How a Purchase-Order Loan Works
A P.O. loan is a fee-based, short-term loan--there is no interest charged. The transaction works like this: A business receives a large order but doesn't have the cash to get the required goods made. To see if a loan can be made, the P.O. lender investigates the credit history of the borrower's big customer--not the credit history of the small business seeking the loan. If that big end customer has a solid track record of paying its bills and has the cash flow to pay for the goods it has ordered, a loan can be made.
We don't care about your credit score or if your business is completely underwater, we look only at the transaction we're financing. If the borrower's big customer has good credit, the P.O. lender delivers a letter of credit to the manufacturer that guarantees payment for the needed goods. The factory then makes the products, and a third party verifies that the order is complete. The factory gets paid and ships the goods off, usually to a third-party warehouse. It's rare for the borrower to receive the goods--they're usually shipped straight to the customer. When the bill's paid, the funds go to the P.O. lender, which subtracts its fee and sends the remaining profits to the borrower. Without revealing what he charges.
We don't care about your credit score or if your business is completely underwater, we look only at the transaction we're financing. If the borrower's big customer has good credit, the P.O. lender delivers a letter of credit to the manufacturer that guarantees payment for the needed goods. The factory then makes the products, and a third party verifies that the order is complete. The factory gets paid and ships the goods off, usually to a third-party warehouse. It's rare for the borrower to receive the goods--they're usually shipped straight to the customer. When the bill's paid, the funds go to the P.O. lender, which subtracts its fee and sends the remaining profits to the borrower. Without revealing what he charges.
Who Qualifies for Purchase Order Financing?
Purchase Order Financing is ideal for wholesalers, resellers, distributors and similar businesses that purchase completed product from suppliers to resell at a mark-up. Obtaining Purchase Order Financing is easy because it’s based on your customer’s credit worthiness, not yours. Please contact us for complete details.