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Factoring vs. Bank Loans

Invoice Factoring or Bank Loans?

Find Out Which Type of Financing is Best for Your Company

As businesses grow, they often find themselves needing additional funding for expansion, meeting payroll, marketing or to cover other expenses. Sometimes, corporations are financially strong enough to obtain a bank loan as a means of increased credit. Other times however, less traditional means of financing are necessary. For certain companies, traditional bank loans just don’t make sense. Especially ones that are looking for funding as-needed or don’t want to add more debt to their balance sheet. Banks offer little leverage to meet the additional borrowing needs and can possibly even hurt the company more than help it.

Invoice factoring is a financing solution to help companies stabilize cash flow and unlock stalled potential. Also known as accounts receivable factoring, this process involves treating invoices as collateral, which are sold to factoring companies—giving your company the cash in advance. The amount of capital available grows with your business. As long as you have invoices to factor, funding is available!

Bank financing is a solid option for many business owners, but the lending market remains tight. If you’re lucky enough to be approved, the loan amount may not be enough meet your financial requirements. Plus, you’ll have debt to repay.

Factoring companies offer funding for businesses of all sizes and stages. From start-ups to long-established companies, factoring is a smart solution to combat cash flow crunches without taking on additional debt.

 

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What’s the Difference Between Factoring and a Bank Loan?


Invoice Factoring

  • No Debt to Repay
  • Unlimited Funding Potential
  • Fast Approval in 3-5 Days
  • Approval Based on Credit Strength of Your Clients
  • Startups are Eligible for Factoring



Bank Loans

  • Principal & Interest Repaid Over Time
  • Funding Potential is Capped by Banks
  • Approval May Take Months
  • Approval Based on Your Company’s Operational and Credit History
  • Very Tough for Startups to Obtain Bank Funding


Yes, Banks Refer Customers to Factoring Companies

Businesses often need additional funding, but are unable to meet the stringent borrowing requirements to qualify for a new bank loan. In this case, they are often referred to factoring companies like Factor Finders. In fact, Factor Finders often gets customer referrals from local banks that want their customers to receive the financial help that they are unable to provide. Banks know Factor Finders will serve their customers well by providing a speedy factoring application process and cash advances within 24 hours of submitting their invoices.

Is Invoice Factoring Faster Than a Bank Loan?

Yes–much faster. It’s no secret that banks are strict when it comes to loan approval. Not only can they take a very long time, loan decisions are based on a combination of a company’s previous years’ operating history and the business owner’s credit scores. The loan approval process can take weeks, possibly longer.

Factoring Provides Fast Funding, When You Need it Most

Factoring ensures you receive the working capital you need within 24 hours. Factors buy your eligible invoices at a discount and advance you up to 98% of the total amount within hours of verification. The remainder is held in a reserve account. When your customer pays the rest of the invoice, the factor will release the balance on the account, minus a small fee for utilizing the service.

If you’ve been declined for a bank loan, join the club! It’s not uncommon for banks to deny small business owners funding, especially if it’s a newly-established business. Factors base approval on the credit of your customers, since your customers are the ones responsible for invoice payment.

Factor Finders works with the best factoring companies across the entire United States—matching your company with a factoring firm that specializes in your market and that will work with you to meet any specific goals or needs of your business.

Think Outside the Bank Loan

Invoice factoring is a simple & debt-free business financing option. Contact us to get started.

Factoring Offers More Flexibility than Bank Loans

Factoring Invoices is a Debt-Free Form of Financing

Conventional bank loans are pretty cut and dry. They loan you a certain amount of money and you’re expected to pay it back over a specific amount of time with a certain (and generally pretty high) amount of interest. In order to obtain more cash, you have to add more overall debt to your books. With factoring, you aren’t incurring any more debt–you’re selling a valuable asset. Furthermore, you get to choose which invoices you factor and how often. You aren’t locked into a long-term contract and terms are flexible.

Factoring offers financial solutions than can yield unlimited growth for agencies. Including:

  • Credit Protection
  • No Debt Added to Balance Sheet
  • Collections Services
  • Credit Analysis
  • Same Day Funding
  • Unlimited Funding Potential

Bank loans are not your only option. Request a quote today!
Call 1-855-FACTOR-1 to learn more about our services.

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Talk to Us: 855-322-8671

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