FAQ’s for Purchase Order Funding

We’ve put together some FAQ’s with answers to help you with some aspects about our funding that might not be clear. Please click on the + icon to see the response to the question

WHAT IS A PURCHASE ORDER?

A purchase order is a commercial document that details an official order placed by a buyer (from either corporate or government) to a seller indicating types, quantities, and agreed-upon prices for products or services required. After the fulfillment of that order, the seller is then paid by the buyer’s organization that issued out the order.

You can watch the following video to get more clarity:

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WHAT IS PURCHASE ORDER FUNDING?

Put simply: this is a cash-flow management solution that helps a seller fulfill an order placed by the buyer, by proving capital to cover the expenses related to the fulfillment of the order. As The People’s Fund, we come in as a profit-sharing ‘partner’ to the entrepreneur’s business where we pay their suppliers on their behalf; and then we get our money back when the client pays them**, along with our portion of the profits (in the form of a facilitation fee).

HOW CAN I APPLY FOR FUNDING?

All our applications are completed online on the following link: https://thepeople.co.za/purchase-orders/

If you need assistance with completing the online application, please book an appointment on the following link: https://thepeople.co.za/booking/

You can also contact our office on 0812851839 or 0110261474 to set up an appointment to get assistance.

WHAT PROJECTS DO YOU FUND?

We provide funding to businesses with purchase orders for the supply of goods to government and corporate. We pay your suppliers directly once approved and ensure delivery of goods to your client. We fund projects where the project period will not be more than 60 days and the capital requirement is under R1 million. Furthermore, your margins for the purchase order should be ≥20% (unless your purchase order value is for R50000 or less).

HOW LONG DOES IT TAKE TO GET FUNDED?

On completely new applications, it can take us 2-5 days to process applications for approval. Repeat applicants we have worked well with can even be funded in a day. A large part of our turn around time is highly dependent on how soon you send us all the documents that we require; the quality of the documents; and the complexity of your application.

How can you speed up your application?

  1. Send all the documents that we require all at once when responding to the document request email
  2. Rename your documents so that we can quickly work through them (e.g. rename the PO document as “Purchase Order” rather leave it as OR-4000234)
  3. Try and avoid scanning your documents into one attachment as some things might be missed
  4. Only send documents that are related to the application
  5. If you must follow up, please respond directly to the last message on your application email thread. Please don’t call in every 30 mins to follow up as that interrupts the team in the process (as they would have to stop in their tracks in order to accommodate your call)

I HAVE A SERVICE PROJECT, WILL YOU ABLE TO ASSIST ME?

Service projects are treated on a case by case basis; therefore, we cannot offer a blanket yes or no answer to this question. Instead, we always encourage that you apply so that we can review the project on its own merits. One of the key requirements for us to consider funding a service project is that you need to have extensive experience in servicing the client in that manner.

IF I HAVE INTERNATIONAL SUPPLIERS AND CLIENTS, WILL YOU ABLE TO ASSIST ME?

If you have international suppliers, we encourage you to look for local suppliers offering the same thing in order for us to assist you. Suppliers situated just outside the confines of South Africa (or even in Lesotho or Swaziland) might be considered if there is a strong case, but generally, we like to keep money circulating in our economy as much as possible.

Then if you have international clients, we will review the project on its own merits. We are likely to assist, and even more so if the international client does have well-established local offices in South Africa.

The People’s Fund has intentions to expand its services into other countries, and so the rules governing international suppliers and clients will certainly develop when this expansion happens.

WHO CAN APPLY FOR FUNDING?

A business that meets the following minimum criteria can apply:

  • Your business is ≥51% black-owned
  • You have worked with the client before (in the past 12-months)
  • Your project can be completed in ≤ 60 days
  • You have a ≥20% gross profit margin on your project
  • You require < R1 million

I HAVEN’T WORKED WITH THE CLIENT BEFORE; CAN I STILL APPLY?

Part of mitigating the risk for our investors is ensuring that there is a historic relationship between the applicant and their client. If you are delivering for the first time to a client and they are on our preferred client list, then you can apply for funding. You will, however, need to prove that you have delivered similar goods elsewhere. The list of our preferred clients can be found at https://thepeople.co.za/preferred-purchase-order-clients/

We cannot fund a purchase order when it is your first time delivering to a client that is not on our preferred client list; and/or when it is your first time doing a purchase order.

WHERE CAN I FIND YOUR PREFERRED CLIENT LIST?

You can find the preferred list here:
https://thepeople.co.za/preferred-purchase-order-clients/

Please note that our preferred client list only matters if it is your first time working with the client on the list. If you have an order with a client that is not on our preferred client list, and you have worked with that client before, then you can also apply.

Unfortunately, due to our unfavourable past experiences, we do not consider projects are with the following clients:
1. The entire Ekurhuleni municipality
2. The entire Free State municipality (except for those we have successfully funded
in the past)
3. Any client that is known to be under administration**

HOW MUCH INTEREST DO YOU CHARGE?

Please note that we do not charge interest. Depending on your margin, we currently charge a facilitation fee of 6% (plus VAT) of the total purchase order value in order to facilitate you with capital to execute your purchase order. However, if your total purchase order value is R50 000 or less, then we charge a standard facilitation fee of R3 000 (plus VAT) in order to facilitate you with capital to execute your purchase order.

WHY ARE YOUR FEES BASED ON THE PO VALUE AND NOT THE CAPITAL THAT YOU GIVE ME?

The entire philsophy that governs how we assist businesses with purchase order funding is based on partnership and collaboration (and not traditional lending or credit, as we do not offer that). Therefore, because we offer an extensive amount of support to help you successfully see your project through, we like to position ourselves as partners in your business. As such, we have adopted a profit-sharing model, which means that we share in the [PO] value that you get from your client on successful completion of a project.

I HAVE BEEN CHARGED MORE THAN 6% OF MY PURCHASE ORDER VALUE, WHY IS THAT?

We charge 6% of the PO value on condition that your margin is at least 30%. When your margin is below 30%, we adjust the fee to what we would charge you if your margin was 30%. This usually amounts to no more than 6,9% of the PO value.

Any project with a margin below 20%, unfortunately, will not be considered.

I DO NOT HAVE 12-MONTHS BANK STATEMENTS; CAN I STILL APPLY?

If you do not have a 12-month banking history, then we require that you at least have 6-months’ bank statements that indicate a trading history.

I ONLY HAVE A LETTER OF APPOINTMENT; CAN YOU FUND ME?

We can only fund you once you have received the official purchase order. We do consider service level agreement projects, and these are treated on a case-by-case basis.

DO YOU FUND CONSTRUCTION PROJECTS?

Part of our criteria is that the project needs to be executable and paid back within 60 days, construction projects usually need a lot more time than this, for this reason, we usually do not fund them. We do, however, consider small-scale construction projects that can be executed quickly (e.g. renovations).

BUT WHY DON’T YOU ASSIST PEOPLE WHO ARE STARTING UP AS WE ALL HAVE TO START SOMEWHERE?

We always try to balance between two things at The People’s Fund:
1. We want to give access to funding for businesses
2. And we do point 1 by using everyday people’s money and want to make sure that it is paid back

Some of the key issues we have found for non-payment by SMMEs is them not having a track record of delivery as well as not understanding how to successfully complete the execution of a purchase order. Therefore, if you are completely new to this space or coming with a client that is new to us that you have also never worked with, it becomes difficult to fund you without risking other people’s money.

As this is a growing platform, we do aim to develop a solution for this in the future. So if you are working for the first time with a client who is not one of our preferred clients, please apply so that we have your details on our database and you will be the first to know when they make it onto our preferred client list.

WHY DO YOU ONLY FUND ≥51% BLACK-OWNED BUSINESSES?

We want to encourage and support more participation of previously disadvantaged groups in the economy. This approach also aligns with most of the preferential procurement strategies in corporate and government because it really should be at the hearts of all South Africans (given the economic disparities in our country).

Don’t we think it’s unfair/excludes other groups? Government has currently set aside 30% of their procurement to be from black-owned businesses because 80% of their procurement has been with non-transformed 100% white-owned companies. The fact that black-owned businesses participate on such a small scale is what is unfair, especially if you consider the fact that we live in a country where black people make up 90% of the population. So, our objectives are about promoting more inclusivity as we continue pushing our mandate of building the country.

Is there something else that you still need clarity on or assistnace with? The please email applications@thepeople.co.za and our dedicated team will attend to you.

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