POF lenders in South Africa

Top 10 Purchase Order Funding Lenders in South Africa

Business owners in South Africa face many ups and downs. Some months can be much better than others financially, so having continuity as a cornerstone in your business is critical for those harder months.  

One of the biggest challenges for small and medium-sized enterprises is that they might not have sufficient funds to secure a big purchase order. Once a PO has been secured, businesses often worry about how they will obtain the funds to purchase the products. If you are in a position where you aren’t able to finance the client’s order, purchase order funding offers much-needed assistance to maintain operations while still delivering products to the client.  

Not sure where to start with choosing the right lender to suit your business’s needs? Let’s take a look at the Top 10 purchase order finance lenders in South Africa, starting with an overview:

What is a purchase order?

Before we tackle purchase order finance, it’s important to fully understand what a purchase order is. In South Africa a purchase order (also known as a PO) is a document that is used to record the goods or services that a company wants to buy and the price that it will pay for the goods. This official document is used to keep track of the purchasing process.  

A purchase order is often used when one company wants to buy goods from another company. The buyer will send a purchase order to the seller and ask them to provide all of the details about what they want and how much they are willing to pay for it. Once this information has been received, the seller can then decide whether or not they want to do business with them. One of the most important factors for both the business owner and client is that a PO agreement is a legal document. So once the organisation accepts the PO, it becomes a legally binding contract.  

What is purchase order finance?

If an SME is faced with cash flow issues and they are unable to fulfil a purchase order request, often businesses could risk losing both the order and the customer. That’s where purchase order finance can help.  

Purchase order funding (otherwise known as Tender Finance) in South Africa has become a popular way to finance a company that has received a large purchase order from a customer. Purchase order finance bridges the gap between order and payment. A purchase order loan is based on the creditworthiness of your buyer (customer) and your business.  

Important note: In some ways, purchase order funding is not a loan in the sense that as a business owner you will not receive the funds into your account, it is an advancement on working capital. This means that the funds will be transferred straight to the supplier.

Why is it important to shop around for purchase order funding?  

Much like any financial product, purchase order finance is a big decision to be making. One that comes with great reward, risk and responsibility, so you need to be sure about choosing the right lender. If you apply for purchase order finance through FundingHub, we will ensure you are matched with the right lenders to suit your financial needs.  

1. Bright On Capital

Bright On Capital is a black-owned South African lender that provides affordable working capital and funding solutions to small and emerging businesses with sustainable growth prospects. As an alternative lender, they will do their best to go above and beyond to understand your business and its potential. Bright On Capital is also an entirely online lender with the goal of making funding efficient and simple. Their team are also driven to help businesses with a recent successful track record of supplying to one or more corporates or public-sector entities.  

Bright On Capital Purchase Order Funding allows businesses to retrieve funds of up to 70% of the value of your Purchase Order.  

2. MoolaLend

MoolaLend is a boutique lender offering innovative and alternative funding solutions. MoolaLend aims to stand out from the crowd by simplifying the funding process and taking on a partner approach to assist all clients. They don’t want to be like all the other mainstream banks in South Africa, as they’d much rather be your ‘chomie in funding’.  

Moolalend Purchase Order Finance takes two forms:

  1. Government tender financing: Any purchase order that is issued by the South African Government is used to secure financing from Moolalend.  
  1. Company PO funding: Any purchase order issued by a South African company (private or listed) is used to secure financing from them.  

To qualify for POF with MoolaLend your purchase order needs to be more than R50 000. MoolaLend is also open to funding any industry in South Africa as long as the company looking for funding has experience in that industry.  

3. Profit Hub

Profit Hub is an alternative South African lender specialising in Purchase Order Funding for SMEs. Their advanced financing, allows SMEs to smoothly secure finance through a confirmed Purchase Order. They want businesses to focus on things that matter rather than on cash flow issues.  

They deliver a comprehensive, hassle-free solution which allows business owners to fulfil their POs while still scaling their business to a stage where they are in a position to finance their own Purchase Orders.

Profit Hub Purchase Order Financing requires that an SME provide a share of between 25% to 35% of the Gross Profit return from the completed Purchase Order. The PO also needs to be more than R250 000. Their team specialise in PO for import/export and supply & delivery (e.g. an overseas supplier) including POs from Namibia and Botswana. However, they cannot assist with sole props and construction.

4. ProfitShare Partners

ProfitShare Partners are truly committed to helping businesses in need. Much like us, they believe that entrepreneurs and emerging businesses are the drivers of the economy. ProfitShare Partners want to bridge the gap for SMEs by giving them access to big deals that they otherwise wouldn’t have access to. They believe they are able to help business owners because of their great track record, extensive experience in the industry and all the resources they have available.  

ProfitShare Partners PO financing allows business owners to get finance from R250 000 – R5 000 000 per transaction. PFP will also look at funding construction companies if the project is for refurbishment or security and if the PO is for a large corporate e.g., Absa. They will however not look at funding the commodities, logistics and agriculture industries.  

5. Spartan Finance

With over 40 years of experience in financing businesses, Spartan Finance is all about backing entrepreneurs and helping build our country. They are an independent alternative financier, with eyes only for SMEs in South Africa. First and foremost, they want to understand you and your business, after that, they will create a customised and structured funding plan to meet your timeline.  

One of their working capital finance products is PO finance, where they are able to provide either once off or revolving purchase order funding. These are granted to businesses with either current or future Government and Corporate Sector POs. Spartan Finance PO finance amounts range from R1 Million to R25 Million. Another requirement is that the PO needs to come direly from an end-client/end-buyer (government or corporate).  

6. The People's Fund

The People’s Fund is a completely different type of alternative lender, where the power quite literally lies on the people.  People’s Fund is a purchase order crowdfunding platform, where they assist businesses that have orders with government and corporate and help them look for capital to deliver these orders. The People’s Fund allows everyday people to participate in the growth of talented entrepreneurs; whilst also making it easier for entrepreneurs to get access to funding.

To qualify for The People’s Funding Purchase Order Funding, you’ll need a 20% gross profit margin or a purchase order traction of more than R50 000. You’ll also need to be 51% black owned (with a BEE certificate) and have supplied your client before. If it is a first-time transaction, then the client needs to be on TPF list found here: Preferred POF clients.  

The People’s Fund does not assist with PO's for:

  • The entire Ekurhuleni municipality
  • The entire Free State municipality (except for those they have successfully funded in the past)
  • Any client that is known to be under administration

7. Bizfunding

Is your business avoiding bidding for larger projects because you don’t have enough funds? Have you exhausted all your options? Bizfunding purchase order funding is ideal for government contractors, startups and wholesalers who need to fulfil an order but don’t have the money to buy supplies right now. As an alternative South African lender, Bizfunding is all about helping businesses get the working capital they need safely, conveniently and quickly.  

Bizfunding PO financing is a fixed profit share deal, and they offer a tailored profit share structure for each project. Bizfunding funds up to 100% of the purchase order to help you maintain operations.  

8. Kenote Finance

Kenote Finance is a financial institution, established in 2016, their sole intent is to be a purchase order funding house. Offering both PO and Tender Funding for SMEs, they believe access to funding should not restrict entrepreneur’s growth trajectory. The financial institution guarantees affordable and competitive rates and services offering simple and quick funding.  

Purchase Order Funding from Kenote Finance is tailored to help businesses grow significantly without any hassles. Their PO funding starts from R 350 000 to R 5 Million per purchase order.

9. RM capital  

RM Capital is a niche structured finance company with over 12 years in innovative and alternative funding solutions. They pride themselves on being a convenient alternative to mainstream banks and have directly funded more than R400 million worth of deals.

To qualify for RM capital PO funding, you will need to either sell finished goods, or raw materials (no construction or security services). Your goods will either need to be sold to B2B or to government departments with profit margins of more than 20%. RM Capital guarantees to finance up to 100% of the purchase order costs.  

10. Unahina solutions

Unahina Business Solutions, a Pretoria-based financial lender is helping businesses across the country by getting the funding they need for purchase orders or simply extra cash flow to help out with daily business demands.  

They pride themselves on making SME’s dreams come true, even when banks turn them away. They have a 98% success rate when it comes to funding their applicants, by partnering with their clients every step of the way.  

In order to qualify for Unahina Solutions PO funding, you’ll need a good profit margin, and you must be selling finished goods either B2B or business to the government. To ensure your funding is approved you’ll need a good credit history, and your company will need to work with respected and well-established customers and suppliers.  

Note: The mainstream banks like FNB and Standard Bank do not offer purchase order financing as it’s usually alternative lenders that specialise in this type of funding.

Frequently asked questions about Purchase Order Funding  

What’s the difference between inventory funding and purchase order funding?

Inventory funding is a type of financing that offers short-term loans for the purchase of inventory. The borrower receives funds in exchange for their inventory, which they are expected to repay over a specified period of time. Purchase order financing is the process of providing an organization with working capital in exchange for purchase orders, which are assigned to the lender. The biggest difference between inventory funding vs purchase order funding is the intent of the funds – one is for inventory the other is for a purchase order.

What’s the difference between purchase order funding and invoice factoring?  

Invoice factoring is a type of business loan used when you waiting for invoices to be paid by a client. You’ll request this type of funding when you need a cash injection to tide you over. It’s mostly used when you have already sold the goods or services but the client still needs to pay you. So the biggest difference here between PO funding and invoice factoring is the time at which the funding is needed during the purchasing cycle. Invoice factoring is needed after you’ve sold the goods or services, where PO funding will be used to secure the purchase order before the goods are delivered or payments are received.  

What is the cost of purchase order funding?  

We’ve broken down an example of costing for PO funding on FundingHub. Alternatively, you can use our business finance calculator to estimate how much your funding will cost.  

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