Factoring & Accounts Receivable Financing
Accounts Receivable financing is a type of asset financing in which a business’ receivables (money owed from customers or clients) are used as collateral for the loan. Generally funds received are equal to a reduced amount of the receivable assets. The age of the receivables will affect the amount of the loan, as the older that they are the less funding that will be awarded. Accounts receivable funding is also commonly known as “factoring”.
Accounts Receivable
The amount of funding on an accounts receivable loan is based on the value and age of a business’ receivables. Funds can be used for all aspects of daily business operations including, employee wages, utility bills and inventory. With no need for another type of collateral, this loan is highly attainable for businesses who have been denied a traditional loan in the past. Once an applicant is approved for a loan, the financing company typically charges a factor fee. This fee is dependent how long it takes until the invoice is paid. Usually factor fees are calculated on a weekly basis.
Purchase Orders
For businesses that need cash in order to fulfill customer orders, we offer purchase order financing. Rather than asking for collateral, the lender evaluates the credit rating of the customer, not the company. When customers have a reliable history with a track record of prompt payments, purchase order funding is attainable no matter the business credit score. Funding is provided to give businesses an opportunity to get back on track and can typically only be used for the payment of a purchase order. Our purchase order loans provide funding up to 95% of the total purchase order.
Merchant Cash Advance
A merchant cash advance eliminates the need for businesses to wait for funds from credit card sales to be available. The amount of the loan is based on a fixed amount of your future credit card sales. Lenders are paid directly a percentage of these future credit card transactions until the loan is paid in full. Our merchant cash advance loans provide funding to be used in most aspects of business. Funds may not be used for the purpose of purchasing something or holding for future interest value. A merchant cash advance typically does not require a credit check and is easily obtainable for small businesses as well as larger companies.
Limited Recourse Factoring / Non-Recourse Factoring
Limited recourse factoring is secured for only a portion of the amount financed. With full recourse factoring the borrower is required to “buy back” accounts receivable which are not repaid by customers. But with limited recourse or non-recourse factoring, the lender assumes much more risk. If the factored invoices are not paid, then the factoring company will take the loss rather than the borrower. Funding from this type of factoring may be used in all aspects of daily business including employee wages, construction projects, and for purchasing inventory. Limited recourse factoring typically carries lower interest rates than non-recourse factoring.
Contract Financing
Whether a business is monetizing on a contract that they are currently in negotiations with, or that they have already secured, our contract financing loan provides funding for daily business operations. Rather than waiting months or even years to collect on your contracts, these lending options allow businesses to start projects faster and eliminate the waiting involved in repayment from clients. In addition, contract financing can play a critical role in the fulfillment of the contract by smoothing over cash flow issues. This financing will provide the company with the funds it needs to deliver on project requirements and fulfill the contract. Funding is typically 80% or more of the total contract and does not require a credit check, making this an accessible funding option for businesses large and small.