One of the best alternatives to the traditional banking structure for financing is purchase order funding for small business. Here are some of the things that you should know about purchase order loans and what they can do for your company.
What is Purchase Order Financing?
PO financing allows companies to obtain capital by using their purchase orders as the collateral for a loan rather than debt from money that the business does not have. Purchase order finance companies specialize in trading lump sums of money or underwriting lines of credit in exchange for the money that the company would have collected from the purchase orders.
Purchase Order Finance: The Advantages
Purchase order factoring should be one of the top choices for the financing agreement of a business that needs cash to fill single or multiple large orders. You gain leverage while maintaining your resources without having to put up equity. You will also end up paying much less than you would with any other kind of credit line or loan package.
You will also have the advantage of not relying on your own business credit score in order to get the money that you need to expand your company. To see how much cash your business qualifies for, fill out the application form to the right and a representative will contact you to discuss your options.
Purchase Order Factoring Companies Rates
The companies that you will partner with may have different purchase order financing rates. Most purchase order financing companies charge rates based on utilized funds. Utilized funds are the funds outstanding that were used to pay your supplier. On average, these rates are around 3% per 30 days on the utilized funds. Rates can go a little higher or lower based on the transaction. There is also a great deal of administration that you will be passing along to your partner; the administration and operations will also be included in the fee that will be assessed.
There is a great deal of competition when it comes to the fees that you will pay to a company. You will have the ability to compare the fees and services that you will receive based upon a various of factors. These factors can be the size and complexity of the transaction, reputation of the business that manufactures your products or supplies and the customer making the end purchase.
International Purchase Order Financing
The best purchase order financing services will give you the ability to go international with your funding efforts. When you fund your company without debt, you give yourself a great deal more leverage for international funding. Because your company can take orders from outside the country easily, you can create a longer line of credit from worldwide sales instead of having to limit yourself to a country.
Purchase Order Funding: Line of Credit
The funding that a company receives from a purchase order line of credit can completely forgo any funding from a banking or a government source. There are many different ways that a business can be funded; however, there are a few major ways that are more prevalent. The purchase order loan and the lump sum payout are the two major choices.
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