Starting a business can be tough. As the head of a company, you understand the struggles that come in the beginning. Launching can be one of the biggest hurtles. However, after you’ve become established as a new business, it is time to grow. That growth can’t be funded from nothing, however. As you begin to expand your business, your clientele will also begin to expand. However, what do you do when it begins to grow to a point that you are unable to afford? This is a problem that many growing businesses encounter. After all, in order to grow a company to the point where you are completely self-sufficient, it takes funding.
For instance, if you run a wholesale company, you may come across a problem if you cannot afford to pay your supplier upfront. This is not something that should reflect poorly on you. This is a sign of growth. You don’t want to cut it off just as it’s expanding, however. The first thought you might have is to get a loan. This isn’t always the most viable option though. If a bank takes too long or does not approve the loan, then you will be without money for payment. You could ask friends or family, but this is often the last resort. Purchase order financing, on the other hand, could be an incredibly viable option.
When it comes to growing businesses, purchase order financing firms love growing businesses. While a bank may consider them to be a risk, these kinds of lenders are more likely to take a big risk. As a company, you have already taken a lot of risks. It can be smart to rely on a lender that is willing to take on more of one. Oftentimes, they are the ones that take the brunt of the loss if a client doesn’t pay. This can be helpful, because you can’t afford to lose as much while you’re still expanding. Purchase order financing really does help alleviate some of the risk.
It can also be very simple. When it comes to funding, simplicity can be important. The lender agrees to give you the money to pay for the goods, and the client pays you. Then, you would give the money to the lender, who takes a percentage off the top and leaves the rest. Many businesses have grown under this type of financing. It really lends itself to a small business that is still in the process of growing.