Purchase order financing
My company just got approved for finance from a Purchase Order financing company. The interest rate is 3% every 30 days which is ok. However,they are asking for $11,000 set up fee. 50% to be paid before I sign the proposal and the other 50% after the first transaction. Is it a usual practice for P.O financing companies to charge set up fees that cost this much. Thanks in advance.
I would say that the setup fee you’re referencing is not industry standard. Every PO financing company is different, but typically there are no fees to process a transaction. You’ll just be charged a fee starting when the lender delivers payment to your distributor. There certainly shouldn’t be any fees for them to approve you to process transactions, since you haven’t received any benefit at that point. The company you’re looking into might say they fund purchase orders, but they might actually not be a straight purchase order financing company. I would look into our recommended list of PO financing lenders before signing anything. Good luck!