Purchase order, or, “PO financing” is an arrangement where a third party agrees to give a supplier enough money to fund a customer’s purchase order. In some instances, purchase order loans will finance an entire order while in other cases they may only finance a portion of it.
Uses of purchase order financing and loans
PO financing and loans can be used for a wide range of purposes as highlighted below:
Pros of Using Purchase Order Financing
Purchase order financing like any other funding solution for small business have their advantages and drawbacks. Some of the beneficial features of PO financing for small businesses are briefly highlighted as follows:
Cons of Using Purchase Order Financing
PO financing is not the only available option with several other alternatives available to small businesses that find PO financing unsuitable. Some of the other options include invoice financing, traditional term loans, merchant cash advances, business lines of credit, and loans from non-bank lenders.
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