Comparing Bank Loans and Loan Companies with Invoice Factoring

How do you decide to work with banks or other loan companies?

When you need a business loan, you usually turn to a bank. While traditional bank loans can be an option for some companies in certain situations, they are not always the best option to get the cash you need when you need it. The time and effort it takes to qualify for a loan may not be feasible given your current situation. Here’s a quick comparison of bank loans and alternative loan companies, like Universal Funding, that provide invoice factoring services. Our method is an alternative business financing option that will get your company operating capital as quickly as possible.

loan companies

Time

Traditional financing from banks and loan companies often requires a significant amount of time. You fill out the application and provide documentation to the lenders, they review and analyze it before giving you a decision on whether or not to fund your loan, and once approved it could take a few more days to get the cash transferred to your account. The whole process might take several weeks, or even months, putting you in a financial bind in the meantime.

With invoice factoring, Universal Funding can get you approval within 1-3 days and have cash in hand within hours of receiving approval.

Documentation

For most traditional loans you need to provide documentation on your company’s creditworthiness and your ability to repay a loan. That includes things like current cash flows, sales projections, and past debt repayment. An invoice factoring company will collect repayment from your customers, so it’s focused more on your clients’ credit than on your own. No extensive documentation and company history, and no hassle.

Repayment

Adding a bank loan to your balance sheet means increasing your company’s liabilities by whatever amount you borrow. You will need to budget for repaying the loan in installments over time.

When you get cash from invoice factoring, there is no loan to repay—the transaction is based on the money your customers haven’t yet paid you. The fees for factoring are accounted for after your customers have paid an invoice in full.

Learn More

With invoice factoring the amount of money you can obtain is tied to your sales volume—the more sales you have, the more cash you can access. Call us today at 800-405-6035 or fill out our quick rate form  to find out how this flexible and convenient lending alternative can benefit your business.

 

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