchase order financing provider. It offers low starting rates of 3% to 4% for 30 days on $50,000 to $10 million of funding. It’s also one of the most experienced lenders in the industry, has a low profit margin requirement of 15%, and can get you funded in as little as one week.

eCapital: Best Overall Purchase Order Financing Company

eCapital offers the best overall purchase order financing option for businesses because of its competitive rates, quick funding speeds, and accommodating loan amounts. You can get from $50,000 to $10 million in purchase order funding in under two weeks at starting rates of 3%, and you only need a profit margin of 15% or higher to qualify.

eCapital Rates and Fees

eCapital purchase order financing rates and fees include:

• Interest rate: 3% to 4% for the first 30 days; 1.25% every 10 days after that
• Estimated annual percentage rate (APR): 40% to 71%
• Origination fees: Yes; will vary based on the complexity of the transaction
• Additional fees: Assessed on a case-by-case basis

eCapital charges interest rates that range from 3% to 4% for the first 30 days that funding is outstanding. After this, your business will transition to 1.25% for every 10 days, which gave us enough information to estimate an APR of 40% to 71%. However, an APR can deceive because, for every $100,000 you finance for one month, the cost will range from $3,000 to $4,000.

eCapital Terms

eCapital purchase order financing terms include:

• Loan amount: $50,000 to $10 million
• Repayment terms: Up to 90 days
• Repayment schedule: Paid when your customer pays the invoice
• Funding speed: Up to two weeks for domestic transactions and up to a month for international transactions

eCapital will fund orders as small as $50,000 and as large as $10 million, putting its offering in the sweet spot for most businesses seeking purchase order funding. Your order can also be outstanding for as long as 90 days, which is longer than King Trade Capital. You typically must wait up to two weeks for initial funding on domestic transactions and as long as a month for international transactions.

eCapital Qualifications

eCapital purchase order financing terms include:

• Profit margins: At least 15%
• Qualifying purchase orders: Must be purchase orders from governments or other businesses for tangible goods
• Credit score: Relies primarily on the creditworthiness of your customers and suppliers
• Time in business: No stated minimum
• Annual revenue: No stated minimum, but each financing event must be at least $50,000

To qualify, you need to be a business-to-business (B2B) or business-to-government (B2G) business that sells tangible goods. eCapital, like other PO financing companies, relies more on the creditworthiness of your customers and suppliers than your own. It also has the lowest overall profit margin requirement of 15%, making it accessible to low margin businesses.

What eCapital Is Missing

eCapital is the best overall purchase order financing company for most businesses because it balances costs, terms, and minimum qualifications. However, it only funds invoices that are greater than $50,000 and only offers up to $10 million in funding. If you need more in PO financing, consider working with King Trade Capital, which offers up to $20 million.

eCapital Reviews

eCapital reviews are positive on our site and around the web. Positive eCapital reviews came from customers pleased with the responsiveness and professionalism of its customer service team. Some negative reviews were unhappy to be turned down for funding, but eCapital will work to find another lender if it is unable to fund you.

How to Apply with eCapital

eCapital offers businesses a short contact form on its website followed by an expert consultation. You can complete the entire process in one day, with an additional week or two of due diligence by the company depending on the complexity of the deal.

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King Trade Capital: Best PO Financing Company for Established Businesses

King Trade Capital has completed more purchase order financing deals than any other company with more than $2.5 billion funded since 1993. You can get starting rates of 3.5% for the first 30 days, with funding from $50,000 up to $20 million, making it a great option for established businesses that need large amounts of capital.

King Trade Capital Rates and Fees

King Trade Capital purchase order financing rates and fees include:

• Interest rate: 3.5% for the first 30 days; 1.25% for every 10 days after that
• Estimated APR: 47% to 71%
• Origination fees: Yes; will vary based on the complexity of the transaction
• Additional fees: Assessed on a case-by-case basis

King Trade Capital charges similar rates to eCapital, except that it typically sets the first 30 days at 3.5%. Based on this, we calculated an APR of 47% to 71%. However, like with other PO financing companies, APR doesn’t paint the full picture. Your business will pay $3,500 for every 30 days a purchase order for $100,000 is outstanding.

King Trade Capital Terms

King Trade Capital purchase order financing terms include:

• Loan amount: $50,000 to $20 million
• Repayment terms: Up to 60 days
• Repayment schedule: Paid when your customer pays the invoice
• Funding speed: Up to two weeks for domestic transactions and up to a month for international transactions

King Trade Capital offers businesses up to $20 million in purchase order funding, twice as much as eCapital. This makes it a great choice for larger orders or if you expect your business to outgrow the capacity of other PO financing companies. However, King Trade Capital requires payment in 60 days, meaning it’s a better fit if your suppliers are quick to ship and your customers are quick to pay.

King Trade Capital Qualifications

King Trade Capital purchase order financing minimum qualifications include:

• Profit margins: At least 15%
• Qualifying purchase orders: Must be B2B or B2G purchase orders for tangible goods
• Credit score: Relies primarily on the creditworthiness of your customers and suppliers
• Time in business: No stated minimum
• Annual revenue: No stated minimum, but each financing event must be at least $50,000

King Trade Capital has the same minimum qualifications as eCapital. It also requires profit margins of at least 15% and B2B of B2G purchase orders for tangible goods. It also puts a large emphasis on your management team and industry experience besides the creditworthiness of your customers and suppliers. The more established your business is, the more likely you are to receive funding.

What King Trade Capital Is Missing

King Trade Capital gives established businesses some compelling reasons to work together, including its low profit margin requirements and large funding amounts up to $20 million. However, you must settle the transactions within 60 days, which is the shortest time frame on our list. For a longer time frame and similar rates and qualification requirements, consider working with eCapital instead.

King Trade Capital Reviews

King Trade Capital does not have reviews available on our site or the web. However, the company has been in business since 1993 and has originated more than $2.5 billion in purchase order funding to more than 400 public and private companies worldwide.

How to Apply With King Trade Capital

After completing any due diligence for the deal, King Trade Capital may provide funding to small business owners. The entire process takes about two weeks, consisting of background checks, research, and document requests.

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PurchaseOrderFinancing (POF): Best PO Financing Company for Large Orders

PurchaseOrderFinancing.com (POF) is the best financing company for purchase orders of $500,000 or more. Its pricing structure is a flat fee, because of the large order size, offering businesses predictability in an otherwise complex transaction. Rates range from 3% to 6% regardless of the term with maximum funding amounts up to $25 million.

PurchaseOrderFinancing.com Rates and Fees

POF rates and fees for purchase order financing include:

• Interest rate: Flat fee of 3% to 6%
• Estimated APR: 15% to 70%
• Origination fees: Yes; will vary based on the complexity of the transaction
• Additional fees: Assessed on a case-by-case basis

POF offers a unique take on pricing for its purchase order financing by charging a flat fee of 3% to 6%, regardless of how long it’s outstanding. Larger businesses often want this option because it’s easier to predict what the cost and cash flow impact will be for the transaction. However, it might be more costly for quick transactions, leading to an estimated APR range of 15% to 70%.

PurchaseOrderFinancing.com Terms

POF terms for purchase order financing include:

• Loan amount: $500,000 to $25 million
• Repayment terms: Up to 90 days
• Repayment schedule: Paid when your customer pays the invoice
• Funding speed: Up to two weeks for domestic transactions and up to a month for international transactions

POF is only available for large orders of at least $500,000, making it a great solution for businesses needing a large amount of financing. It will also fund up to $25 million, which is the highest maximum offered amongst PO financing companies. Funding times are like other providers. However, you can expect that its due diligence process will take longer for new customers because of the large transaction size.

PurchaseOrderFinancing.com Qualifications

POF minimum qualifications for purchase order financing include:

• Profit margins: At least 20%
• Qualifying purchase orders: Must be B2B or B2G purchase orders for tangible goods
• Credit score: Relies primarily on the creditworthiness of your customers and suppliers
• Time in business: No minimum stated
• Annual revenue: No minimum stated, but each financing event must be at least $500,000

To qualify, you need to be a B2B or B2G business with at least $500,000 of purchase orders to finance, and your suppliers and customers need to be creditworthy. You’ll also need higher profit margins of 20% to qualify, instead of the 15% minimum requirement from eCapital and King Trade Capital.

What PurchaseOrderFinancing.com Is Missing

POF offers predictable flat-fee pricing that’s great for businesses that need a level of certainty for how much purchase order factoring will cost them. However, you must finance at least $500,000 worth of purchase orders per month to qualify. For a lower funding minimum, consider working with eCapital or King Trade Capital, which both require at least $50,000.

What Users Think About PurchaseOrderFinancing.com

There are no POF reviews on the web or our website. However, the company has been operating since 2002 with more than $750 million delivered to customers to grow their businesses. It offers purchase order financing throughout the United States, the United Kingdom, Canada, and China.

How to Apply With PurchaseOrderFinancing.com

POF offers borrowers an application with a purchase order financing specialist to get you the right terms and rates for financing. Funding can take up to two weeks, depending on the complexity of your deal and which suppliers and customers you work with.

PurchaseOrderFinancing (POF)

1st Commercial Credit: Best for High-profit Margin Businesses

1st Commercial Credit offers borrowers low starting rates, making it a great purchase order financing company if your orders have high enough profit margins to qualify and you haven’t been approved by the other companies on our list. You can get funding for $100,000 to $10 million as long as you’ve been in business for at least a year and have profit margins of 25% or higher. Funding takes two weeks and starts with a simple online application.

1st Commercial Credit Rates and Fees

1st Commercial Credit purchase order financing rates and fees include:

• Interest rate: Starting at 1.5% to 3% every 30 days
• Estimated APR: At least 20% to 40%
• Origination fees: Yes; will vary based on the complexity of the transaction
• Additional fees: Assessed on a case-by-case basis

1st Commercial Credit offers purchase order loans to businesses, with some of the lowest starting rates from 1.5% to 3% every 30 days. To qualify for those rates, your business will need to have an established relationship with creditworthy suppliers and customers. You’ll also need to have substantial industry experience and a strong track record of completed transactions.

1st Commercial Credit Terms

1st Commercial Credit purchase order financing terms include:

• Loan amount: $100,000 to $10 million
• Repayment terms: Up to 90 days
• Repayment schedule: Paid when your customer pays the invoice
• Funding speed: Up to two weeks for domestic transactions and up to a month for international transactions

1st Commercial Credit has a minimum funding amount of $100,000 per month. This isn’t as low as eCapital, which offers $50,000 minimums but both companies have the same maximum of $10 million. Domestic transactions take two weeks to fund and, depending on the complexity of the deal, could take longer for due diligence.

1st Commercial Credit Qualifications

1st Commercial Credit purchase order financing minimum qualifications include:

• Profit margins: At least 25%
• Qualifying purchase orders: Must be B2B or B2G purchase orders for tangible goods
• Credit score: Relies primarily on the creditworthiness of your customers and suppliers
• Time in business: At least one year
• Annual revenue: No stated minimum, but each financing event must be for at least $100,000

1st Commercial Credit offers lower rates than most providers, but it also has higher minimum requirements. It will only consider your business if you are financing at least $100,000 per month, are operating for at least a year, and each purchase order has a profit margin of at least 25%.

What 1st Commercial Credit Is Missing

1st Commercial Credit offers the lowest starting rates for purchase order financing. However, your purchase orders will need to have at least a 25% profit margin built in to qualify. This can be difficult for lower-margin businesses and newer companies to meet. For a PO financing company that requires only 15% profit margins, consider working with eCapital instead.

1st Commercial Credit Reviews

1st Commercial Credit doesn’t have reviews on our site or the web. However, it’s among the top purchase order financing companies in the country. It’s been in business for more than 15 years, has offices throughout the world, and can finance transactions in 17 currencies.

How to Apply With 1st Commercial Credit

1st Commercial Credit offers businesses a purchase order financing consultation with an expert in your industry. This consultant will work with applicants to gather the necessary information, make introductions, and ultimately fund and oversee the delivery of goods.

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Liquid Capital: Best PO Financing Company for Small Orders

Liquid Capital offers businesses the lowest minimum funding amount on our list of $20,000, making it a great option for businesses that process smaller orders. Its rates start at 3% for the first 30 days, with 0.6% to 1% for every 10 days after that. Liquid Capital takes up to two weeks to fund a purchase order. However, the complexity of your deal may lengthen the process by a few days.

Liquid Capital Rates and Fees

Liquid Capital PO financing rates and fees include:

• Interest rate: Typically up to 3% for the first 30 days, and 0.6% to 1% for every 10 days after that
• Estimated APR: 40% to 60%
• Origination fees: Yes; will vary based on the complexity of the transaction
• Additional fees: Assessed on a case-by-case basis

Liquid Capital takes pride in providing lower rates than competitors on most purchase order financing deals. This means it works to keep the rate for the first 30 days below 3% with a rate of 0.6% to 1% for every 10 days after that. This is lower than most of the other providers, except for 1st Commercial Credit.

Liquid Capital Terms

Liquid Capital PO financing terms include:

• Loan amount: $20,000 to $10 million
• Repayment terms: Up to 90 days
• Repayment schedule: Paid when your customer pays the invoice
• Funding speed: Up to two weeks for domestic transactions and up to a month for international transactions

Liquid Capital stands out for its low minimum funding amount of $20,000. This is more accessible to newer and smaller businesses that need PO funding, compared to the next lowest minimum of $50,000. Like the other financing companies, expect funding to take up to two weeks for domestic transactions with potential delays depending on the complexity of the contract.

Liquid Capital Qualifications

Liquid Capital PO financing minimum qualifications include:

• Profit margins: At least 20%
• Qualifying purchase orders: Must be B2B or B2G purchase orders for tangible goods
• Credit score: Relies primarily on the creditworthiness of your customers and suppliers
• Time in business: No stated minimum
• Annual revenue: No stated minimum, but each financing event must be for at least $20,000

Liquid Capital has similar minimum requirements to the other providers except for its low minimum funding amount. You’ll need profit margins of at least 20% to qualify. Sometimes, however, startups with significant industry experience can qualify for funding.

What Liquid Capital Is Missing

Liquid Capital offers smaller businesses and startups an opportunity to access purchase order financing with its low minimum funding requirement of $20,000. However, as businesses grow and develop, they may find that the $10 million maximum is not sufficient. If your business needs more capital to consider working with King Trade Capital, which offers up to $20 million.

Liquid Capital Reviews

Liquid Capital doesn’t have reviews on our site or around the web. The company has been operating for 20 years, with almost $3 billion in working capital deployed across North America since it was founded.

How to Apply for Liquid Capital PO Financing

Applying for Liquid Capital requires contact with a company representative. Business owners can submit basic information for a quote and make initial contact with the representative. Business owners must provide the purchase order information, make initial contact with the customer, and supply any additional information requested by Liquid Capital.

 

BlueVine: A PO Financing Alternative for Outstanding Invoices

BlueVine offers invoice factoring to businesses that already fulfilled a purchase order and are waiting for the customer to settle an invoice. This can be a great way to unlock cash flow while you wait for payments, which can sometimes take 90 days or longer to collect. BlueVine offers a quick online application and funding up to $5 million as soon as the next day.

BlueVine Rates and Fees

BlueVine invoice factoring rates and fees include:

• Discount rate: 0.25% to 1.35% per week
• Estimated APR: 13% to 70%
• Origination or maintenance fees: None
• Prepayment penalties or termination fees: None
• Additional fees: $15 wire fee; automated clearing house (ACH) is free

BlueVine charges a weekly fee for the time the invoice is outstanding. This fee can range from as low as 0.25% per week to 1.35% per week. The reason for the lower fee compared to a purchase order credit facility is the reduced risk and complexity of the transaction. This can make it a more affordable option for newer businesses that need access to capital.

BlueVine Terms

BlueVine invoice factoring terms include:

• Loan amount: $5,000 to $5 million
• Advance rate: 85% to 90% on invoices with face values of $500 or higher to B2B or B2G customers
• Repayment term & schedule: Advances are repaid as customers pay their invoices
• Personal guarantee: Required
• Initial approval speed: 10 minutes
• Time to funding: One to three business days

With BlueVine, your business can qualify for up to $5 million in invoice factoring, which is a lower limit than purchase order lenders offer. However, BlueVine also has a lower minimum of $5,000, which makes it a great option for newer businesses that are still growing. The other major benefit of working with BlueVine is its quick funding speed, with money deposited in your bank account in as quick as one to three days.

BlueVine Qualifications

BlueVine invoice factoring minimum qualifications include:

• Credit score: At least 530
• Time in business: At least three months
• Annual revenue: At least $100,000

BlueVine has more minimum requirements to qualify for funding than the other lenders on our list. You’ll need a personal credit score of at least 530, three months in business, and at least $100,000 in annual revenue to receive funding. Although these minimum qualifications are higher, most small businesses won’t find them too restrictive.

What BlueVine Invoice Factoring Is Missing

BlueVine is a great invoice factoring solution for most small businesses that have already invoiced a customer and delivered the goods. However, it doesn’t offer a purchase order loans, which means your business won’t be able to get funding before the goods are delivered. Consider working with one of the other lenders listed in our guide if you need to finance a purchase order.

BlueVine Reviews

BlueVine reviews are positive on our site and around the web. Positive BlueVine reviews note its quick funding speeds and responsive support team. The few negative reviews we found were from users that did not qualify for funding or did not receive a sufficient amount of capital.

How to Apply With BlueVine

BlueVine’s application process is entirely online because it offers invoice factoring, rather than purchase order financing. Business owners can connect their invoicing software and request an evaluation by BlueVine. BlueVine usually does not request additional information and can provide an approval decision within a day.

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Pros and Cons of Purchase Order Financing

Financing your purchase orders can help grow your business quickly and frees up cash flow for investment in your business. However, it can take a long time to get funding and the lender basis your approval less on your personal and business qualifications than it is on the credibility of your customers and suppliers. It’s also less expensive than some other short-term funding options. However, it takes longer overall to get an approval decision.

Pros of Purchase Order Financing

• Provides access to capital to fulfill large orders and fuel growth: Taking on a large client and fulfilling growing orders can fuel growth for your business. Having access to capital in amounts up to $25 million to get these orders delivered to your customers can be a huge relief for a growing business.
• Has a lower overall cost of capital compared to other short-term funding options: With starting rates typically around 3% per month, your business can save money compared to other financing alternatives like long-term loans. The opportunity to get the funding when it’s needed also means you’re not paying interest on unused funds.
• Frees up cash flow for reinvestment in the business: If a business uses its own capital to fund the manufacture and delivery of goods and extends terms up to 90 days to a customer, then its money is unavailable for up to six months. Freeing up this money can help businesses hire new employees and take on more customers.

Cons of Purchase Order Financing

• Can take a long time to get funding: Funding a purchase order typically takes two weeks. However, if your transaction requires multiple suppliers or international shipping methods, it can take up to a month to get the funding needed. This makes it important to plan to get funding in time or work with a fast business loan provider.
• Isn’t an option if you don’t have credible suppliers and customers: While it isn’t difficult to qualify for funding compared to a traditional loan, the credibility of your customers and suppliers plays a large role in approvals. This is something business owners typically have little control over and can lead to lost funding opportunities.
• Is less flexible than other financing alternatives: Purchase order financing is meant for funding purchase orders. Businesses can’t use it to fund other business operations like payroll or rent, making it less flexible than some alternative forms of financing.

Your business can access a large amount of funding to fuel growth by financing purchase orders, but it will typically take at least two weeks to get funding. You also must depend on the creditworthiness and track record of your suppliers and customers to get approved. If your business doesn’t need as much capital or needs funding sooner consider applying for an alternative to purchase order financing.

Alternatives to PO Financing

When considering financing a purchase order, it’s important to explore alternatives in case you cannot qualify or need funding that’s more flexible. You can factor existing invoices if you have slow-paying customers, access funding based on the value of receivable with accounts receivables financing, or get a short-term loan or line of credit to fill a working capital need.

Invoice Factoring

Invoice factoring is a great alternative for businesses that have already delivered goods to their B2B or B2G customers and are waiting for them to pay an invoice. The best invoice factoring companies offer large maximum funding amounts, low rates, and a quick application process for funding.

Accounts Receivable Financing

Accounts receivables financing allows your businesses to access a revolving line of credit based on the value of your outstanding receivables. The top-rated accounts receivables companies offer flexible repayment terms, have low minimum requirements to qualify, and can get your business funded as soon as the same day.

Business Line of Credit

A business line of credit is a great financing solution even if you already have access to capital for a purchase order, because of its flexibility in solving short-term cash flow needs. The best business lines of credit are available to borrowers quickly, carry no fees if they are unused, and can be a terrific solution for working capital expenses like payroll or inventory.

Short-term Business Loan

Short-term business loans offer borrowers a financing solution with a fixed repayment term and predictable costs for larger projects that require a lump sum of capital. There are several lenders that offer these loans, but the best short-term business loans can get your business funded in one day, have low minimum requirements, and offer flexible repayment terms that help you manage your cash flow.

Purchase Order Financing Frequently Asked Questions (FAQs)

How does a purchase order funding company pay my suppliers?

The method used by PO financing companies to pay suppliers varies by lender and includes a letter of credit, wire transfer, and check. Every lender and supplier prefers a method of payment, and lenders are typically flexible, depending on the needs of the business and what it takes to get the deal done.

Can startups qualify for purchase order funding?

PO funding is one of the few types of financing for which startups can qualify. However, keep in mind that if you don’t have an established history with the supplier, it will be more difficult to get access to capital. The exception to this made by some lenders is if you have extensive industry experience.

Is purchase order funding available in all industries?

There are few restrictions for businesses that can qualify for purchase order funding. These are general restrictions such as nonprofit organizations or institutions in the gambling business. Regardless of industry, your supplier must deliver tangible goods directly to your customer to qualify.

Bottom Line

Businesses with outstanding orders from customers needing capital to pay a supplier use purchase order financing to fulfill the orders. It’s only used for the direct delivery of tangible goods with the customer then paying the invoice directly to the lender. The business satisfies the purchase order and receives the difference less any interest and fees the PO financing company charges.

eCapital offers businesses with B2B or B2G customers purchase order financing up to $10 million. It has a low profit margin requirement of only 15%, and you must finance at least $50,000 at a time to get funding. Rates average around 3% for the first 30 days the invoice is outstanding, and your business can get funded in as little as two weeks after completing a short online questionnaire.

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