Purchase order funding is an excellent capital option for your small business.
Purchase order funding is short term financing which provides 100% of your costs to fill orders from creditworthy customers. If you are reselling or distributing a finished product you can be provided 100% of all your costs to fill the order. There are several benefits to this sort of financing.
You can pay your supplier in advance of shipping the product if that is what they require with purchase order funding. Advance payments can be made to them or a Letter of Credit supporting the payment obligation can be made. With this option your businesses creditworthiness isn’t taken into consideration, but the creditworthiness of your customer is.
This gives new businesses an opportunity to take advance of purchase order funding. Large purchase orders can be hard to fill with normal cash flows so purchase order financing allows your business to take advantage of it. Another benefit of this financing options is that you can work with overseas suppliers.
Companies that qualify for purchase order funding typically drop ship products from suppliers to credit worthy customers. Also they will need at least $100,000 in financing. Other companies that are distributors or resellers of finished goods. It is also important for a company to have a gross profit margin larger than 10%.
To locate more sources of funding for your business you can do a search in our free business capital search engine which has over 4,000 lenders and investors. There are many financing options available to your business.