Thinking of applying for a bank loan to fund your new project, buy equipment or pay your employees? Facing cash flow problems because most of your earnings are tied up in invoices and account receivables? Worried whether or not your bank loan request will be approved? Looking for urgent financing to streamline your working capital and ensure business continuation and growth? If yes, then you might want to consider applying for invoice factoring rather than a bank loan.
What is Invoice Factoring?
Invoice factoring is an alternative business funding method that is rapidly growing in popularity for all the right reasons. This business funding alternative offers borrowers a chance to convert current and unpaid invoices immediately into cash that otherwise may take 30, 60 and sometimes even 90 days to convert.
With banks across the country tightening their credit policies, the chances of loan application approval have dwindled significantly. And if by any chance, the application is approved, the loan terms and interest rate make it extremely difficult for the borrower to pay back the loan.
Counting Down Top Five Reasons to Consider Invoice Factoring
Where applying and qualifying for bank loans has become extremely difficult, on the other hand, funding alternatives like invoice factoring have made it easier for borrowers to meet their business financing needs.
Let us now take a deeper dive to find out why and how this funding method is better than the traditional bank loans:
Cash Flow without Debt
Since invoice factoring finances unpaid invoices/account receivables, it is not a loan that adds debt or liability to the balance sheet. This means unlike unsecured loans where banks ask borrowers with low credit score to provide collateral, invoice factoring relies on the credit worthiness of your customers. By opting for this business funding method, you have to make monthly loan payments or provide collateral as a safety net. It helps borrowers keep a clean balance sheet without adding to the company’s liabilities.
Quick Cash Flow
Majority of the requests for invoice factoring are approved within 24 to 48 hours and funding is made within 3 business days. This means that the borrower doesn’t have to wait for weeks to get their loan application approved, as they might have to, when borrowing money through a bank. Invoice factoring ensures fast approval and quick cash flow.
Through invoice factoring, borrowers can easily meet their urgent cash flow needs and tap new business growth opportunities before their competitors.
No Long Term Contracts or Credit Limit
Unlike bank loans that are long-term and contract based, factoring has no long term contracts, maximums or minimums. This business funding alternative gives borrowers the flexibility to pick and select how often and what types of invoices the borrowers want to factor. This is because the invoice factoring method grows with the borrower. This means that as the sales increase, so does the borrower’s access to funds.
Strong Financial Standing Not Required
To qualify for bank loans, borrowers must have a strong financial standing and certain credit score that shows their business credibility and strength. However, invoice factoring has no such requirements. To benefit from factoring, borrowers don’t need to have great credit and long & strong financial history.
This gives new startups, and small businesses who have hit a few bumps on the way to grow their business by tapping into new opportunities through quick financing.
Low Factoring Rates
Over the years, the cost of invoice factoring has come down significantly. Advances are now available up to 90 percent and factoring rate is as low as 1% percent.
If you are new in the industry and looking for quick business financing solutions to take advantage of a new opportunity that might not come again; then get in touch with CFC.
We provide quick factoring to startups and fast growing companies. Our advance rates are up to 90 percent and the factoring rate as low as one percent. We also process applications on the same day and can provide you funding in as quick as 3 business days. Click here to get started now! Remember, an opportunity never knocks twice. This is your chance to grow. So avail it before your competitor does!