PO Funding versus Traditional Business Loans For Your Wholesale Business

Good news…you got your first large purchase order from a large retailer. Bad news…you don’t know how you are going to finance the order. Growing a wholesale business can come with ups and downs.  Managing working capital can be stressful—especially when you’re faced with fulfilling a large order you simply don’t have the cash to fund. However, turning down a large order could hamper your growth, so exploring your options is key.

For the majority of business owners, when it comes to obtaining funding for your business, it’s hard to know exactly where to turn. From traditional bank loans to purchase order funding, knowing which route to take won’t just lessen your load, it will ensure that you are positioning your organization for success. Below are five key differences when it comes to traditional loans vs. PO funding.

Purchase Order Funding 

  1. Can be deployed within a few days, providing greater availability when needed, if supported by a solid purchase order.
  2. PO funding companies look at your purchase orders and sales opportunities, they are not relying solely on the balance sheet or past cash flow.
  3. Does not rely on personal credit, rather PO Funding companies are more interested in the credit of the end-customer.
  4. Is a short-term commitment as it is transactional focused. Typically PO finance companies do not require committing to paying back large unnecessary loans over time, which makes it easy for planning and projections.
  5. Is extremely flexible and, therefore, loan sizes can vary depending on business cycles and opportunities.

Traditional Loans

  1. Often times traditional business loans require a tremendous amount of paperwork.
  2. Take a long time to underwrite.
  3. Are issued based off of your past history.
  4. Won’t provide necessary capital to take on large opportunities.
  5. Offer a fixed loan amount that requires time and paperwork to make any changes.

When your success hinges on obtaining financing to fulfill purchase orders, PO funding is a great solution.

Partnering with Star Funding, you will work with a team of experts that have experience in manufacturing, logistics, and finance.  For over 15 years Star Funding has helped hundreds of companies grow through purchase order funding and other trade finance solutions.   If you need help financing your purchase orders from retailers, please contact Avi Levine at alevine@starfunding.net or by phone at 212-768-9900.