One of the most frustrating situations for a small business owner is having a confirmed order from a good client — but not having the cash to buy the stock or materials to fulfil it. Purchase Order (PO) Funding is a financing solution designed specifically for this problem.
What is PO Funding? PO Funding is a short-term business loan secured against a confirmed purchase order from a creditworthy buyer. The lender advances funds to help you pay your suppliers, you fulfil the order, collect payment from your buyer, and repay the funder.
Who qualifies? To qualify for PO Funding at Ndzinga Capital, you need: a confirmed, written purchase order from an established buyer; a clear supply chain with identifiable suppliers; margins sufficient to cover the funding cost; and a track record of order fulfilment.
How the process works: You submit the purchase order and your supplier invoice. We assess the buyer's creditworthiness and your ability to fulfil. Once approved, we advance up to 80% of the PO value directly to your supplier. You fulfil the order, your buyer pays, and you repay the principal plus our fee.
What does it cost? PO Funding typically carries a higher rate than standard personal loans, reflecting the short-term, transaction-based nature of the financing. At Ndzinga Capital, our PO Funding carries a 2.5% per month interest rate, calculated on the outstanding amount.
PO Funding vs invoice discounting: PO Funding is used before you fulfil an order (pre-delivery), while invoice discounting is used after you've already delivered and issued an invoice (post-delivery). Both serve similar purposes but at different stages of the cash conversion cycle.
If your business regularly wins orders it struggles to fulfil due to cash constraints, PO Funding could be the tool that accelerates your growth. Contact our business lending team to discuss your specific situation.
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