Funding Services
There are multiple funding options for businesses, spanning from traditional bank loans to more unique forms of lending. Choosing the right type of funding for your business can be a challenge, but Factor Finders can relieve some of the stress.
As a factor broker, Factor Finders can assess your cash flow situation, your goals and your industry to match you with a factoring company that can provide the funding you need to grow your business. We can help you decide which funding option works best for your business, including accounts receivable factoring, payroll funding, spot factoring and unsecured business loans. Below is a breakdown of each funding type for you to learn more about factoring.
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Accounts Receivable Factoring
Accounts receivable factoring, also called invoice factoring, is a type of funding used by companies that need to close the gap of cash flow caused by slow paying customers. Without consistent cash flow, a company does not have funds for needed expenses, such as buying new equipment or purchasing fuel. When you engage in accounts receivable factoring, you sell your unpaid invoices to a factoring company that provides a cash advance for a portion of the invoice to close the gap. Factoring is a simple process. You serve your customers as usual and then submit the invoices to the factor. After the invoices have been verified, you will be advanced the cash. Factoring can be utilized by a variety of industries, such as transportation, staffing, manufacturing, distribution and oil and gas.
Payroll Funding
Ensuring you have the cash to pay your employees can be a challenge if you have customers who do not pay you for 30 or 60 days. You can use payroll funding to get the cash needed to pay your employees and keep your business growing. When you work with a factoring company for payroll funding, you can receive up to 95% of your invoice advanced within 24 hours after document submission. Make missing payroll a thing of the past. Many companies use payroll funding in place of traditional bank loans because factoring is a debt-free solution since you are being advanced money that is already yours. Approval is easy and less-than-ideal credit is acceptable.
Purchase Order Financing
Purchase order financing is used to fund companies that need coverage for additional supplies or costs that deal with manufacturing and shipping. You could benefit from purchase order financing if your business has experienced a rapid increase in growth, seasonal highs and lows or need to set funds aside for other expenses. Usually, this type of funding is utilized by businesses in the distribution, manufacturing, industrial industries and those with government contracts. To qualify for purchase order financing, you must have margins of at least 20%, conducted a similar business with similar clients and have qualified purchase orders.
Spot Factoring
If you only want to factor one invoice without having to commit to a contract for a set duration, then single-invoice factoring, or spot factoring, is for you. With traditional accounts receivable factoring, businesses usually factor on a monthly or annual basis, but spot factoring is a one-time transaction. Spot factoring has a similar process to accounts receivable factoring in terms of a factor advancing money in exchange for an invoice, but it is important to find a factor quickly if you are looking to factor one invoice to get paid faster.
Unsecured Business Loan
This is a funding option where a monetary loan is paid out to a company or consumer. Unlike a secured loan, an unsecured loan allows businesses to qualify without needing other assets to secure the loan. Companies can borrow up to 90% of their gross monthly sales with an unsecured loan to improve their cash flow. Even if your equipment or other assets are already pledged as collateral to a bank, you can still qualify for an unsecured loan. Interest rates are slightly higher than a secured loan due to the added risk, but this can be offset by applying for a longer-term loan. Obtaining an unsecured loan is faster than a traditional bank loan. You will need to fill out an application and provide 3-6 months of bank statements. Following the application process, lenders will make a funding decision within hours and you can have cash within 48 hours.
Merchant Cash Advance
Merchant cash advance (MCA) is a funding option for businesses that involve a funding advance of a fixed amount in exchange for a percentage of the company’s future daily credit or debit card sales. Essentially, an MCA is cash in exchange for future sales. This is a quick and flexible funding option. Since the payback is set to a percentage instead of a set amount, if your sales are low, your payback will be low, as well. It is easy to qualify for an MCA since they do not require collateral. For qualification, you must have been in business for at least six months, have $5,000 in overall monthly sales, a positive business checking account and a credit score of at least 500.