Business owners are often cautious about obtaining outside funding because they don’t want to overextend their financial capabilities or use their assets as collateral. However, this can prevent them from taking on large orders from clients because they don’t have the capital on hand to pay suppliers. Purchase order loans, which have the specific purpose of enabling businesses to fill orders they would otherwise be unable to handle, offer an excellent solution to this dilemma. Here are some ways that purchase order loans can assist you in achieving business growth.
Avoid Credit Checks
Newer companies or businesses with low credit scores generally find it difficult to obtain financing. However, your credit score is not an issue when you apply for purchase order loans. Instead, the lender is concerned with the credit score of the client whose order you need to fill. As long as the client’s credit history is strong, your application will be approved.
Obtain Funding Quickly
When you apply for a loan from a credit union or bank, the application process and decision typically take a long time. In contrast, your application for purchase order financing will usually be finalized in a day or two at the most. A prompt reply to a funding request is crucial when you are waiting to fill a major order from a client.
Avoid Using Assets as Collateral
Many traditional loan agreements require that you put up equipment, inventory, or other company assets as collateral. This is not necessary when you secure a purchase order loan, because the specific invoices involved serve as collateral. As a business owner, you can have peace of mind that when you obtain the loan your company assets are not on the line.
Keep Your Profits
Taking out a bank loan means committing to regular payments, including interest, over an extended period of time. However, when you obtain a purchase order loan, the lender deducts its fees from the manufacturer’s payment upon completion of the order and then sends the balance on to you. This concludes the monetary transaction.
For more advice on using purchase order loans for business growth, contact Navigate Firm.