Need a Business Loan? Consider Financing Your Invoices Instead
Looking for business financing can be one of the most important tasks that a business owner handles. Unfortunately, the chances of successfully getting a business loan are actually quite small, especially in the current credit environment. When it comes to business loans, most institutions are very conservative and will only lend to the strongest borrowers. That means that you business will need a solid track record of success. You will need to provide financial statements, most often audited, dating a few years back. You may also need to put up your home as collateral for the business loan.
What can a business owner do if they don't qualify for a business loan? One alternative that has been gaining popularity is to finance their invoices. Most companies that have commercial or government sales need to wait 30 to 90 days to get the invoices paid. However, they have expenses that must be paid immediately. Employees, suppliers and landlords must be paid in a timely fashion. This discrepancy in the timing of your supplier payments and your clients' payments can create a substantial working capital problem. This problem can easily be fixed by factoring your invoices.
Suppose that instead of waiting 60 days to get paid, you got paid a few days after invoicing. Would you still have cash flow problems? Probably not. You can achieve that by using invoice factoring. Invoice factoring provides a simple solution to a simple problem - it advances you funds on your slow paying invoices tiding you over until your client pays. The factoring company charges you a small fee for that service, usually a percentage of the invoice.
One of the advantages of invoice factoring is that the financing company makes their decision based on the credit worthiness of your client. They consider your invoices from reliable clients to be a solid asset and are willing to finance them. This means that small companies whose biggest asset is a roster of good clients can usually qualify.
Another advantage of invoice financing is that your financing line is based almost exclusively on the credit quality of your clients and the size of your sales. Because of this, your financing line evolves and grows with your sales. This makes it an ideal financing program for emerging and growing companies.
Related Tags: business loan, invoice factoring, invoice financing
About Us
Looking for a business loan? We are a business financing company and provide alternatives to conventional business loans. For more information on our small business loan alternative plan, please visit our web site.
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