4 Myths to Forget About Regarding Purchase Order Financing
For many businesses, purchase order loans are crucial. Unfortunately, some businesses are wary over this type of financing because of the myths surrounding purchase order financing. Once you’ve gotten through the myths and know the facts behind them, you may be able to consider the advantages of these loans. Here are four of the main myths spread about purchase order loans.
They Are Risky
When someone is unfamiliar with purchase order financing, he or she might think that they will have to put their assets at risk in order to get money. A person might worry that they will have to use payroll, real estate, bank accounts or operating expenses as collateral. The truth is that no one has to put up those assets. No assets are at risk.
They Are Distasteful
There are myths surrounding the type of clients that accept purchase order loans. Many think that these loans are used for shady businesses to pay off the debts they owe. That just isn’t the case. People from a variety of businesses and expertise choose to use this type of financing. Even some of the bigger name companies use this form of financing to help with their cash flow.
They have High Interest
While it is true that a purchase order loan has a slightly higher interest rate, it is still affordable for most businesses. The rates remain affordable and companies can still take enough money to make a profit. The problem arises when a CPA miscalculates the interest. Some clients end up thinking that they will have to be up to half the cost in interest. The truth is that interest is rarely ever that high.
They Are Difficult to Obtain
It’s a common misconception that it will take a long time to get a purchase order loan. There are many considerations for a lender to consider first. For instance, the lender has to take your payment histories and credit ratings into account. However, this part of the process doesn’t usually take very long. In fact, it can be completed in a few days. Purchase order loans allow a business to stay productive day after day.
Once you know a little more about purchase order financing, the whole idea might seem less intimidating. While this type of financing can be extremely important for a business, businesspeople are still wary of it. With the right information, however, you can see through the myths.