Best Purchase Order Loan lenders in South Africa for 2025
- Written by Wesley Vos
- Updated
Purchase Order Loans
Lula: Best for fast funding
Pros & cons
Pros
- Fast funding within 24 hours
- No collateral required, making access easier for SMEs
- Transparent costs with no hidden fees
Cons
- Higher costs compared to traditional bank loans
- Minimum annual turnover requirement of R500,000
- Limited to businesses with at least one year of trading history
Our take
Overview
Lula, formerly known as Lulalend, is a South African financial services provider dedicated to empowering small and medium-sized enterprises (SMEs) with accessible and flexible funding solutions. Recognising SMEs’ challenges in securing traditional bank loans, Lula leverages innovative fintech products to offer quick, straightforward financing options tailored to your business needs.
Specialising in various business funding avenues, Lula provides purchase order funding, bridging finance, and capital advances. Their commitment to a fully digital application process ensures you can access funds swiftly, often within 24 hours, without the cumbersome paperwork typically associated with traditional lending. This efficiency has earned Lula a positive reputation among South African business owners seeking reliable and prompt financial support.
Key Facts
- Loan Amount Range: Lula offers business funding from R10,000 to R5 million, accommodating small and medium-sized enterprises.
- Interest Rate Type: Lula applies a fixed monthly cost structure, with monthly costs ranging from 4% to 6% of the advanced amount for the initial months and 2% for the remaining months.
- Repayment Terms: Flexible repayment options are available over 6 or 12 months, with no penalties for early settlement.
- Special Features: The application process is entirely online, and funding can be disbursed within 24 hours of approval.
Known qualification & document requirements
- Minimum annual turnover of R500,000.
- At least one year of trading history.
- Business registered in South Africa.
- Recent bank statements (typically the past six months).
- Valid business registration documents.
Fees
- Initiation Fees: Not specified; it’s advisable to inquire directly with Lula.
- Monthly Administration Fees: Incorporated into the fixed monthly cost structure.
- Early Repayment Penalties: None; early settlement is encouraged to save on costs.
Time to receive funds
Upon approval, funds are typically disbursed within 24 hours. Ensuring all required documentation is submitted promptly can facilitate this swift turnaround.
Illustrative Example
Loan Amount: R100,000
Repayment Term: 37 days
Financing Fee Structure:
- 5% for the first 30 days
- 2% for each additional 15 days or part thereof
Breakdown of Costs:
Financing Fee for 30 days: R5,000
Additional Fee for 7 extra days (tiered): R2,000
Total Financing Fee: R7,000
Total Repayment: R107,000 (R100,000 loan amount + R7,000 financing fee)
Disclaimer: This is an illustrative example. The actual cost and terms of your purchase order funding will depend on your specific agreement with Lula. Always confirm the final cost with your provider.
Purchase Order Loans
Sourcefin: Best for comprehensive purchase order support
Interest (APR)
N/A
Loan Amount
R250k plus
Loan Term
Aligned with buyer payment terms
Apply on partner site
Pros & cons
Pros
- Comprehensive support, including sourcing and logistics
- Potential for quick funding approval
- Flexible funding amounts based on business capacity
Cons
- Specific revenue or asset thresholds are required
- Fees and costs are not transparently specified upfront
- Dependent on the credibility of the end-buyer
Our take
Overview
Sourcefin is a South African financial services provider specializing in purchase order funding and invoice discounting for small and medium-sized enterprises (SMMEs). Recognizing the cash flow challenges that SMMEs often face, Sourcefin offers tailored financial solutions to help you fulfil larger orders and drive business growth.
With a focus on partnership, Sourcefin provides end-to-end support, including funding, sourcing, and logistics, ensuring you can deliver purchase orders efficiently. Their transparent application process and commitment to open communication make them a reliable partner for businesses aiming to scale.
Key Facts
- Loan Amount Range: Sourcefin offers funding from R250,000, with potential support for orders requiring more than R100,000, provided your business earns more than R1 million per year or holds a net asset value exceeding R1 million.
- Interest Rate Type: Costs are personalized based on purchase order value, costs, and deal complexity.
- Repayment Terms: Aligned with the payment terms of your end-buyer, ensuring flexibility.
- Special Features: Sourcefin offers comprehensive support, including supplier sourcing and logistics assistance, beyond just funding.
Known qualification & document requirements
- Valid purchase order from a credible end-buyer
- Supplier quotations detailing costs
- Business registration documents
- Recent bank statements
- Tax compliance certificate
Fees
- Initiation Fees: Not specified; inquire directly with Sourcefin.
- Monthly Administration Fees: Not specified; inquire directly with Sourcefin.
- Early Repayment Penalties: Not specified; inquire directly with Sourcefin.
Time to receive funds
Sourcefin aims to provide funding swiftly, with approvals potentially within 24 hours, depending on the completeness of your documentation and the deal’s complexity.
Illustrative Example
Loan Amount: R500,000
Repayment Term: Aligned with end-buyer payment terms (e.g., 60 days)
Fees: Personalized based on deal specifics; inquire directly with Sourcefin
*Please note this is just an illustrative example. Your interest rate and total repayment may vary depending on your credit profile and loan terms. To get an accurate quote, we recommend applying directly with Sourcefin.
Purchase Order Loans
ProfitShare Partners: Best for contract financing
Interest (APR)
N/A
Loan Amount
R250k-R5m
Loan Term
Aligned with buyer payment terms
Apply on partner site
Pros & cons
Pros
- Fast approval process within 24–48 hours
- No traditional interest charges; profit-sharing model
- No requirement for financials, security, or track record
Cons
- Minimum transaction value of R250,000 may exclude smaller deals
- Profit-sharing may result in higher costs compared to traditional loans
- Not suitable for high-performance-based contracts, such as construction
Our take
Overview
ProfitShare Partners, established in 2017, is a South African fintech company dedicated to providing innovative financial solutions for small and medium-sized enterprises (SMEs). They specialize in Purchase Order Finance, Contract Finance, and Invoice Purchasing, aiming to bridge the funding gap for businesses with limited access to traditional financing. Their mission is to drive economic inclusivity and growth by offering quick, flexible funding options tailored to your business needs.
Their purchase order finance product enables you to fulfil orders from credible entities by providing the capital needed to pay suppliers upfront. This solution is designed to support SMEs in delivering on contracts without the burden of selling equity or securing traditional loans. ProfitShare Partners is committed to empowering your business by offering accessible funding solutions that facilitate growth and success.
Key Facts
- Loan Amount Range: ProfitShare Partners offers funding from R250,000 to R5,000,000 per transaction.
- Interest Rate Type: No standard interest charged; operates on a profit-sharing model.
- Repayment Terms: Aligned with your customer’s payment terms, typically short-term.
- Special Features: Fast approval within 24–48 hours; funds disbursed within days.
Known qualification & document requirements
- Valid Purchase Order from a credible entity
- Supplier quotation
- Company registration number and director(s) details
- Business financial information (if available but not compulsory)
Fees
ProfitShare Partners does not charge standard interest rates. Instead, they become a joint venture partner for the specific transaction, sharing the guaranteed profits. They charge a deal management fee and recover legal costs, detailed in an obligation-free quote.
Time to receive funds
Approval is typically granted within 24–48 hours of application, with funds disbursed within days after approval.
Illustrative Example
Loan Amount: R500,000
Repayment Term: Aligned with customer’s payment terms (e.g., 60 days)
Profit Share: Determined based on transaction specifics
Fees: Deal management fee and legal costs (specified in the quote)
Disclaimer: This is just an example. Your terms may differ based on your business profile and risk factors. Always request an accurate quote directly from ProfitShare Partners.
Purchase Order Loans
Bridgement: Best for quick access to working capital
Interest (APR)
Not specified
Loan Amount
R20k-R5m
Loan Term
1-12 mo
Apply on partner site
Pros & cons
Pros
- Fast approvals, often within 24 hours
- Flexible repayment terms with no early settlement penalties
- Access to significant funding amounts for SMEs
Cons
- The minimum turnover requirement excludes smaller businesses
- Short repayment terms may not suit long-term projects
- Specific cost details depend on your business profile
Our take
Overview
Bridgement is a South African fintech company that provides quick and flexible funding solutions for small and medium-sized enterprises (SMEs). Established to address businesses’ financing challenges, Bridgement specialises in lines of credit, invoice financing, and other short-term funding products designed to support your cash flow and operational needs.
While Bridgement doesn’t offer traditional purchase order loans, its Line of Credit product is a flexible alternative for purchase order funding. This facility allows you to access funds on demand to pay suppliers and fulfil client orders without the hassle of lengthy approval processes. With its user-friendly, fully online application system, Bridgement ensures you can secure funding within 24 hours.
Key Facts
- Loan Amount Range: Access funding from R20,000 to R5,000,000.
- Repayment Terms: Flexible repayment periods between 1 and 12 months.
- Interest Rates: Fixed cost structure with no hidden fees or penalties.
- Special Features: Funds are accessible on demand, and early settlement discounts may apply.
Known qualification & document requirements
- Minimum annual turnover of R500,000
- At least six months of trading history
- Registered business in South Africa
- Bank statements or accounting software data
Fees
- There are no hidden fees; costs are transparent and based on a fixed cost structure
- Early repayment incurs no penalties and may qualify for discounts
Time to receive funds
Funds are typically accessible within 24 hours of approval, making it a fast solution for urgent purchase order funding needs.
Illustrative Example
Loan Amount: R500,000
Repayment Terms: 6 months
Monthly Instalment: R92,583
Total Cost of Credit: R55,500
Total Repayment: R555,500.00
Compare purchase order loan rates with Fundrate's top picks
Lender | Best For | Est. Apr | Loan Amount | Loan Term |
|---|---|---|---|---|
Lula | Fast funding | 4-6% per month | R10k-R5m | 6-12 months |
Sourcefin | Comprehensive purchase order support | N/A | R250k plus | Aligned with buyer payment terms |
ProfitShare Partners | Contract financing | N/A | R250k-R5m | Aligned with buyer payment terms |
Bridgement | Quick access to working capital | Not specified | R20k-R5m | 1-12 months |
Pros and cons of purchase order loans
While purchase order loans can provide crucial funding, they aren’t ideal for every business. Weigh the pros and cons before committing.
- Quick access to working capital
- No collateral typically required
- Enables fulfilment of large orders
- Supports business growth and expansion
- Aligned with client payment schedules
- High interest rates and fees
- Reliance on client creditworthiness
- Limited to tangible goods industries
- Requires confirmed purchase orders upfront
- May not suit startup businesses
What is a Purchase Order Loan?
A Purchase Order Loan is a financing option providing businesses with the capital necessary to fulfil confirmed purchase orders. This type of loan covers the costs of producing or purchasing goods required to complete an order, ensuring timely delivery to your client. It’s particularly beneficial for small and medium-sized enterprises (SMEs) in South Africa that may not have sufficient working capital to handle large orders.
How Does Purchase Order Financing Work?
When you receive a purchase order from a reputable client, you can approach a PO financing company to fund the production or procurement of the goods. The financier pays your supplier directly, allowing the goods to be produced and delivered to your client. Once the client pays for the goods, you repay the financier, including any agreed-upon fees or interest. This process lets you accept and fulfil large orders without depleting your cash reserves.
Loan Use Cases
Purchase Order Loans are ideal for:
- Fulfilling Large Orders: When a significant order exceeds your current production capacity or inventory levels.
- Managing Seasonal Demand: To handle spikes in orders during peak seasons without overextending your finances.
- Expanding Market Reach: Accepting orders from new clients or markets without immediate capital constraints.
- Maintaining Supplier Relationships: Ensuring timely payments to suppliers, thereby strengthening partnerships.
Loan Eligibility Factors
To qualify for a Purchase Order Loan, lenders typically assess:
- Confirmed Purchase Orders: A legitimate and verifiable purchase order from a reputable client.
- Profit Margins: Sufficient margins to cover financing costs and ensure profitability.
- Supplier Reliability: Suppliers capable of fulfilling orders promptly and to the required standards.
- Business Track Record: A history of successfully delivering orders and managing finances.
Credit Score Impact and How to Improve It
While PO financing relies more on your client’s creditworthiness, your business’s credit history can influence terms. To enhance your credit profile:
- Maintain Timely Payments: Ensure all debts and obligations are paid on time.
- Monitor Credit Reports: Regularly check for inaccuracies and rectify them promptly.
- Manage Debt Levels: Keep debt-to-income ratios at manageable levels.
- Establish Credit History: Engage in credit activities that build a positive credit record.
Interest Rates Breakdown
Interest rates for Purchase Order Loans in South Africa vary based on factors like loan amount, duration, and perceived risk. Typically, rates range from 3% to 8% of the purchase order value. These rates are often fixed, providing predictable repayment amounts. The Annual Percentage Rate (APR) reflects the total cost of the loan, including fees, offering a comprehensive view of borrowing costs.
Repayment Terms and Flexibility
Repayment terms are usually aligned with your client’s payment schedule. Once your client pays for the delivered goods, you settle the loan with the financier. Some financiers may offer flexible repayment options, such as early repayment without penalties or structured payments to match cash flow cycles.
Comparison with Other Business Loan Types
Unlike traditional business loans that may require collateral and have longer approval times, Purchase Order Loans are transaction-specific and focus on the purchase order’s validity and the client’s creditworthiness. This makes them a quicker and more accessible option for businesses needing immediate funds to fulfil orders.
Regulatory and Legal Considerations in South Africa
In South Africa, business lending is governed by the National Credit Act, which ensures transparency in lending practices and protects borrowers from unfair terms. Lenders are required to disclose all fees and interest rates upfront, allowing you to make informed decisions.
Alternatives to Purchase Order Loans
If a Purchase Order Loan isn’t suitable, consider:
- Invoice Factoring: Selling your accounts receivable to a financier at a discount to access immediate funds.
- Business Lines of Credit: Accessing a revolving credit facility to manage cash flow needs.
- Merchant Cash Advances: Receiving a lump sum in exchange for a percentage of future sales.
How to Apply for a Purchase Order Loan
- Assess Eligibility: Ensure you have a confirmed purchase order from a reputable client and that your business meets the financier’s criteria.
- Prepare Documentation: Gather necessary documents, including the purchase order, supplier agreements, and financial statements.
- Submit Application: Apply to a PO financing company, providing all required information.
- Approval Process: The financier will evaluate the purchase order, your client’s creditworthiness, and your business’s capacity to deliver.
- Receive Funds: Upon approval, the financier pays your supplier directly, enabling order fulfilment.
FAQs
What is a Purchase Order Loan?
A Purchase Order (PO) Loan is a financing solution that provides businesses with the necessary capital to fulfil confirmed purchase orders. This type of loan covers the costs of producing or purchasing goods required to complete an order, ensuring timely delivery to your client. It’s particularly beneficial for small and medium-sized enterprises (SMEs) in South Africa that may not have sufficient working capital to handle large orders.
How does Purchase Order Financing work?
When you receive a purchase order from a reputable client, you can approach a PO financing company to fund the production or procurement of the goods. The financier pays your supplier directly, allowing the goods to be produced and delivered to your client. Once the client pays for the goods, you repay the financier, including any agreed-upon fees or interest. This process enables you to accept and fulfil large orders without depleting your cash reserves.
What are the typical interest rates for Purchase Order Loans in South Africa?
Interest rates for Purchase Order Loans in South Africa vary based on factors like loan amount, duration, and perceived risk. Typically, rates range from 3% to 8% of the purchase order value. These rates are often fixed, providing predictable repayment amounts. The Annual Percentage Rate (APR) reflects the total cost of the loan, including fees, offering a comprehensive view of borrowing costs.
How long does it take to get approved for a Purchase Order Loan?
The approval process for a Purchase Order Loan can vary depending on the lender and the complexity of the transaction. Generally, if all necessary guarantees and confirmed POs are in order, you can access funding within days.
What financial documents are required to apply for a Purchase Order Loan?
To apply for a Purchase Order Loan, you will typically need to provide:
- A valid purchase order from your client.
- Supplier quotes or pro forma invoices.
- Business registration documents.
- Recent bank statements.
- Financial statements, if available.
These documents help the lender assess the viability of the transaction and your business’s ability to fulfil the order.
Can I qualify for a Purchase Order Loan if my business has only been operational for a year?
Yes, it’s possible to qualify for a Purchase Order Loan even if your business is relatively new. Lenders focus more on the strength and legitimacy of the purchase order and the creditworthiness of your client rather than the length of your business’s operational history. However, demonstrating your ability to fulfil the order and manage the transaction effectively is crucial.
Are there specific industries that qualify for Purchase Order Loans in South Africa?
Purchase Order Loans are commonly used in industries that deal with tangible goods, such as manufacturing, wholesale, distribution, and import/export. Service-based industries may not typically qualify, as there is no physical product involved.
What is the maximum loan amount I can apply for under a Purchase Order Loan?
The maximum loan amount varies by lender and depends on factors such as the value of the purchase order, your business’s capacity to fulfil the order, and the creditworthiness of your client. Some lenders may offer financing for purchase orders between R10,000 and R300 million per transaction.
How does repayment work for Purchase Order Loans, and are there flexible options?
Repayment terms are usually aligned with your client’s payment schedule. Once your client pays for the delivered goods, you settle the loan with the financier. Some financiers may offer flexible repayment options, such as early repayment without penalties or structured payments to match cash flow cycles.
Are there penalties or fees for early repayment of a Purchase Order Loan?
Policies on early repayment vary by lender. Some may charge early repayment fees, while others may allow it without penalties. It’s essential to review the loan agreement carefully and discuss repayment terms with your lender to understand any potential fees associated with early repayment.
How do interest rates and fees differ between banks and alternative lenders for Purchase Order Loans in South Africa?
Interest rates and fees can vary significantly between traditional banks and alternative lenders. Banks may offer lower interest rates but have stricter qualification criteria and longer approval times. Alternative lenders might provide faster access to funds with more flexible terms but at higher interest rates. It’s advisable to compare offers from multiple lenders to find the best fit for your business needs.
How we choose our best purchase order loan lenders
To select the best loans, Fundrate evaluates the most prominent lenders in South Africa. Each lender was ranked focusing on four main categories:
Affordability
This section of the scoring evaluates interest rates, penalties, and fees. Lower rates and fees, along with fewer penalties, contribute to a higher score. Lenders that offer rate discounts, grace periods, and the option to change the due date receive bonus points.
Availability
This category considers factors such as minimum loan amounts, number of repayment terms, eligibility requirements, the option to apply with a co-borrower or co-signer, and the loan turnaround time.
Customer experience
This category includes customer service hours, the availability of online applications, online account access, and mobile apps.
Transparency
For this factor, we assess how clearly information is presented to borrowers on the lender’s website. This includes details on credit requirements, rates, fees, and the availability of prequalification.