During your parents’ generation, when a small business owner needed financing to grow his business, cover his bills or pay his rent in tough times, he’d put on a clean suit, walk to his neighborhood bank and apply the same day for a small business loan. Though he would have to show some credentials such as credit history and tax records for underwriting and loan approval purposes, it was a relatively clear-cut process. He might shop around a few different banks for the best small business loan rates but he’d find out in a few weeks whether or not he’d get the loan.
Small Business Invoice Factoring Is More Accessible Than Loans
Today, according to the Wall Street Journal, this once time-honored tradition occurs less and less frequently. Fewer banks are offering loans for small business and when they do, they are generally in smaller amounts. Banks, in the view of many, are being overly cautious in extending loans in part as a result of the 2008 financial crisis. Even established businesses with solid credit scores and revenue growth are having a harder time securing cash in the 2013 economic environment. Some businesses that are likely to qualify find the application process so laborious they choose alternative financing methods.
Factoring For Small Business Is Within Reach
With more corporate and neighborhood banks saying no to small business loans, small business factoring has increased significantly in popularity. Factoring small business is startup-friendly way to secure financing to grow your business or just cover cash flow gaps. Factoring For small business does not require a credit check or minimum years of being in business the way typical small business loans do. The application process for small business invoice factoring is a few steps and questions rather than the long, lengthy process required for a business loan. To qualify for small business invoice factoring, you need to have a supply of recent and current invoices from customers. These customers must be in good credit standing with a history of paying their bills on time. The factoring companies will buy these invoices (minus a processing fee between 2-8 percent) to provide you with cash right away. They will then collect the invoice within the 30-day payment window and everyone gets paid, everyone wins.