Many businesses find that they have grown so quickly that they simply don’t have the resources to accommodate large customer orders. If this has happened to your small business, purchase order financing may be a way that you can manage those large customer orders without actually having the funding necessary to purchase materials from your suppliers. Here is how purchase order financing might be beneficial for your company.
If you were to apply for a bank loan in order to purchase materials needed to fulfill a customer order, it would probably take far too long to be approved in order to actually complete the order. In addition, there’s a pretty good chance you wouldn’t even be approved by your bank for the loan, so you wouldn’t be able to purchase the materials anyway. With purchase order financing, you’re much more likely to be approved by an alternative lender, so that you can proceed with the customer order and gain more business for your company.
Source of Alternative Funding
Alternative lenders have stepped in to provide a very valuable resource to small business owners over the past two decades. With bank loan approvals drying up rapidly in this country, it has been necessary for alternative lenders to step in and fill a gap; this is where purchase order financing comes into play. If small business owners of this country were totally reliant on banks for funding, most of those small businesses would not survive. Developing an alternative source for funding is critical to your small business’s survival, and making use of purchase order financing is one way to work with a new lending source.
Third-Party Order Verification
An alternative lender will make use of a third-party to verify that your past orders have been successfully completed. This third-party will ensure that your orders have been filled according to customer specifications, and that they were sent directly to the client. Since this is all done by an independent third party, you don’t have to do the verification yourself, so your time is freed up to be used on business purposes. This is a great advantage of purchase order financing for small businesses.
Would Purchase Order Financing Help Your Small Business?
Not every small business would benefit by obtaining purchase order financing, but if yours would, we’d like to hear from you. Contact us at Aspen Commercial Lending so we can discuss whether it would be a good fit for your company.