Purchase Order and Supplier Guarantee Financing: Small Business Loan Alternative for Manufacturers

In this scenario, a small business involved in the manufacturing of products or goods receives a purchase order (makes a sale) for goods from a customer. The small business does not have the cash required up front for purchasing the raw materials to manufacture the goods. The small business hands the purchase order from the customer over to a third party lender, who now assumes the obligation of billing and collecting the payment from the customer. The lender covers the cost of the raw materials for the manufacturer. The lender assumes the risk of the collection for payment and the manufacturing of the goods. In some cases, the supplier of the raw materials will guarantee the delivery of the raw materials by acting as the third party lender. This is a legitimate method for a small business to fulfill a purchase order when it does not have the time wait for a small business loan. Please contact us for more information about purchase order and supplier guarantees and small business loans.