Purchase Order Finance
Get Advances Against confirmed Orders
Purchase order financing is a type of cash advance used when a business doesn’t have the capital to fulfill a customer order. Rather than turn down the order, the business can use purchase order financing to pay suppliers and ship the order. It then invoices the customer, and the customer pays the financing company directly
Our Purchase Order Funding solutions help SMEs and startup companies who may be having a difficult time filling large orders. Purchase order funding for small business is a perfect solution for resolving cash flow problems and getting your outstanding orders filled. Our financing solutions will help you procure the necessary raw materials, supplies or manpower to deliver an outstanding product or service to your clients whilst you continue to grow your customer base.
Unsecured Limits starting @ 16%
*T&C Apply | Rate of Interest Linked with Repo Rate and subject to changes as per RBI circulars
Know More about WORKING CAPITAL LOAN
Purchase order financing involves multiple parties working together to fulfill the customer’s purchase. The process includes:
~ Buyer requests a large order. A creditworthy buyer fills out a purchase order requesting a set number of products from your business.
~ The business determines costs from suppliers. You check with suppliers on the cost of goods and realize your business doesn’t have enough cash to purchase materials.
~ The business requests purchase order financing. You present the purchase order and estimate of supply costs to a financing company.
~ The financing company sends capital to suppliers. The financier approves the request based on the buyer’s creditworthiness and pays the suppliers.
~ The customer pays the invoice. You receive the supplies, ship the goods to the customer, and send them the invoice.
~ The financing company takes out fees and sends you the rest. The customer pays the financier directly, who deducts fees and sends your business the remaining balance.
The following documents are required to apply for a Working Capital Loan:
~ FY23 Provisional financial
~ Last three years audited financials (FY-22, FY-21, FY-20) including ITR with computation, balance sheet, profit & loss with schedule, and Tax Audit Report – Form 3cb, 3cd
~ Sanction letter of all loans along with schedule & updated loan sheet
~ Last 12 months’ bank statements of all banks
~ Address proof (Telephone bill or electricity bill) – Latest (within 60 days)
~ Udyam registration certificate
~ Trade reference: 5 buyers & suppliers contact details along with volumes for the last two years, and 2 personal references (friends and relatives)
~ GST certificate & GST returns from April 2022 to date
~ Profile of the company (History, Product, and Operation)
~ Stock, debtors & creditors statement from April 2022 to date
~ Month-wise sales list from April 2022 to date
~ Projections / CMA
~ Group company financials and sanction letter, if any
~ Profile of the company (History, Products, and Business)
Proprietor & Co-Applicant Documents
~ ITR return with computation for the last 2 years
~ KYC – PAN Card, Aadhaar Card
~ Photographs of each individual
The following documents are required to apply for a Working Capital Loan:
~ FY-23 Provisional financials
~ Last two years audited financials (FY-22, FY-21, FY-20): ITR and computation, balance sheet, profit & loss account with schedule, Tax Audit Report – Form 3cb, 3cd
~ Form 26AS (if any)
~ Sanction letters of all loans with schedules
~ Last 12 months bank statements of all banks
~ Business incorporation date proof – PAN Card
~ Partnership deed
~ Udyam registration certificate
~ Address proof (Telephone bill or electricity bill – latest within 60 days)
~ Trade references: 5 buyers and 5 suppliers’ contact details with volume for the last two years, and 2 personal references (friends and relatives)
~ GST certificate & GST returns from April 2022 to date
~ Stock, debtors & creditors statement from April 2022 to date (on company letterhead)
~ Month-wise sales list from April 2022 to date (on company letterhead)
~ Projections / CMA
~ Company profile (History, Products, and Business)
~ Group company financials and sanction letter (if any)
Partners’ Individual Documents
~ ITR with computation for the last 2 years
~ KYC – PAN Card, Aadhaar Card
~ Photographs of each individual
The following documents are required to apply for a Working Capital Loan:
~ FY-23 Provisional financials
~ Last three years audited financials (FY-22, FY-21, FY-20): ITR with computation, balance sheet, profit & loss with schedule, independent auditor’s report & Tax Audit Report – Form 3ca, 3cd
~ Form 26AS (if any)
~ Sanction letters of all loans with schedules & updated loan sheet
~ Last 12 months bank statements of all banks
~ Business incorporation date proof – PAN Card
~ MOA (Memorandum of Association) and AOA (Articles of Association) + Certificate of Incorporation
~ Udyam registration certificate
~ Address proof (Telephone bill or electricity bill – latest within 60 days)
~ CA-certified net worth statement of Directors and Shareholders
~ Trade references: 5 buyers and 5 suppliers’ contact details with volumes for the last two years, and 2 personal references (friends and relatives)
~ Stock, debtors & creditors statement from April 2022 to date (on company letterhead)
~ Month-wise sales list from April 2022 to date (on company letterhead)
~ Projections / CMA
~ GST certificate & GST returns from April 2022 to date
~ Company profile (History, Products, Business)
~ Group company financials and sanction letter (if any)
Directors’ Documents
~ ITR returns with computation for the last 2 years
~ KYC – PAN Card, Aadhaar Card
~ Photographs of each individual
∼ 14% to 28% per annum
1.5% to 2% one time on the sanctioned limit amount.
The processing fee depends on the credit decision of Financial Institution providing the sanction. At no given point does BazaarMoney / its employees / partners solicit Processing Fee to be paid to our own account. This fee is directly payable to the Financial institution.
Frequently Asked Questions about WORKING CAPITAL LOAN
∼ The bills should be drawn under irrevocable Letters of Credit issued by a commercial bank in India.
∼ The bills drawn must be in strict conformity with the terms of the LC.
∼ The LC must have a Usance period. (At sight LCs cannot be discounted.)
∼ Bills of exchange should arise out of bona-fide commercial or trade transactions.
The main difference is that invoice financing is a cash advance on unpaid invoices for goods already delivered or services already performed. Purchase order financing is an advance on products that have not yet been delivered to the customer.
Purchase order finance is an excellent solution for small businesses struggling to overcome cash flow issues and fulfill orders. Its key benefits include:
~ Easier qualification
Purchase order finance is ideal for businesses facing difficulty in securing traditional loans. The purchase order itself serves as collateral, simplifying approval.
~ No personal guarantee required
Unlike standard business loans, promoters may not need to sign a personal guarantee, avoiding the risk of losing personal assets.
~ Perfect for startups
Startups, which often lack a strong financial track record, benefit from PO finance as it supports their growth while improving liquidity.
~ Flexibility
Unlike conventional loans, PO finance is adaptable. If cash flow decreases, businesses can raise funds against existing purchase orders or discontinue use if order volumes drop.
Different companies use purchase order financing when facing cash flow problems. These include:
~ Distributors
~ Retailers
~ Outsourcing Businesses
~ Resellers
~ Wholesalers
~ Businesses with heavily fluctuating or seasonal sales patterns
~ Businesses low on working capital, low on liquidity, or facing a cash flow crunch but with an immediate need of raw materials
Purchase orders of large amount, creditworthy customers and capable suppliers, and non cancellable transactions are essential factors for qualification.
Major lenders may ask for collateral for purchase order financing. However, unsecured purchase order finance limits are available at marginally higher rate of interest.
Unsecured limits up to 5 crore
*T&C Apply | Rate of Interest Linked with Repo Rate and subject to changes as per RBI circulars
+80 MORE
Portfolio Clients we Work with
Get up to 200% of property value
*T&C Apply | Rate of Interest Linked with Repo Rate and subject to changes as per RBI circulars
