Purchase Finance - Simplified Financing for Essential Purchases
If you want your business to grow, you need to make timely investments in equipment, technology, and raw materials. Purchase finance allows you to optimise working capital by solving cash flow issues. In a dynamic business landscape, purchase finance is a critical tool that helps you seize market opportunities.
What is Purchase Financing?
Purchase financing offers a financial solution for businesses to fulfill their raw material needs by providing instant liquidity to the purchaser to source raw materials from the supplier without any delay in payment. This would result in an instant cash discount from the supplier side, which could be helpful to keep the business margin intact!
On the other hand, with Purchase Financing, the lender provides extended timelines for repayment of the loan to the buyer, wherein you can start production or sell the inventory and then repay the same. Thus, with Purchase Financing, you can pay your supplier in advance and save on procurement costs. You can also manufacture and deliver without having to cut back on your margins.
In purchase finance, banks/NBFCs assign a credit limit to the business which can be used when there is a need of funds So, this can be great financing option for the purchaser. Let’s understand the features and benefits of Purchase Financing, from the the purchaser’s perspectives.
Features & Benefits of Purchase Financing
Purchase financing is a great option for the buyer as it helps to strengthen the buyer-supplier relationship. Let us take a look:
Benefits of purchase finance for Purchasers/ Buyers:
- Cheaper procurement By paying the suppliers upfront, you can ask them for discounted prices.
- Pay interest only on what you useAnother major advantage of purchase finance is that you will have to pay interest only on the amount that you use and for the time period you use it.
- Faster & Streamlined Digitalised process, making approval faster than traditional business loans. This streamlined process gets funds deployed quickly to fulfil large orders
- No collateral One of the biggest benefits you can enjoy with purchase financing is that without pledging collateral you can get funds on time.
- Fuel the growth with flexibility Purchase finance solutions help to fuel the growth by improving cash flow for purchase orders. As orders fluctuate, the financing can scale up or down to continually match working capital needs.
- Better relationship with the supplier By giving timely payments to suppliers you develop a good relationship with them. Due to this relationship, you get extra support from the supplier. Which is helpful in long-term growth.
- Reduced COSG Purchase finance gives you the much-needed edge. As you offer upfront payment, you can negotiate with suppliers for discounted prices, thereby reducing the cost of goods sold.
Table for Interest Rates and Eligibility
Check out the table given below that mentions the eligibility criteria for purchase financing:
| Particulars | Details |
| Age | 23-65 |
| Nationality | Indian |
| Minimum CIBIL score required | 700 + |
| Processing Fee | 1-2% |
| Annual turnover | Rs. 1 crore |
| Loan amount | Minimum: 2 lakhs Maximum: 20 lakhs |
| Business vintage | 3 years |
| Repayment tenure | 30/60/90/120 Days |
| Interest rate offered | 18%*- 24%* per annum |
*Interest Rates are subject to change.
Documents required for Purchase Financing
Here are the list of documents that you’ll need for Purchase Financing:
- KYC
- The supplier’s invoice
- GST & income tax filings
- Bank Statement for the last 12 months
- Business proof.
Why get Purchase Financing from PaisaDost?
- Purchase Financing from PaisaDost is an attractive option for businesses.
- It provides much-needed working capital in a simple and hassle-free manner.
- With a valid purchase request, flexible loan terms & conditions can be tailored to meet the individual needs of the business.
- Helps convert confirmed revenues into immediate funds to deliver orders on time, scaling up operations seamlessly.
- Quick approvals and digital processing
- Competitive rates and dedicated support
- Entrepreneurs can pursue lucrative deals without being constrained by short-term cash flows.
Over To You
Every entrepreneur dreams of landing a huge contract that could propel their business to the next level. However, for many small business owners, the euphoria of winning a large purchase order quickly turns to dread upon realising they lack the working capital needed to fulfil it. Cash flow constraints are a frustrating reality that stunts growth opportunities for companies operating on thin margins. In such tough situations, purchase financing works as a lifeline for small companies.
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Frequently Asked Questions
What is purchase financing?
Purchase financing is the financial help you can get as a business to fulfil your raw material/ inventory needs.
How can I apply for purchase financing?
PaisaDost makes applying for purchase financing very simple and quick. In a few clicks, you can fill in the application form and complete the procedure. Once we complete the formalities, an instant loan disbursal will be done.
What is revolving credit?
As a borrower, you can access credit up to a specific amount. After that, you have ongoing access to that amount of credit. This credit line is available as you pay the balance.