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Every business must have cash on hand to survive. Many times, the only valuable asset businesses can leverage are receivables. Factoring becomes a valuable resource for businesses when selling receivables is their best option for obtaining cash. When a factoring company is able to assist a business, the following positive things occur:

  • The business gets the cash today to meet payroll, pay bills, pay taxes, and take care of other obligations.
  • The business is not paying more than they would with 2-net-10 terms, which they are usually willing to give anyway to customers.
  • The business doesn’t run the risk of customers taking the 2% discount and still taking 30 or more days to pay, which happens.
  • The business is not paying more than if they accepted credit cards instead of extending credit.

Factoring

  • Startup process can take as little as 1 day
  • No financial covenants
  • Focus is the creditworthiness of your customers
  • Factoring agreement are flexible and easy
  • No financial statement required
  • Advance 70-100% of collateral
  • Startups and new companies welcome
  • No cap on receivables funded

Bank Loan

  • Startup process can weeks or months
  • Bank will require financial covenants
  • Focus is on your creditworthiness
  • Bank loan documents take time to prepare
  • Bank will require financial statement, most likely audited
  • Advance 50-80% of collateral
  • Require a minimum length of time in business
  • Cap on receivables funded