As a small business owner, securing financing can be a difficult and stressful process. If you’ve recently been turned down for a bank loan, you are not alone. With rising interest rates and reports of a tightening economy, banks are becoming more cautious in their lending policies. You may be wondering what other options you have? One alternative solution to consider is invoice factoring with American Receivable.
Factoring Companies are Pro-Entrepreneurial
Invoice factoring is a financial tool that allows businesses to sell their unpaid invoices to a factoring company, known as a factor, in exchange for immediate cash. Essentially, the factor will pay you a portion of the total value of your outstanding invoices, typically between 85-90%, upfront. The factor will then collect the full amount from your clients directly, paying you the remaining balance minus their fees once the invoices are paid. Since the factoring company is being paid back by your client, not your company, the factoring company will grow with you as you maintain a strong customer base.
Here are some ways that invoice factoring can help a company that was turned down for a bank loan:
- Immediate cash flow. One of the main benefits of invoice factoring is that it provides immediate cash flow. Instead of waiting 30, 60, or even 90 days for your customers to pay their invoices, you can receive a major portion of the money upfront. This can help you cover any immediate expenses, such as payroll or inventory purchases.
- No collateral needed. Unlike traditional bank loans, invoice factoring does not require collateral. The factoring company is simply purchasing your unpaid invoices, so there’s no need to put up any other assets as security.
- Bad credit is OK. Another advantage of invoice factoring is that factoring companies focus on the credit strength of your customers. This means that even if you have less-than-perfect credit, you may still be eligible for this type of financing. Factors are more concerned with the creditworthiness of your customers since they will be responsible for paying the invoices.
- Better cash flow management. By using invoice factoring, you can better manage your cash flow. You’ll know exactly when you’ll receive payment for your outstanding invoices, allowing you to plan and budget more effectively. You’ll also have more predictable cash flow, which can help you make better decisions about your business’s future.
- Flexibility. Invoice factoring is a flexible financing option that can be customized to meet your specific needs. You can factor all of your invoices or just a portion of them, depending on your cash flow needs. You can also choose which invoices to factor and when to do so. This keeps you in control of how much you factor and which customers you choose to factor.
- Factoring companies move fast. Most factoring companies can fund a prospect in a week or less. By using our Streamlined Application, American Receivable can fund you in as fast as 2-3 days.
If you’ve been turned down for a bank loan you have already lost valuable time. You do not want to miss out on opportunities to grow your business because of a lack of financing. Apply today to get the business financing you need to your company!
Jack Stieber [email protected] 972-404-4726
Brad Gurney [email protected] 800-297-6652
Dakota Stieber [email protected] 512-339-5512
