Owners of newer businesses often struggle to find funding options when cash is urgently needed. The decision process behind business loan approval is not favorable to young companies. The application and approval process for these types of loans can take weeks, and it is possible that it will last months. This is not an option for a company in need of capital quickly. When your new business needs a fast influx of cash, you might not be able to rely on conventional lending options. However, an invoice factoring company can work with you, providing cash for your open invoices.
How a Factoring Company Is Different Than a Bank
Factoring companies purchase your open invoices, providing you with cash before customer payments are due. Since the transaction is a sale, your business does not take on debt. This gives your business several advantages over a bank loan:
- The application and approval process is much quicker. You can be approved and have your cash within days.
- The transaction is complete after you receive your cash and transfer customer payment to the factoring company. There are no future monthly payments or interest charges.
- The factoring company considers your customer credit strength and trends in customer payment cycles when making the approval decision. Your credit strength is not the deciding factor.
The Advantages of Using Factoring for a New Business
Since credit strength is not the only variable factoring companies consider, they can work with new businesses that have little or no credit history. Your business can qualify for fast cash even if you have been turned down by more traditional lending institutions because we look at the credit of your customers who will be paying on the invoices.
Factoring companies work with new businesses with a variety of obstacles to traditional loan qualification. You can qualify to sell your invoices even if you have tax issues or if a lender already has the rights to your accounts receivable as collateral.
Talk to an Invoice Factoring Company
Learn more about the benefits of selling your invoices. Universal Funding can answer your questions about invoice factoring for new businesses. Fill out our online rate form to request a no-cost consultation today.