Applying for large to small business loans from an established banking institute is an intimidating enough endeavor in this formidable marketplace. And if you are a business owner with a personal bankruptcy or poor credit history, such an act may be unthinkable. Why waste your time, right?
Fortunately, if you’re business is an LLC or corporate entity, it is viewed as a separate unit from yourself. This means that even though your credit history may be in the gutter, it will not be taken into consideration when assessing your business’s credit, provided it is free of any liens or impediments.
Factoring Services: This Isn’t Your Grandfather’s Bank
Unlike those nerve-racking banks, invoice factoring also called account receivables factoring makes a determination to provide you with money based on the value of your existing current invoices rather than on a FICO score. This is one reason why factoring receivables can be the preferred choice of business startups and those tied to owners with less than perfect or not-yet-established credit scores.
As a recent example, an invoice factoring company was able to provide funding to a an Electronics Assembly and Design company in San Jose, CA even though the owner had poor personal credit due to a strategically planned property foreclosure a few years ago. As a result traditional banks would not lend to this individual’s business even though they are separate entities. The $300K secured from factoring receivables enabled the business to secure a large contract in order to continue delivering top-notch products to its new and existing customers.
Personal Bankruptcy May Not Affect Business Factoring invoices
The practice of factoring receivables assesses the value of your invoices, your clients’ history of paying their vendors on time, their good standing and more. So if your customers generally pay their bill on time, then you may be a good candidate for invoice factoring. Though invoice factoring companies may vary, they generally pay you up to 96% of the total dollar amount you are seeking. In other words you pay an agreed upon percentage (about 3-5%) to the factoring company.
And unlike a traditional bank that generally will take weeks and weeks to let you know whether or not they’ll do business with you, with an invoice factoring company, you’ll know in a matter of days. Same day service is possible, depending on your individual situation. Try getting your money the same day at a regular bank.