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Is Accounts Receivable Financing right for me?

A/R (accounts receivable) financing, also referred to as factoring, allows the business owner to receive capital in the event you are owed money for services completed.

If your small business is in a crunch because your services are provided and payment is not collected for 30 days or more after the work is completed, there are financial factoring companies that can help. The companies will take a look at your clientele who is owing you money and depending on their credibility the financial company will advance funds and then collect the funds from your client to pay the advance off. This can be optimal because the focus is on the business that owes the receivable and not the company receiving the advance.

Loan Amount Up to 80% of A/R
Loan Term Generally up to 90 days
Interest Rate 5% - 12%
Benefits
  • Typically lower interest rates
  • Time savings for collecting A/R
  • Doesn't require any collateral
Drawbacks
  • Customers may prefer to deal directly with you
  • Financing costs may exceed

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Qualifying

The credit rating of the orderer is key in determining eligibility for this type of loan, not yours. The job or service you’re providing must be fully completed and make sure you have a clear business record.

What is Accounts Receivable Financing?

A/R financing (factoring) is the selling of purchase orders or accounts receivables for cash now. This type of financing allows the business owner to receive capital in the event you are owed money for services completed.

What Types of Businesses is it Good For?

This type of financing is valuable when a contract for products or services is received, but the business lacks the cash to fulfill on the contract.

What are the Minimum Requirements?

The orderers credit rating is key in determining eligibility for the loan. Personal credit is not usually examined by the lender when determining approval. You need to be invoicing creditworthy businesses for your product or service.

How Much Will A/R Financing Cost?

A/R Financing Loan Calculator

The rates are generally lower than what you would receive with a cash advance loan or a daily payment loan depending on the strength of the creditor. There also can be an additional cost per invoice fee.

Why Use Lendio?

Lendio’s mission is to empower your small business by making small business loans simple through options, speed, and trust. Whether you are looking for an acquisition loan or A/R financing, Lendio offers hundreds of different loan products from a variety of lenders. Finding out which business loan is best for you is why we’re here.

Sign up today and in minutes be matched with the perfect small business loan.

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AR Factoring Might Be a Good Option for You

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