PURCHASE ORDER FINANCING

We provide up to 100% financing from $25K – $25 million revolving credit lines, ranging from 1.5% -3.5%. interest rates. Purchase order financing is a short-term commercial finance option that provides capital to pay suppliers upfront for verified purchase orders. Businesses avoid depleting cash reserves or declining an order because of cash flow challenges. It allows companies to accept unusually large orders and adjust the loan basis up/down quickly to meet needs. If order volume drops, there’s no long-term commitment so they can stop using it at any time.  PO financing is designed for growing businesses that want to fulfill large orders. They have little access to working capital and/or poor cash flow. The types of businesses that usually qualify includes Manufacturers, Distributors, Wholesaler/resellers, and Importer/exporters.

Your business receives a large PO from a new or existing customer. Your supplier needs upfront payment, but the customer invoice won’t be paid for 60-90 days after shipment is received. This creates a classic working capital gap. Without the money, you risk losing the order and customer confidence. To secure money, many companies will apply for traditional financing but cannot satisfy bank requirements. Even if they do, banks base their lending on a company’s past performance. That means the bank will want proof that you can handle fulfilling such a large order. With a verified PO, purchase order financing can support a single transaction and/or grow with your company’s accelerated funding requirements. We pay the suppliers directly via a letter of credit or cash. Your business fulfills the order; with proceeds being distributed after shipment is received.  A traditional lender, like a bank, is bound by government regulations. Loan requirements typically include collateral and 3 years of financials. Don’t forget, they’ll also want proof you can handle a large increase in business. Banks can’t extend the credit you need if you don’t have proof. The cost of financing purchase orders varies for each transaction. The monthly percentage is based on the lender’s underwriting factors, such as: paying upfront for goods, delivery according to contract, waiting 60 – 90 days from delivery of goods to get paid.

About the author

Millennium Capital is a multi strategy Private Equity, and Capital Advisory firm dedicated to helping businesses succeed with a full range of strategic finance services making both direct investments in operating companies as well as partnering with other private equity, venture capital firms, banks, and our strategic network of investors to provide long-term and short term financial solutions.
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