Alternative financing for wholesale produce distributors

Equipment financing/leasing is one option. Equipment lenders help small and medium-sized businesses get equipment financing or equipment leasing, even if it’s not available through their local bank.

A wholesale distributor’s goal is to find a leasing firm that can meet all their financing requirements. While some financiers prefer companies with excellent credit, others will consider companies with poor credit. Financiers may only focus on companies with a high level of revenue (more than 10 million). Others focus on smaller transactions with equipment costs under $100,000.

Equipment as low as 1000.00 can be financed by financiers. It can also cost as high as 1,000,000. Look for low-interest lease rates, and look into equipment lines of credit, sales-leasebacks, and credit application programs. Get a quote for a lease the next time that you are in the market.

Merchant Cash Advance

Wholesale distributors of produce are not likely to accept credit or debit cards from merchants, even though this option is available. Their merchants will need to have the money to purchase the produce. Merchant cash advances can be used to purchase your produce by merchants, which will help you increase your sales.

Financing/Accounts Receivable Financing & Purchase Order Financing

Factoring or purchasing order financing wholesale distributors of produce is one thing that is certain: the simpler the transaction, the more PACA comes into effect. Every deal is treated individually.

Are PACA and other problems a problem? Answer: It is up to the grower to unravel the process.

Factors and PO. Financers don’t lend on inventory. Let’s say that a distributor sells produce to two local supermarkets. Produce is perishable so accounts receivables usually turn quickly. It all depends on the source of the produce. If the sourcing happens with a larger distributor, there won’t likely be any issues for purchase order financing or accounts receivable financing. If the sourcing is done directly through growers, financing must be more careful.

A value-add can make a situation even more appealing. Example: Someone buys green, red, and yellow bell peppers from many growers. These people are packaging the items and selling them as packaged goods. Sometimes, the value added of packaging, bulking and selling the item will suffice for the factor or PO. Financers will be more inclined to consider this a favorable option. PACA is not applicable if the distributor provides enough value-add to the product.

A distributor might also be an example. They could take the product, cut it up, and package it for distribution. This could have potential because the distributor might be selling the product directly to large supermarket chains. The way they source the product and how they use it after they have sourced it will impact. This is where the factor, or P.O., really matters. The deal will be viewed by the financer, who will not know this information until it is reviewed. This is why individual cases can be considered touch and go.