Running a small or medium-sized business can be incredibly rewarding—but when that big Local Purchase Order (LPO) comes in and you don’t have the working capital to fulfill it, panic sets in. That's where LPO financing steps in.
We understand that access to funds can make or break a contract. This guide will walk you through what LPO financing is, how it works, and how you can use it to grow your business.
✅ What is LPO Financing?
LPO Financing is a short-term loan facility provided by banks or lenders to businesses that have secured a purchase order or contract from a reputable client (government or corporate). It enables suppliers to access immediate funds to deliver goods or services as per the LPO.
Think of it as "funding on the strength of your contract".
🧩 Who Needs LPO Financing?
LPO financing is perfect for:
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Startups that lack cash flow to deliver big orders
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SMEs that don’t want to dip into operational funds
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Suppliers working with county or national governments
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Businesses servicing large corporates with long payment cycles
💡 How Does It Work?
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Get an LPO from a credible client
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Apply for LPO financing from a lender
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Submit required documents (LPO, KRA certificate, business registration, etc.)
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Receive funds (usually 70–90% of the LPO value)
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Deliver the goods/services
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Client pays the lender, and you receive the balance
🛠️ Key Benefits for SMEs
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✅ Quick access to working capital
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✅ Ability to handle larger contracts
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✅ Builds business credibility
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✅ Keeps your operations running smoothly
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✅ Prevents contract penalties or cancellations
🔍 What You Need to Apply
To boost your approval chances, ensure you have:
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A valid LPO from a recognized organization
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Your business registration documents
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Updated KRA tax compliance certificate
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A quotation from your supplier
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A delivery timeline and cost breakdown
🏦 Where Can You Get LPO Financing?
Several Kenyan banks and micro-finance institutions offer LPO financing, including:
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KCB Bank
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Sidian Bank
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Absa
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Faulu Kenya
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Rafiki Microfinance
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Other SACCOs and fintech lenders
💡 Tip: Compare interest rates, approval timelines, and required collateral.
📌 Final Thoughts
Don’t let lack of capital stop you from seizing big opportunities. With the right partner and proper documentation, LPO financing can be your bridge to bigger deals and better cash flow.
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