Purchase Order Finance
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STAR is prepared to work with other lenders and factors to maximize a client's access to credit, provided the client is in a pre-sold position. In such cases STAR, with the agreement of the existing lender, takes a purchase money security interest in the assets it finances. STAR will finance the purchase order and inventory portion of the transaction. The lender generally finances the receivables, if it chooses.

Otherwise, STAR can also finance the receivables, with the net proceeds of the transaction going to the lender. In effect, the lender takes no additional risk, and receives the net profit margin in the transaction. An inter-creditor agreement signed among the Lender, STAR and the Client regulates the actions, priority of the lenders' security interests in the collateral being financed and the obligations of the participants.

For Example: An importer/wholesaler of machinery has a line of credit with a local bank or factor. However, the client needs an additional line of credit to open letters of credit to the manufacturer/supplier of the machines. Otherwise, the manufacturer would not put the machines into production for the client.

In response, STAR is prepared to open letters of credit to the manufacturer/supplier, provided the client has purchase orders from good customers for the merchandise purchased under the letter of credit. When the inventory arrives from overseas, the client ships the product to his good customer. By prior agreement, the lender's initial advance against the receivables will be used to pay out our exposure.