There is a common misconception that Purchase Order Funding is only for larger businesses. WRONG! Also known as PO Financing, this type of funding can be used for businesses of all sizes. To put it simply, if you have a purchase order from a credit worthy end customer you can qualify for purchase order funding as a small business. Now it’s just a matter of finding the right lender and the right funding tools that meet your needs.
Of course some lenders have minimums and would much rather fund the larger purchase orders. There are still great options for Purchase Order Funding for small businesses. In it’s most traditional structure a purchase order funding company will help facilitate the financial aspect of the transaction to be funded. This does require labor, management, and of course credit or capital. When you really think about it, it takes us the same amount of time to fund a $50,000 purchase order as it does a $5,000,000 purchase order. Taking that into consideration you should be able to understand why it’s challenging to get your smaller purchase orders funded.
The good news is that there are plenty of options for purchase order funding for small businesses. Sometimes it may take a little “selling” on the borrowers part, to really convince us why it’s a good idea to take them on. Here are a few tips on how to secure purchase order funding as a small business.
- Present your purchase order financing transactions in an organized manner.
- Be open and honest about your business.
- Realize it’s about a lot more than just Purchase Order Financing Rates. It’s about great service and finding a lender who understands and appreciates your business.
- Present a solid plan for growth and don’t be afraid to commit. Most lenders aren’t interested in just a “one and done” funding opportunity. They are looking for an ongoing relationship.
In additional to more traditional Purchase Order Funding for Small Business methods there are also a number of ways to finance your purchase orders with other funding methods. Below are a few other funding options you can consider to finance your next purchase order. We have also laid out a few challenges you might face when trying to finance your orders using these tools.
- Cash Advances – A merchant cash advance is a great tool for a quick cash injection into your business. You will typically find that cash advances are offered from 4-12 months. Sometimes you may not need to keep the money for so long but it’s the cost of doing the business. MRKT offers an excellent short term cash advance. Having the ability to take an advance for 30-60 days provides ultimate flexibility and cost savings when trying to fund a purchase order as a small business.
- Accounts Receivable Factoring – AR Factoring can sometimes fill your PO Financing needs. While the leverage comes from your accounts receivable sometimes this is the better option to help expedite your cash flow.
- Supplier Credit Facility – This type of accommodation allows you to purchase materials to fill purchase orders from vendors on terms who may not be willing to offer credit terms. In this situation you are able to obtain the products you need on open terms.
As you can see, there are a number of great options for purchase order funding for small businesses. MRKT offers great funding solutions to help growing business deliver on their promises in a timely and cost effective manner. Send us an email today to learn more about purchase order funding for your small business at email@example.com.