Purchase Order Financing Underwriting Criteria

purchase order financing criteria

Purchase order financing is form of short term financing that can be utilized by businesses that need capital to produce or deliver a product or service to a customer. Like other forms of short term financing, PO financing is more expensive than a conventional bank loan. However, if you cannot acquire conventional bank financing, the cost of alternative financing is a moot point!

If paying a little more in financing costs is the difference between fulfilling an order to a key customer or losing the sale, then you do whatever it takes to make the deal work.

Companies that can benefit greatly from PO financing are: 1) new companies that have not yet established a line of credit and 2) companies who may have had financial difficulties in the past that damaged their credit ratings. Apply for P. O. Financing by filling out the short form here.

Underwriting Criteria

Business Money Source has funding programs that range from $50,000 to $25 million or more in PO financing. It is possible to get 100% financing of your project with the use this form of financing. Some addition criteria that the funding source will consider:

  • The length of time you have been in business – should be at least one year.
  • The credit strength of your customer.
  • Have you dealt with the customer or a similar customer before – in other words do you know the business and what is entailed in fulfilling the order.

How Does PO Financing Work?

  1. You receive a purchase order from a customer with a solid credit rating.
  2. The cost to fulfill the order exceeds your working capital and/or your line of credit with your suppliers
  3. You contact Business Money Source by filling out the short form on this page or elsewhere on the website and explain the purpose and the amount of funding that you need
  4. Business Money Source will arrange the financing with an appropriate funding source
  5. The funding source will issue a Letter-of-Credit to your supplier for the cost of materials, inventory, fabrication, etc. that you will need to fulfill the order.
  6. You deliver the order to your customer. The customer pays the funding source.
  7. The funding source pays the supplier and you less a small commission for their service

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Apply for purchase order financing by filling out this short one-page initial form.

Learn more about purchase order financing.

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