5 Best Purchase Order Financing Companies for 2022

Purchase order (PO) financing is a working capital solution used to fund inventory for outstanding customer orders. When businesses deal with significant growth or face a spike in demand, purchase order financing can help meet those challenges. We have researched several PO financing companies, selecting the top five options that will serve the needs of many businesses.

SMB Compass: Best overall option for small businesses
King Trade Capital: Best option for larger businesses
Liquid Capital: Best option for smaller purchase orders
1st Commercial Credit: Best option for lower rates
PurchaseOrderFinancing.com: Best for flat-fee pricing

SMB Compass: Best Option for Qualified Small Businesses

Loan Amount	$25,000 to $10 million
Repayment Term	Up to 90 days
Repayment Schedule	Paid when your customer pays invoice
Funding Speed	Up to two weeks for domestic transactions Up to a month for international transactions

Interest Rate	Starting at 1.5% to 3% every 30 days
Estimated APR	20% to 40%
Origination Fee	Varies based on complexity of transaction
Additional Fees	Assessed on a case-by-case basis
Profit Margins	At least 30%
Qualifying Purchase Orders	Must be from governments or other businesses for tangible goods


PROS	CONS
Low rates	Very high profit margin requirements
Low minimum financing requirements	Lack of clarity on additional fees
Fast application process

Why we like SMB Compass: We ranked SMB Compass as the best overall option for small businesses because it provides purchase order financing starting at $25,000 and can finance up to $10 million. While it may not be ideal for businesses operating on a lower profit margin, this minimum provides well-qualified smaller businesses with a purchase order financing option. Its competitive rates are also attractive for qualified businesses who are seeking financing.

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King Trade Capital: Best Option for Larger Businesses

Loan Amount	$50,000 to $20 million
Repayment Term	Up to 60 days
Repayment Schedule	Paid when your customer pays invoice
Funding Speed	Up to two weeks for domestic transactions
Qualifying POs	Must be from governments or other businesses for tangible goods

Interest Rate	3.5% for the first 30 days 1.25% every 10 days after that
Estimated APR	47% to 71%
Origination Fee	Varies based on complexity of transaction
Additional Fees	Assessed on a case-by-case basis
Profit Margins	At least 15%


PROS	CONS
Competitive terms	Not ideal for smaller businesses or smaller orders
Will finance up to $20 million	Shorter repayment terms than eCapital
Nearly 30 years of experience working in PO finance

Why we like King Trade Capital: King Trade Capital has completed more purchase order financing deals than any other company, with more than $2.5 billion funded since 1993. They’re one of the few PO financing companies that will finance up to $20 million in purchase orders. For businesses seeking larger amounts of capital in a purchase order, King Trade Capital is a great option to consider.

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Liquid Capital: Best for Smaller Purchase Orders

Loan Amount	$20,000 to $10 million
Repayment Term	Up to 90 days
Repayment Schedule	Paid when your customer pays invoice
Funding Speed	Up to two weeks for domestic transactions Up to a month for international transactions
Qualifying Purchase Orders	Must be from governments or other businesses for tangible goods

Interest Rate	3% for the first 30 days 0.6% to 1% every 10 days after that
Estimated APR	40% to 60%
Origination Fee	Varies based on complexity of transaction
Additional Fees	Assessed on a case-by-case basis
Profit Margins	At least 20%


PROS	CONS
Competitive terms	Not ideal for businesses in need of large purchase order financing
Will finance smaller purchase orders	Lack of posted information on additional fees
Longer repayment times

Why we like Liquid Capital: Liquid Capital offers financing of purchase orders as small as $20,000, which is the lowest starting point among the companies we reviewed. Liquid Capital’s financing rates are competitive within the industry and their repayment terms allow purchase order repayment out to 90 days. If you have smaller purchase orders in the $20,000 range, Liquid Capital is a great option to consider.

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1st Commercial Credit: Best Option for Lower Rates

Loan Amount	$100,000 to $10 million
Repayment Term	Up to 90 days
Repayment Schedule	Paid when your customer pays invoice
Funding Speed	Up to two weeks for domestic transactions Up to a month for international transactions

Interest Rate	Starting at 1.5% to 3% every 30 days
Estimated APR	20% to 40%
Origination Fee	Varies based on complexity of transaction
Additional Fees	Assessed on a case-by-case basis
Profit Margins	At least 25%
Qualifying Purchase Orders	Must be from governments or other businesses for tangible goods


PROS	CONS
Lower pricing than competitors	High profit margin requirements
Will finance up to $10 million	Higher minimum finance requirements
Fast application process

Why we like 1st Commercial Credit: 1st Commercial Credit offers borrowers the lowest starting rates of the companies we surveyed, starting at 1.5%. These low starting rates make 1st Commercial Credit a great purchase order financing option if your business’s profit margin is high enough to qualify.

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PurchaseOrderFinancing.com: Best for Flat Fee Pricing

Loan Amount	$500,000 to $25 million
Repayment Term	Up to 90 days
Repayment Schedule	Paid when your customer pays invoice
Funding Speed	Up to two weeks for domestic transactions Up to a month for international transactions

Interest Rate	Flat fee of 3% to 6%
Estimated APR	15% to 70%
Origination Fee	Varies based on complexity of transaction
Additional Fees	Assessed on a case-by-case basis
Profit Margins	At least 20%
Qualifying Purchase Orders	Must be from governments or other businesses for tangible goods


PROS	CONS
Flat fee pricing may be advantageous for some businesses	Large minimum financing requirement
Will finance up to $25 million	Higher profit margin requirements

Why we like PurchaseOrderFinancing.com: PurchaseOrderFinancing.com’s pricing structure is a flat fee, which may be advantageous, as it offers predictability in determining pricing. Rates range from 3% to 6% regardless of the term, with maximum funding amounts up to $25 million. This lender is arguably best suited for larger companies, given the initial funding minimum of $500,000.

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How Purchase Order Financing Works

Purchase order (PO) financing works like this: first, 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 then forwarded to the lender for approval, and capital is transferred to the supplier to fulfill the order. Once the customer’s order is filled, the business issues the customer an invoice that’s payable directly to the lender. When the customer pays the invoice, the lender deducts the financed amount and any additional fees and interest. The business owner then receives 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, especially in these types of situations:

Small businesses with spikes in demand: If your business signed a new distributor and demand for your product spiked, PO financing makes a lot of sense.
Businesses with reliable suppliers: The more experienced and reliable your supplier is, the more likely you’ll get funding. This can free up capital for other investments in the business.
Startups seeking to fuel growth: Taking advantage of PO financing can be a lower-cost way to fuel growth while meeting customer demand.
Companies wanting to reduce capital in shipping: Businesses using overseas suppliers often pay for goods long before they can invoice a customer. By financing your purchase orders, you can use your capital to invest in other parts of your business instead of having it tied up in an order.

How We Evaluated Purchase Order Financing Companies

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’re entrusting the financing company with the relationship of your supplier and customer.
Loan amount: 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 how long the invoice is outstanding.
Minimum qualifications: PO financing companies look closely at the creditworthiness of your suppliers and customers as well as your profit margins. Unlike traditional business loans, your personal credit score isn’t a major factor.
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. Lenders conduct due diligence on your business, your suppliers, and your customers before approval. Experienced lenders may be able to reduce that time because they have experience working with your suppliers.

Based on the criteria outlined, we feel confident recommending SMB Compass as the best overall purchase order financing company because of their longer terms of repayment, ability to work with smaller and mid-sized businesses, and competitive rates.