Purchase order loans are financing options that can help your business finances. They are similar to accounts receivable financing, but the asset is the purchase order instead of the invoice. Many businesses don’t ever inquire about purchase order loans because there are so many myths around the financing. Here are four myths that are not true.
Myth – Purchase Order Loans Have Higher Interest Rates
Technically, it is true that the purchase order loan will have a higher interest rate than a traditional loan, but the rates are not so high that it’s not affordable for businesses when they need cash. Sometimes, you have to balance your need for cash against missing out on an opportunity that could save you even more.
Myth – It’s Risky to Get a Purchase Order Loan
Purchase order loans do not require you to put your other business assets or equity, making purchase order loans less risky than traditional loans where you do put up your assets. The purchase order is the asset that protects the lender. Once the order is filled and the purchase order paid by the customer, the lender gets paid and everyone is happy.
Myth – Purchase Order Loans Are Disreputable
Some financial experts believe that purchase order loans are offensive and will hurt your business’ reputation. Today, companies of all sizes and reputations use purchase loans to finance operations when their cash flow is short.
Myth – It’s Hard to Get a Purchase Order Loan
Traditional lending can take a long time, sometimes months. Purchase order loans can often be handled in a week or less. The client’s payment history and credit rating are taken into account, and it must be researched before the loan can be approved. Typically, this information can be accessed online, making the transaction go much quicker.
Contact Purevue Capital for more information about purchase order loans for your business.