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It’s common in business for a supplier to require that you prepay for goods before they’re shipped. However, you may not have the required cash to pay upfront and you may have trouble getting traditional trade financing or credit extensions from banks.
If so, you may wish to look at some alternative import finance options that can help you pay your suppliers without having to put up security or pay extravagant fees for deferred payments.
There are two main types of alternative import finance options you can consider:
When considering your financing options, make sure you select the most competitive loan product that’s appropriate for your particular business situation. Keep in mind the following when comparing your options:
Make sure you’re aware of the following pitfalls before you apply:
If your business has outstanding invoices, invoice financing can help you get access to the required cash to pay upfront to your suppliers. It's a type of business loan that is secured by the unpaid invoices and comes with reduced risk, no asset requirements or interest payments.
Compare invoice financing products below.
What happens if something goes wrong with the delivery of my shipment?
It depends on the particular agreement made between you and your lender. However, with PO financing, your lender will still get paid since your goods are pre-sold.
How long do I need to have been in business for to qualify for such loans?
Depending on the lender, loan type and amount, anywhere between one and two years.
Can I qualify for PO financing for goods that haven’t been manufactured yet?
Unfortunately not. Your purchase order financing request must be for finished goods as there is more risk for the lender when having to worry about things such as late orders, defected items, etc.
Picture: Shutterstock
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