Purchase Order Financing For PPE Products – Explained
- How Huntington Coast Capital Is Contributing To The Fight Against The Pandemic
- How Much PPE Financing Costs
- The Process Of Purchase Order Financing For PPE Products
Huntington Coast Capital is continuing its fight against the COVID-19 pandemic. First, by securing purchase order financing for PPE products and secondly, by covering the cost.
Over the past few months we have facilitated millions of dollars in purchase order financing for our clients in the PPE space. According to UNICEF the demand for PPE products will continue for the foreseeable future. The financing required to fill orders will continue to be in demand.
Many lenders in the PPE financing space have pulled back their purchase order financing. This is due to problems experienced with some of the orders. Orders were being shipped late or incomplete and sometimes both, due to the huge demand. Huntington Coast Capital’s fund partner has an approved list of suppliers, both here and in southeast Asia. They have worked with and established strong business relations. This partnership has greatly reduced supplier performance risk. By controlling each step in the supply chain, they are mitigating the risks associated with supplier performance and quality.
Where do we go from here? To meet this demand, Huntington Coast Capital will be partnering with another group to deliver PPE products directly within the next few weeks. The warehouse space will be located domestically and allow the buyers to inspect their orders prior to payment. This additional step will eliminate the supplier risk entirely. The result will be a reliable source of PPE Product delivered where it is needed most.
How much does purchase order financing for PPE products cost?
The typical charge for purchase order financing is 3% of the loan amount every 30-days. These charges to not exceed 90 days. If there are any balances owed after 90 days, the amount is charged back and given back to the client to resolve the matter with the customer. Most all transaction costs fall with the 6% range. For example, if you have a margin of 30% on your product sales, this would reduce to 24% as a result of the purchase order financing cost. However, the benefit is that you now have the capital to meet orders and bid on contracts. This gives you a tremendous advantage when negotiating with suppliers. NOTE: Due to the extremely high demand and limited capital available, we have seen rates rise to 5% in recent months (as of December 2020).
PPE purchase order financing – how the program works?
Unlike other lenders in the space, we have access to capital that can pay suppliers direct and work without a letter of credit or escrow account. The demand for PPE products has suppliers in the driver’s seat. Most do not agree to work under a letter of credit. We have an approved list of suppliers in Vietnam, Malaysia and China that we work with that eliminates the risks associated with delivery and quality issues. There are other lenders that advertise financing for PPE products, but the goods have to be located in the United States or paid for once they get to a US-based port. The problem with this is suppliers overseas want to be paid upon shipment. The end result is that these lenders are really not providing a solution. They are not offering purchase order financing, they are offering factoring services for PPE products. There is a big difference.
If you are looking for purchase order financing for PPE products, we would like to speak with you.
Huntington Coast Capital, Inc.