Factoring vs. Traditional Bank Financing

When business owners need funding for growth there are not always a lot of options available. Traditionally, you go to a bank with your business plan and credit history in tow and wait for the bank to help you out. It often takes a very long time from the day you apply to the day you receive your money. And if you are like most people, the odds of qualifying are pretty low due to the stringent regulations of the Banking Industry.

But for those who do receive a line of credit from a bank, it may not always be the best plan for growth. If your company is a start-up or small to mid-sized and growing quickly, there is a good chance that the credit limit the bank extends to you will ultimately stunt your company’s growth.

You see, the limited line of capital can easily be maxed-out by growing companies. And where does that leave you? It leaves you with a large debt and no way to nurture your growing company.

This is where factoring is different. With factoring there is no credit limit and it is not considered a form of debt on your balance sheet. The more account receivables you get, the more cash you can have access to. So as your company grows so does your line of credit, which continuously fuels your company’s growth.

Factoring is also different in that there are no stringent regulations or lengthy approval processes. You can typically have your money within 24 hours and there is no need for a business plan or to review your personal credit history. If you have accounts receivables and customers with established credit then factoring will work for your business. You see, it is your customers who are paying the factor so it is their credit-worthiness that matters.

So, although there are not always financial solutions for every business owner, factoring can potentially be the best if managed as a tool for growth.

If you would like to see if we can help your business grow please visit us at www.universalfundingmain.com and fill out an online application.