Purchase Order Financing

APurchase Order Financing is a bit like Import Letter of Credit Financing (see above) but without the Letter of Credit. Typically, you have a Purchase Order from, say, Wal-Mart, and a deal with a factory in China to ship you one or a dozen forty-foot containers of goods, but you don't have the bank credit to open the Letter of Credit that the Chinese factory is demanding before it will start to manufacture. A P. O. Financier will open that Letter of Credit for you and assist you in many ways to make the deal go smoothly, from transit insurance, quality inspection at the port, clearing customs, arranging good freight forwarders, etc. Big-time importing is not the sort of thing to do at your kitchen table, working with pros is a big plus here. Yes, real P. O. Financiers are expensive, but so is making a container-sized mistake and not being in business at all.

Advantages: P. O. Financiers will get the deal done if you know what you're doing. High profits for the right business.

Disadvantages: Very expensive, and not for the faint-hearted or the inexperienced. Find a lender you can trust and work closely with him.

Current Availability: There are probably no more than six purchase-order firms across the entire U. S., and they take very few deals out of the hundreds they see a month.

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This Guide includes information on business financing options and how to decide which is best for your business.