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

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Know More about WORKING CAPITAL LOAN

How does purchase order financing work?

Purchase order financing involves multiple parties working together to fulfil the customer’s purchase. The process for getting this type of financing 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. You realize that your business doesn’t have the cash available to buy 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 financing company approves the financing based on the creditworthiness of the buyer. It then pays the suppliers.
~ The customer pays the invoice. You receive the supplies and ship goods to the customer. You then send the invoice to the customer.
~ The financing company takes out fees and sends you the rest. The customer pays the financing company directly. The financing company takes out any fees and sends your business the remaining amount.

DOCUMENTS REQUIRED (For Proprietorship Firms)

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) ITR with Computation, Balance sheet, Profit & loss with Schedule, 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 the volumes for last two years and 2 personal references (Friends and relatives)
~ GST Certificate & GST Return since April 22 to till date
~ Profile of the company (History, Product, and Operation)
~ Stock, Debtors & Creditors statement April 22 to till date
~ Month wise sale list April 22 to till date
~ Projections / CMA
~ Group Company Financial and Sanction letter if any
~ Profile of the Company (History, Products, and Business)

Proprietor & Co-Applicant Documents
~ ITR Return with computation for last 2 Years
~ KYC – PAN Card, Aadhar Card
~ Photographs of each individual

DOCUMENTS REQUIRED (For Partnership Firms)

The following documents are required to apply for a Working Capital Loan:

~ FY-23 Provisional financial
~ Last two year audited financials (FY-22, & FY-21, FY-20) ITR and Computation, Balance sheet, Profit & loss a/c Schedule, Tax Audit Report -Form 3cb, 3cd.
~ Form 26AS If any
~ Sanction Letter 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 proofs (Telephone bill or electricity bill)-Latest (within 60 days)
~ Trade References 5 Buyers and 5 Suppliers contact details along with the volumes for last two years and 2 personal references (Friends and relatives)
~ GST Certificate & GST Returns since April 22 to Till Date
~ Stock, Debtors & Creditors statement April 22 to till date on company letterhead.
~ Month wise sale list April 22 to till date on company letterhead.
~ Projections /CMA
~ Profile of the company (History, Product, and Business)
~ Group Company financial and Sanction Letter. (If any).

Partners Individual Documents
~ ITR with computation for the last 2 years.
~ KYC – PAN Card, Aadhar Card
~ Photographs of each individual

DOCUMENTS REQUIRED (For LLP / Private Limited / Limited Firms)

The following documents are required to apply for a Working Capital Loan:

~ FY- 23 Provisional financial
~ Last three years Audited financials (FY-22 & FY-21,FY-20) ITR with Computation, Balance sheet , Profit & loss with schedule, Independent auditors report & Tax Audit Report -Form 3ca, & 3cd.
~ Form 26AS (If Any).
~ Sanction Letter of all loans along 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 reference 5 Buyers & Suppliers contact details along with the volumes for last two years and 2 personal references (Friends and relatives).
~ Stock, Debtors & Creditors statement April 22 to till date
~ Month wise sale list April 22 to till date
~ Projections /CMA
~ GST Certificate & GST Return from April 22 to Till Date.
~ Profile of Company (History, Product, Business).
~ Group Company Financials and Sanction Letter.(If any).

Directors Documents
~ ITR Return with computation for last 2 Years.
~ KYC – PAN Card, Aadhar Card.
~ Photographs of each individual

Rack Rate of Interest (ROI)

~ 14% to 28% per annum

Processing Fee / Loan Processing Charges

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

Pros of using Purchase Order Finance

~ Keeps business flowing. You don’t have to turn down a large order, potentially hurting a relationship that would lead to future sales.
~ Easier to qualify for. This financing is easier for businesses with bad credit to qualify for because the lender weighs your customer’s credit more than your business’s.
~ No upfront payment. You don’t pay the financing company until the customer pays the invoice.

What is the difference between Purchase Order Finance and Invoice Discounting?

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.

Benefits of using Purchase Order Finance

Purchase order finance is an excellent solution for small businesses struggling to rise above the cash flow problems to fulfil an order. However, to understand its full usefulness, let us look at some of its major benefits.

~ Purchase order finance is a good option for businesses that are finding it difficult to secure approval for a loan against a purchase order in India within a reasonable time. It is easier to qualify for purchase order loans where the purchase order itself acts as the collateral for the loan.
~ Business loans usually require the promoters to sign a personal guarantee, which means failure to repay leads to the seizure of personal assets.
~ Typically, startups are in rapid growth mode, but their lack of track record makes it challenging to secure funds to realise the growth. So, purchase order finance is great for startups as it helps them achieve growth while shoring up cash flow.
~ Unlike regular business loans, purchase order loans are flexible. If the cash flow drops, funds can be raised using the outstanding purchase orders. On the other hand, businesses can stop using it if there is a drop in order volume.

Who needs to take a Purchase Order Finance limit?

Different companies uses 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

How to qualify for Purchase Order Finance?

Purchase orders of large amount, creditworthy customers and capable suppliers, and non cancellable transactions are essential factors for qualification.

Is collateral required for Purchase Order Finance?

Major lenders may ask for collateral for purchase order financing. However, unsecured purchase order finance limits are available at marginally higher rate of interest.