Why Small Business Factoring is Ideal for Your New Business
Written by US Funding on September 22, 2015
Starting a new business can be very exciting. This is a big undertaking that involves quite a bit of work and dedication. It also takes a lot of help. You surely are not doing everything on your own and are relying on others to get you where you need to go. Unfortunately, when it comes to financing, startup owners can have a tough time. Traditional lending institutions like banks are often reluctant to give out money to fledgling businesses. So, what is a new business owner to do? One good option is small business factoring.
What is Small Business Factoring?
Once your business starts taking off and you have built a customer base, ironically, this could be the time when you are most lacking funds. Why? Depending upon the customers you are selling to, it may take them a long time to pay you. You may have been so thrilled to have gotten customers that perhaps you agreed to very favorable buying terms for them.
This means that after you send them your product, they could have months to pay you. And what does this mean for your business? While your customers are happy, suddenly you realize you do not have any money on hand, which means you and your employees will not be so happy.
This is where small business factoring comes in. In order to get cash right away, a small business factoring company will buy all of those outstanding invoices from you. This prevents you from having to wait for your customers to pay. And when you are able to get that quick money, you will now have the funds for your supplies, payroll, and whatever else you need it for. Small business factoring is a great way to keep a new business afloat.
Why is Small Business Factoring Better Than a Loan?
While a loan can be very beneficial, as mentioned, it can also be really difficult to get. Because new businesses do not yet have a credit history, that is a big obstacle when seeking a loan. Banks also want to see things like projection reports and comprehensive business plans. Plus, the loan process can take a while…and time is another thing that you may not have. On the other hand, small business factoring is generally a very quick process.
The credit history of your business is irrelevant; as long as your customers are good for the money, you are fine. In addition, because you are selling your invoices, there is no money to pay back, unlike with a loan. You will never have to worry about your small business factoring company breathing down your neck for money you owe.
To get the money you need quickly, small business factoring could be a great solution for you. If this is something you would like to learn more about, just get in touch with US Funding. We will talk to you about your situation and explain exactly how the process works.