Small businesses have unfortunately been hit hard by the recent recession. Many have lost customers and continue to have reduced sales because of lingering effects of the recession. They may have downsized their operations as a result, and some have lost supply lines that were integral to business functions. More significantly, however, they may have lost relationships with banks that once provided them with a much-needed line of credit. This may be because of a combination of tighter lending guidelines in place with banks as well as the diminished financial standing of some small businesses because of the effects of the recession.
If your own small business has lost its relationship with local banks and you are wondering what can be done to help you get the credit you need in place once again, the answer may be in alternative sources of business loans. These may have unique lending guidelines and parameters, and they may not be perfectly ideal for all situations. In fact, some small businesses will need to string together multiple alternative financing solutions to fully get the funds they need. Nonetheless, they ultimately can provide you with a feasible solution for the problem you are facing today. A closer review of purchase order financing may reveal if this is the right solution for your needs.
Purchase Order Financing
Purchase order financing is just one of several alternative sources of capital that you may have access to, but it may be right for you. Also known as invoice financing, this is similar to factoring except that the financing company guarantees a buyer’s order. With purchase order financing, the financing company pays for the manufacturing of the product, takes their share of the profit, and enables your company to have the rest of the profits. It is ideal for businesses that need extra money to fill customer orders or for companies that have trouble with cash flow related to filling orders. Generally, this is a suitable option for those who are in the distribution or reselling business or who import products for re-sale.
What to Expect From Purchase Order Financing
As is the case with many alternative forms of financing, this is not the most affordable source of capital that you may be able to obtain. However, when other sources of financing have dried up and are not available or do not provide sufficient capital for all of your needs, this may be a feasible solution to consider. You can expect higher rates and more fees than with traditional bank financing, but there are usually much be looser qualifications and requirements for qualification.
There are numerous alternative financing options to consider, but you may find that purchase order financing can be used to generate the capital that you need to move forward with your business plans. While the interest rates may be higher, it may provide the financing needed to keep your business afloat. If you’d like to know more about how we can help you get money for your business, call us for a FREE Business Funding Consultation at (800)416-7713.
Rick Anderson @FundingExpert1
Rick Anderson is the CEO and Senior Small Business Funding Specialist with Small Business Money Solutions. A company that helps small business owners and self employed professionals get the financial solutions they need to GROW and thrive. Rick has been in business for over 22 years, and his company has helped 22,485+ small business owners and counting. Rick has also written a book on small business finance entitled 10 Easiest New Money Sources For Business Owners.
Connect with him https://www.linkedin.com/in/RickAndersonSmallBusinessLoans or if you would like to ask him a question, send it to [email protected] If you’d like a FREE ‘Business Funding’ Consultation, call him at (800)416-7713.