Purchase Order Financing in India

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What is Purchase Order Financing?

Your business finally landed that dream order, but doesn’t have the operating capital in hand to make it happen? Tata Capital Purchase Order Funding solutions provide upfront funding to your suppliers secured against a confirmed Purchase Order. We assist you with the financing of the transaction up until the time an invoice is raised.

Our Purchase Order Funding solutions help SMEs and startup companies who may be having a difficult time filling large orders. Purchase order funding for small business is a perfect solution for resolving cash flow problems and getting your outstanding orders filled. Our financing solutions will help you procure the necessary raw materials, supplies or manpower to deliver an outstanding product or service to your clients whilst you continue to grow your customer base.

Purchase Order Funding is available from Tata Capital for vendors dealing with selected Corporates only which are approved by Tata Capital.

Key Features & Benefits of Purchase Order Financing

Here’s why you should choose Tata Capital to get a working capital term loan for your business:

Encourages vendors to take up new business opportunities without waiting for advances

Facilitate additional working capital funds thus improves cash flow / liquidity to fulfill Purchase Order from corporate

Competitive Pricing – Leveraging on Corporate ’s credit rating

Simple standard documentation process

Eligibility Criteria for Purchase Order Financing in India

Purchase Order (PO) financing helps businesses access working capital to fulfil confirmed customer orders. Lenders typically assess certain eligibility requirements before approving financing.

Eligibility criteria for purchase order financing in India include:

The business must be legally registered, such as a proprietorship, partnership, LLP, or private limited company.
Applicants should have a valid and confirmed purchase order from a reliable buyer.
The business should have a stable operational track record, usually at least 1–2 years.
Basic financial documents and transaction records may be required for evaluation.
A satisfactory credit history and repayment record can improve the chances of approval.

Meeting these criteria can help businesses secure timely purchase order financing and manage large customer orders more efficiently.

Purchase Order Financing Rates & Charges

Particulars	Working Capital Demand Loan
Customer ROI	9.00% - 21.00%
Processing Fees	Minimum 1% of Sanctioned Amount
Stamp Duty	As per Stamp Duty Circular, Varies from State to State
Foreclosure Charges	Upto 6%

Penal & Late Payment Charges

Default in payment of interest and/or principal amounts, Below charges on the defaulted amount

Overdue Days	Penal Charges
1-30 days	4% p.a
31-60 days	8% p.a.
61- 90 days	12% p.a.
Greater than 90 days	24% p.a

(ii) Dishonour Charges: Rs. 670/- (Rupees Six Hundred and Seventy Rupees only) for every Cheque/ Payment Instrument/ ECS Dishonour.

(iii) Non-creation/perfection of security: @ 2% on the outstanding principal amount will be charged for the period of delay in respect of delayed/non-submission of security/collateral related documents and non-perfection of security.

*Charges to be paid along with applicable Tax

Other Fees & Additional Charges

Description	Periodicity	Penalty Amount
Delayed/non submission of stock statement	To be submitted Quarterly by 10th of every Calendar Quarter.	Additional one time charge of Rs 20,000/- per Quarter
Delayed First Insurance cover note and non renewal of Insurance on due date	First Insurance:- within 30 days from disbursement date. Renewal : as and when due	Additional one time charge of Rs 20,000/- per financial year
Non adherence of financial covenants’ of sanction letter	At the time of Review /Renew of account	Additional one time charge of Rs 20,000/- per financial year
Documentation charges	Rs 5,000/-
Stock Audit charges	Rs 5,000/-
ROC and CERSAI filling	Rs 5,000/-
Valuation charges	As per actuals
TSR fees / Title search fees	As per actuals
Security trust fees	As per actuals

Charges to be paid along with applicable Tax

Step-by-Step Application Process for PO Financing

Applying for Purchase Order (PO) financing with Tata Capital is a simple and structured process designed to help businesses access timely working capital to fulfil confirmed orders.

Step-by-step application process for Tata Capital's PO financing:

Submit your application by visiting the Tata Capital website.
Provide basic business details, including company registration documents and financial information.
Share the confirmed purchase order received from your customer for verification.
Submit supporting documents such as bank statements, GST records, and business financials.
Tata Capital evaluates the application, the buyer's credibility, and the order details.
Once approved, financing terms are finalised, and funds are disbursed to support order fulfilment.

With a streamlined process and quick evaluation, Tata Capital helps businesses access the funds they need to execute large orders smoothly and efficiently.

Frequently Asked Questions about Purchase Order Financing

Purchase order financing provides funds to fulfil confirmed customer orders before goods are delivered. Invoice discounting, on the other hand, offers financing against unpaid invoices after goods or services have already been supplied.

Some lenders may offer purchase order financing without traditional collateral. Approval usually depends on the strength of the purchase order, the buyer's credibility, and the business's financial track record.

Businesses such as manufacturers, traders, and distributors with confirmed purchase orders from reliable customers can apply. Lenders typically require a registered business entity, stable operations, and satisfactory financial and credit history.

Common documents include business registration proof, GST details, bank statements, financial statements, KYC documents, and the confirmed purchase order from the buyer. Lenders may request additional documents depending on their assessment process.

The disbursement timeline varies by lender and verification process. Once documents are reviewed and the purchase order is validated, funds are generally released within a few days to help businesses fulfil orders quickly.

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