Purchase Order Financing provides working capital to businesses by using confirmed purchase orders as collateral, funding up to 100% of supplier costs for orders ranging $500K–$25M.
Data compiled from public sources · Rating from CreditDoc methodology
Purchase Order Financing has operated since 2002 and claims to have secured over $750 million in funding for businesses across the US, UK, Canada, and China. The company specializes in a niche financing product: leveraging purchase orders from creditworthy commercial or government clients as collateral to fund the upfront supplier costs needed to fulfill those orders.
The company offers purchase order financing with up to 100% coverage of supplier costs for deals between $500,000 and $25 million. Their core process involves verifying the purchase order directly with the customer, opening a Letter of Credit to guarantee supplier payment, and then distributing proceeds once the customer pays. They position this as an alternative to traditional bank financing, particularly for resellers, distributors, and government contractors who may lack the balance sheet strength banks typically require.
What distinguishes them is their underwriting focus: rather than evaluating the applicant company's financial health, they primarily assess the creditworthiness of the purchase order issuer (the customer). This allows them to fund businesses that banks reject, provided the customer is established and creditworthy. They also claim to work alongside existing credit institutions rather than replace them, and they offer related services like invoice factoring and creative financing solutions.
The model works best for growth-stage resellers and distributors with confirmed large orders but insufficient working capital. However, the service is inherently limited to businesses with tangible, verifiable purchase orders from strong customers—it is not a general working capital solution. Pricing and APR details are absent from the website, requiring direct contact. The $500K minimum also excludes small businesses with smaller order volumes.
Yes. Purchase Order Financing is a registered company, headquartered in Chicago, IL.
Results vary by individual situation. Contact the provider to discuss expected timelines for your specific needs.
CreditDoc Diagnosis
Purchase Order Financing is best for established resellers, distributors, and government contractors with confirmed large purchase orders from creditworthy customers who need fast, non-dilutive working capital to fulfill those orders. The critical caveat is that this product requires a legitimate, verified purchase order—it is not general working capital financing and cannot help businesses without confirmed customer commitments. Actual pricing and terms are not transparent on the website and require direct inquiry.
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Read guide →New to credit and lending? Here are the key terms used on this page, explained in plain language with real-number examples.
The total yearly cost of borrowing money, including the interest rate plus any fees the lender charges. Think of it as the 'true price tag' on a loan.
Lenders must show APR by law (Truth in Lending Act) because the interest rate alone can hide fees. Comparing APR across lenders is the most reliable way to find the cheapest loan.
Example
You borrow $10,000 at 6% interest for 3 years, but there's a $300 origination fee. The interest rate is 6%, but the APR is 6.9% because it includes that fee. You'd pay $304/month and $946 total in interest.
The percentage a lender charges you for borrowing their money, calculated on the amount you still owe. It's the lender's profit for taking the risk of lending to you.
Even a 1% difference in interest rate can cost you thousands over a loan's life. Lower rates mean less money out of your pocket.
Example
On a $20,000 car loan for 5 years: at 5% you pay $2,645 in interest. At 8% you pay $4,332. That 3% difference costs you $1,687 extra.
A person who agrees to repay your loan if you can't. They're equally responsible for the debt, and their credit is affected by your payment behavior.
Cosigning helps people with thin credit get approved or get better rates. But it's a huge risk for the cosigner — they're on the hook for the full amount if you default.
Example
A parent cosigns their child's $30,000 student loan. The child stops paying after 6 months. The parent is now legally required to make the payments or face collections, lawsuits, and credit damage.
How long you have to repay the loan, measured in months or years. A shorter term means higher monthly payments but less total interest paid.
Longer terms feel more affordable monthly but cost much more overall. A 30-year mortgage costs almost double in interest compared to a 15-year mortgage on the same amount.
Example
Borrowing $200,000 at 6.5%: A 15-year term costs $1,742/month ($113,561 total interest). A 30-year term costs $1,264/month ($255,088 total interest). You save $141,527 with the shorter term.
A one-time fee the lender charges to process and set up your loan. It covers their costs for underwriting, verifying your information, and preparing paperwork.
Origination fees are usually 1-8% of the loan amount and are often deducted from your loan proceeds — so you receive less than you borrowed.
Example
You're approved for a $10,000 personal loan with a 5% origination fee. The lender deducts $500 upfront, so you receive $9,500 in your bank account but owe $10,000 plus interest.
The original amount of money you borrowed, before any interest or fees are added. It's the 'real' amount of your debt.
Your interest is calculated on the principal. Paying extra toward principal (not just interest) is the fastest way to reduce your total cost and pay off a loan early.
Example
You borrow $25,000 for a car. That $25,000 is your principal. Your first payment of $450 might split as $150 toward interest and $300 toward principal, bringing your balance to $24,700.
The process where a lender evaluates your finances — income, debts, credit history, assets — to decide whether to approve your loan and at what rate.
Understanding what underwriters look for helps you prepare a stronger application. They check your DTI ratio, employment stability, credit score, and the asset's value.
Example
You apply for a mortgage. The underwriter reviews your pay stubs (income), bank statements (savings), credit report (history), and orders an appraisal (home value). This takes 2-4 weeks.
Want to learn more? Read our Financial Wellness Guides for in-depth explanations and practical advice.
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