Invoice financing and factoring
Speed: ★★★★★ Cost: ★★☆☆☆ Requirements: ★★★★☆ Funding amounts: ★★★☆☆Both invoice financing and invoice factoring allow you to borrow against your unpaid receivables. They’re both accessible types of business loans, often open to startups and bad-credit borrowers. To get approved for these loans, lenders are more concerned with the creditworthiness and repayment history of your invoiced clients.
There’s a key difference between the two. Invoice financing involves receiving an advance of your company’s accounts receivables that you’ll repay the amount borrowed (plus fees) once the client pays you.
If you choose invoice factoring, you’ll sell the outstanding invoices directly to the lender in exchange for a lump sum of up to 90 percent of what’s owed. The client will pay the lender directly, and any amount that remains after fees are deducted will be distributed to you.
Best for:
Fast financing Bad credit financing