Make Invoice Factoring Loans And Asset Based Lending Work ! Looking For A Business Credit Line Solution?

Tweet

 

You Are Looking For Canadian Business Financing!

Unpacking the Differences:  Factoring vs. Asset-Based Lending

You've arrived at the right address!  Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the  biggest issues facing businesses today 

               Unaware / Dissatisfied with your financing options?

Call Now!  - Direct Line  - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Email  - sprokop@7parkavenuefinancial.com

 

Asset-Based Lending and Invoice Factoring: Alternative Financing Options Explained

 

Invoice factoring loans are one area of business finance that has slowed the growth of traditional financing via banks in Canada.

 

It's no secret that asset-based lending is on the rise, while not that long ago, we can vouch, that alternative financing was pretty well unheard of. Industry stats both in the U.S.  as well as Canada indicate more and more companies are turning to asset-based lending solutions.

 

A big challenge of any business is the cash flow challenges in times of economic uncertainty and when a business is focused on growing and expanding market share - traditional bank financing may not be available during times like this - that is when alternative financing options such as receivable financing/ factoring, and asset-based lending tend to be a popular solution - The real challenge is knowing which finance option is best for your business.

So why have asset-based financing solutions become one of the most popular financing methods for your company's working capital and cash flow needs?

Asset-based finance solutions and factoring work for a straightforward reason - they monetize one of the essential assets in your business, letting accounts receivable act as security.

 

 

WHAT IS INVOICE FACTORING? 

 

Invoice factoring is a  business financing option which allows businesses to finance outstanding invoices to a third-party commercial finance company in exchange for immediate cash. In traditional invoice finance factoring services, the financing company assumes management and collection of the receivable - The factoring agreement specifies the invoices are  ' sold ' to the fiance company - in bank financing, invoices are assigned to the bank, typically under a general security agreement.

 

Key benefits of factoring invoices include the ability to access cash immediately without any debt coming onto the balance sheet - the company is simply monetizing a balance sheet asset - accounts receivables.

 

Small and medium-sized businesses that need working capital to fund day-to-day expenses and finance growth use factoring, which is not debt financing on the balance sheet.

 

 

THE INVOICE FACTORING PROCESS 

New clients here at 7 Park Avenue Financial always want to know how these 'loans work.  First of all, it's not a loan per se. It's simply a method of selling and cash-flowing your receivables as your generate revenues. Cash advanced on this type of financing is typically in the  80-90 % range and it's at the business owner's option to cash flow some or all of your a/r.

 

 

 

WHAT DOES FACTORING COST? 
 

Confusion exists if only for the terminology commercial lenders and customers use around describing the cost of this financing.

 

That's because this finance method is costed as a ' fee ', not an interest rate. Factoring fees are typically between .75 - 1.25 %, so if your firm has good margins and a reasonable turnover in receivables you are an excellent candidate for factoring loans.

 

FACTORS INFLUENCING PRICING

Other factors that influence your overall cost include :

Size of your facility,

General creditworthiness of your customer base

The amount of time you use the funds for is probably ultimately the largest cost aspect of the financing.  Good asset turnover and lower days sales outstanding lower financing costs!

 

While bank business credit lines are the lowest cost in Canada it's no secret that thousands of businesses simply can't access all or part of the business financing they require.

 

 

IS CONFIDENTIAL RECEIVABLE FINANCING THE BEST FACTORING SOLUTION? 

At 7 Park Avenue Financial, we strongly recommend Confidential Receivable Financing facilities. They allow you to bill and collect your own accounts, generating the cash flow you need to run and grow your business.

A/R financing collateralizes company assets such as receivables, allowing you to finance the other parts of your business, such as inventory, equipment, real estate, etc.

For smaller to medium-sized firms that have exhausted forms of financing such as business credit cards, friends and family loans, collapsing personal investments asset-based lending via a business factoring loan is a logical step to financing operations and growth.

 

  

 

WHAT IS ASSET BASED LENDING?  

 

Asset based lending is a business finance option that allows a business to use the physical assets of the business as a loan or line of credit. Assets financing under this type of facility include combinations of accounts receivable, fixed assets and equipment, inventories, and in some cases real estate.

 

Key benefits of this type of loan or line of credit include the ability to be flexible in drawing down funds as the business needs them and scale finance as sales and assets grow. Assets financing under the facility remain in the ownership of the company. Asset-based lenders are experienced in assessing values and advance rates on each asset category, ie receivables.

 

 WHAT IS THE DIFFERENCE BETWEEN INVOICE FACTORING AND ASSET BASED LENDING? 

 

The key difference between factoring and asset based lending lines of credit is the paperwork around the ownership of the invoices - Under a factoring agreement invoices are ' sold ' to the finance company. In contrast, in asset-based lending assets are secured as collateral for the financing.

 

In traditional factoring the factoring company is involved in the collection of invoices, but in asset based lending, businesses retain ownership and the customer relationship around collections.  As we have noted companies choosing  Confidential invoice financing are in fact allowed to bill and collect their own invoices while still enjoying the benefits of immediate cash access.

 

The timing around financing costs is also another difference - In invoice factoring the financing company purchase invoices at a discount. In contrast, interest rates/ financing costs do not start until facilities are drawn down on and used.

 

  WHICH FINANCE OPTION IS RIGHT FOR YOUR BUSINESS? 

 sE

Several factors will define whether  your firm will best benefit from  factoring or a full asset based lending solution - Those factors are:

 

Type of industry

Cash flow needs,

Growth goals

 

Factoring is best suited for businesses with  higher  volumes of invoices and the need for the firm to access immediate cash to cover business expenses and funding day-to-day operations - The ability to finance working capital investment in accounts receivable is a key factor

 

Asset based lending solutions such as term loans or business lines of credit are best suited for companies needing a full business line of credit that funds accounts receivable, inventories and other business assets. Companies that cannot access all the financing they need from traditional bank financing solutions are solid candidates for asset-based lines of credit.

 

Both solutions help companies with cash flow problems

 

  

KEY TAKEAWAYS: INVOICE FACTORING ASSET BASED LENDING 

 

Invoice factoring is a solid alternative financing option for small businesses needing immediate cash

Invoice factoring is the sale and financing of outstanding invoices st third-party factoring companies

Asset based loans and lines of credit is a full-service financing facility which funds business assets and combines them into one facility

Both solutions, ie  factoring and asset-based credit lines provide fast access to cash once facilities are improved and set up

A company will determine whether it needs invoice factoring or asset based loan solutions based on cash flow needs and the overall  creditworthiness of the business

 

  

 

 CONCLUSION - ASSET BASED LENDING VS. FACTORING  

 

Both invoice factoring financing and asset based lending are creative and alternative finance options that can help a business grow via access to capital around the cash flow needs of the business.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of success.

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK MORE INFORMATION

 

 

Do I lose ownership of my invoices with invoice factoring? 

Yes, invoice factoring involves the selling of outstanding invoices to third-party factoring firms to obtain funds via a cash advance prior to invoice collection - in traditional notification factoring the finance company manages collection and payments.

  

 Does invoice factoring affect my customer relationships?  

In invoice factoring the finance company has contact with customers in the collection relationship, while an asset based lending business credit line allows the company to bill and collect its own receivables as well as manage collections. customers.

   

What industries are suitable for invoice factoring and asset-based lending?   

Any small or medium-sized business that requires working capital to fund operations and growth will benefit from these facilities' cash flow access. More established companies needing full services credit lines to finance a company's assets such as  a/r, inventory and other assets will typically use an asset-based credit line.

 

    

Is factoring considered asset based lending?    

 

Yes, factoring is often considered a type of asset-based lending because it involves selling unpaid invoices to a  commercial lender, who then provides funding based on the value of those assets. Unlike traditional loans, factoring is sometimes non-recourse, meaning that the lender assumes the risk of non-payment by the debtor. The amount of funding available through factoring depends on the borrowing base, which is the total value of the assets/invoices being factored.

Factoring is often used by manufacturing companies and other businesses with rapid expansion and core operations that require additional money to pay invoices and support important differences in payment. The annual percentage rate and additional fees associated with factoring are typically higher than those of traditional term loans, and lenders view factoring from their perspective of collecting payments on the invoice assets purchased. Overall, factoring is a valuable financing option for businesses that require immediate payment and can benefit from the value of funding unpaid invoices.

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Asset-Based Lending (ABL): The Game-Changing Business Credit Line Solution You Need to Know About

Tweet

YOUR COMPANY IS LOOKING FOR A CANADIAN ASSET BASED LINE OF CREDIT! 

SUPERCHARGE  BUSINESS GROWTH - LET ABL REVOLUTIONIZE YOUR BUSINESS CREDIT LINE NEEDS

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

LEVERAGE BUSINESS ASSES - EMPOWER YOUR BUSINESS - THE ABL BUSINESS CREDIT LINE STRATEGY

 

 

Asset based lending in Canada is the closest thing to a ' generic ' business credit line facility in Canada. So why do we describe clients ' ABL  ' solutions in that manner? 

 

The answer is simply that it's a one size fits all solution to working capital and cash flow needs.  It's generic that it's always, and we mean ' always,' about your business assets. That's why thousands of businesses choose asset based lending.

 

' ABL ' (Asset-based lending ) is a method of financing your business via a revolving line of credit - The company's assets, such as inventories, accounts receivable, and fixed assets are combined into one facility as security interest collateral. This gives the company flexibility around working capital needs experiencing cash flow and/or growth challenges. Let's dig in!

 

 

A BUSINESS CREDIT LINE SOLUTION TO CONSIDER! 

 

The proof in the pudding about ' ABL ' is that top finance experts tell us that asset-based lending gains traction every day - and again, generic if only for the reason that start-ups, small and medium-sized and large firms all can use this facility.

 

 

HOW DOES THE ABL CREDIT LINE WORK? 

 

The asset-based financing method provides a business with a revolving business credit facility where the assets of the business are the collateral - Typically the assets include accounts receivable, inventories, fixed assets and even commercial real estate if owned by the company.  These facilities, unlike bank financing, don't focus on the cash flow of past business credit history, the focus is ..  Assets! 

 

In that way, the company can access via asset based lenders, cash in times of fluctuating cash flows or other unique needs of the business.

 

If ABL credit lines are that generic, how do the business owner and financial manager find the right facility for his firm, and who does he or she find it from?  Here it's all about what we call ' the tiers ‘. There are several types of lenders, and you have to know the size and quality of your transaction and who is best matched to finance it. Working with an expert in the area will, of course, help!

 

 

We're reminded of one of our mentors who once said ' tuition is costly in the school of experience, ‘When it comes down to a strategic financing decision, the cost of a bad experience can be expensive in many ways. 

 

 

 

 

KEY DIFFERENCES BETWEEN ASSET BASED LOANS AND TRADITIONAL   

 

ABL loans differ from traditional bank-type financing in focus on the collateral for the loan - Bank financing will focus on personal guarantees, outside collateral, and business credit requirements around ratios on the balance sheet. Abl focuses on sales and the tangible asset of the business - which allows companies with irregular cash flows or seasonality and cyclicality in their business to access funding. 

 

While many types of bank loans require repayment schedules, the ABL revolver facility allows the business to draw on funds and pay for those funds only when required - allowing for better cash flow management and cash planning.

 

 

ELIGIBILITY CRITERIA FOR ABL  ASSET BASED LOAN FINANCING 

 

In order to qualify for ABL credit lines a business must meet certain criteria -  Typical criteria include the ability to produce proper financing statements and aged schedules of balance sheet items of eligible accounts receivable, inventory,  and accounts payable. The business should also be free from government liens and be up to date with provincial and federal taxes owed. Good balance sheet asset turnover will help approve an ABL line of credit, so firms focusing on dso,  inventory turns, etc are strong candidates. An inventory appraisal might also be required.

 

 

 

WHY DO BUSINESSES GRAVITATE TOWARD ASSET FINANCE SOLUTIONS? 

 

The answer is painfully simple - it's a challenging financing environment for companies searching for SME commercial finance.

 

Once owners and finance managers pick up on the fact that access to ABL provides liquidity and often makes a firm more financially competitive, it's easy to see why that road is better travelled.

 

 

WHAT ARE THE TYPES OF ASSETS UNDER ABL LOAN BUSINESS LOANS COLLATERAL? 

 

Some confusion around ' ABL ' is that many business folks consider it as only an equipment financing solution - however, in our context, it’s a business credit line that finances all your current and fixed assets - typically A/R, inventory, and equipment. Like bank credit lines, it's a ' senior facility 'and provides aggressive financing on those assets via eligible collateral.

 

Accounts receivable are a key form of ABL collateral - invoices under 90 days old are eligible for financing at advances rates in the 90% range.

 

Inventories can be in the form of  raw materials, work in process, or finished goods and each type of inventory will have an advance rate placed on borrowing power

 

Fixed assets used in the business and critical to business operations can be included in abl credit lines, as well as commercial real estate if that applies to the transaction - Often, a real estate component might be under a short-term separate bridge loan.

 

More and more asset-based abl business lenders can include some form of financing around IP, patents, brands, and copyrights if that is applicable to a transaction.

 

It should be noted on very large transactions in the millions in the form of appraisal or field exam might be required- although note this is for very large deals generally in the range of 10M  plus.

 

The uniqueness of this business credit line is that those assets named above are financed under one revolving facility. The best ' deliverable ' for ABL is its ability to allow you to borrow aggressively on the real assets in your business, based on their ' real values.  Bottom line = higher borrowing margins!

 

So who's using and/or checking our ABL finance? Its companies can access any or enough bank financing for firms that can’t meet ratio, covenant, and personal guarantee requirements typically mandated by the bank.

 

Bottom line? Investigate ABL business credit lines as a viable working capital option used by thousands of companies like yours, including your competitors. Opting for this solution will give you overall liquidity and cash flow that helps your business grow and succeed.

 

  

KEY BENEFITS OF ASSET-BASED LENDING ABL BUSINESS CREDIT LINE SOLUTIONS  

 

Working capital access - short-term business needs can be met around cash flow/working capital

 

ABL facilities are custom tailored via flexible credit structures and higher borrowing advances than traditional loans - Busines access cash when needed

 

Asset-based credit facilities are known as covenant light -  reporting requirements and eligibility criteria are significantly easier to manage around business operations and finance needs -

 

Reporting process revolves primarily around monthly borrowing base requirements around a/r and inventory, as well as a/p schedules.

 

  

KEY TAKEAWAYS - ABL FINANCING  

 

All types of businesses can use asset-based lending  to finance their business

Typical borrowers include manufacturers, distributors, retailers,

Businesses that are restructuring or focused on turnaround are perfect for an ABL solution

Companies using ABL financing face minimum reporting and  little to no focus on the balance sheet and financial ratio covenants required by banks

ABL increases financing capacity and allows companies to be flexible in financial decision-making without third-party lender approval

 

 

  

CONCLUSION - ASSET BASED LENDING ABL FINANCE  

 

Asset-based finance solutions provide a unique and flexible form of financing for Canadian businesses requiring working capital.

 

Leveraging assets solves the business cash flow challenge and growth goals. Talk to the  7 Park Avenue Financial team to ensure you make an informed decision around this business financing method.
 

Asset-based financing is growing in popularity every day as a business financing solution for companies seeking flexible access to cash flow and working capital - The unique ABL business credit line options allow businesses that are leveraged and who might not be able to achieve traditional bank financing to secure the money the company requires for business needs.

 

Investigate ABL as a viable working capital option - work with an expert in the area. If you opt for this financing solution, your liquidity and overall cash flow should improve significantly!

 

Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor to explore ‘generic ‘business credit line solutions to maximize borrowing capacity!

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK  MORE INFORMATION  

 

  

  

 What types of assets can be used as collateral in asset-based lending (ABL)?     

 

Asset-based lending uses a variety of business balance sheet assets as collateral - these include a/r, inventories fixed assets and real estate. Business lenders evaluate each asset category and construct a credit line that will provide liquidity to the borrower.

 

 

 

How does asset-based lending differ from traditional cash-flow lending regarding financial covenants and flexibility? 

 

Unlike traditional cash flow lending that focuses on financial covenants and balance sheet and liquidity ratios around debt and debt service, ABL lending has few covenants and allows businesses to access liquidity based on sales growth and business assets. That financing provides flexibility to the business borrower to improve cash flow.

 

 

 

What limitations or risks are associated with asset-based lending (ABL) as a business credit line? 

 

Businesses should ensure abl financing does not encourage overleveraging of the company - and they should be aware of monthly reporting requirements and the types of assets used as advances for the facility on a day-to-day basis.

  What type of business can benefit from ABL Financing?   

 

Businesses that can benefit from ABL financing solutions include manufacturers, distribution companies, and some types of service companies.  Any business facing a cash flow challenge or requiring financing for larger orders around seasonality in their business can benefit from ABL business loan borrowing capacity credit approval secured by assets.

 

   

What are the limitations of ABL Asset-based lending solutions?   

Businesses should ensure that declines in sales or asset values and be a potential facility risk to future growth. As borrowing bases are reduced the amount of credit availability declines on financial and physical assets around the company's cash flow. Companies with growing sales and good asset turnover present less risk to the ABL business loan lender. Not all business assets might be eligible for collateral financing, including highly specialized assets or inventories with no real resale value.

 

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Asset Finance: A Smart Way to Secure Your Business's Credit Line and Working Capital

 

YOUR COMPANY IS LOOKING FOR WORKING CAPITAL FINANCING SOLUTIONS!

Maximizing Your Cash Flow: How Asset Based Financing  Can Help Fund Your Business's Credit Line

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

  

Building Your Business's Future with Asset Finance for Working Capital  

 

Business line of credit needs are often best solved when your firm understands why you need this type of financing/working capital facility. And the good news? 

 

 

What You Need to Know About a Business Line of Credit Via An Asset Finance Strategy 

 

Using asset finance as a business line of credit strategy provides companies with a flexible financing solution to borrow funds as needed for day-to-day short-term expenses. It allows the company to explore growth options. As a working capital strategy, asset-based lending provides the same revolving credit lines based on a higher loan-to-value ratio for borrowing based on asset finance eligibility.

 

 

 

ASSET BASED LENDING IS YOUR ' HACK ' FOR IMPROVING CASH FLOW 

 

Cash flow management is a critical requirement for any business, large or small. By focusing on effective asset turnover and proper management of accounts receivable and inventories, all companies' short-term cash flow gaps experience by all companies can be met by focusing on an ' ABL ' solution.

 

  

  

ASSET FINANCE EXPLAINED  

 

Asset finance is a method of financing a business that uses business assets of the company such as receivables, inventory, and fixed assets as collateral for borrowing. Companies obtain working capital via collateralized loans as a flexible financing option.

 

As a business owner, you don't need one of those ' Artificial Intelligence Bots ' ( such as Chatgpt )  to run thousands of algorithms around your cash flow needs.

 

It's all about understanding how your company is doing and what type of solution is available!

 

Cash flow is vital to all businesses. 60% of business owners say they regularly struggle with cash flow and 40% say the absence of access to cash flow financing restricts their business growth.

 

 WHAT IS THE DIFFERENCE BETWEEN A TERM LOAN VERUS A LINE OF CREDIT? 

 

Both term loans and lines of credit are types of typical business financing - Term loans are lump sum cash flows requiring regular installment payments over a fixed amortization period at a specified interest rate from the lender.

Business lines of credit are revolving credit facilities that businesses use to access funds as required based on a predetermined credit limit.  The line of credit options typically offers more flexibility as it revolves and is used only as needed.

 

WHAT ARE THE CAUSES OF CASH FLOW PROBLEMS

 

Common causes of poor cash flow problems are:

Collections too slow - accounts receivable management and financing of a/r is critical around unpaid invoices

 

The operation capacity (or ability) you have available for your company might be unreliable due to a lack of sales and the ability to meet current liabilities -  Take the time to research various Canadian business financing options with a focus on the nature of your industries and the actual need for working capital - that might be for equipment, real estate, inventory, etc.

 

 

 

SHORT / MEDIUM / LONG TERM FINANCING - WHICH ONE DOES YOUR COMPANY NEE D

 

Small business owners often struggle to find the right financing for their companies. They face many options, including short-term, medium-term and long-term loans - but what does this all mean?

 

If you don't select an appropriate length of time based on your needs as a small entrepreneur, then it could hurt not only your prospects but also your financial stability in general.

 

MATCH CASH FLOW TO LOAN TERMS!

 

Business owners and their financial managers should choose financing terms that align with their current and future cash flow needs.

 

The shorter loan terms offer shorter repayment times but more sizable monthly payments. Longer loan terms mean small monthly payments but longer amortizations --and they may not work unless you have a steady cash flow coming in regularly.

 

 

  

THE IMPORTANCE OF CREDIT SCORES

 

  

Business loans will often, but not always, require a good credit score. Safe to say, though, that business owners with good credit will more likely be approved for loans, but those with bad credit may not.

 

 

 DON'T MAKE THIS MISTAKE! STAYING AHEAD OF THE GAME VIA PROPER CREDIT LINE USE

 

 

A working capital line of credit should be used for short-term needs, not long-term ones. Don't confuse short-term working capital needs with long-term, permanent requirements.

 

If credit lines provide one thing it certainly is  ' flexibility ' as it relates to your financing ' wiggle room '. You're borrowing what you need and, of course, only incurring charges for amounts you use which hopefully are constantly revolving as you turn over key assets such as receivables and inventory. Invoice financing is key to running a successful growing business.

 

  

FACTORS AFFECTING LOAN TERM OPTIONS  

 

When considering the type of business loan that will best suit your needs, it's essential first to determine what you hope to use this money for. Beyond deciding which term is right for our situation and given financial circumstances, two other factors are involved in choosing a financing solution: interest rate and potential cost versus cash flows.

 

REASONS YOUR FIRM MIGHT NEED MORE WORKING CAPITAL

 

The cash flow of your business can be volatile. You may need additional capital during the peak seasons or to keep up when there’s less money coming in due to time pressures from suppliers, employees, and government regulations demanding attention all the time.

 

Almost all companies will experience times when more working funds are required just so obligations such as payrolls go through without interruption! ...but these instances typically come at different intervals.

 

Seasonal fluctuations in business cash flow are not uncommon. This can be because many companies need added capital at peak seasons or when they receive less revenue. Others may require more money so their operations keep running smoothly during these slower times of year without cutting back on expenses.

 

Almost all businesses will experience boom-and-bust cycles. Even more, flexibility comes around simply knowing and understanding that your firm can handle the day-to-day surprises ' - aka ‘bulge ' cash flow needs around one of, or seasonal business expenses.

 

Credit lines are of course, also not term debt - while your business assets typically collateralize them, it's at the end of the day, somewhat unsecured.

 

Knowing and understanding the true financial health of your business will often dictate what type of facility you're eligible for. Key to that of course, is how long you've been in business, what type of financing rates your firm can handle, and speed and accessibility to financing approval.

 

Thousands of businesses with SME COMMERCIAL FINANCE needs take advantage of short-term working capital loans, often marketed (or disguised?) as business credit lines and typically not used for more established businesses.

 

They are sought after because they offer quick approvals and approval criteria are far less restrictive than those solutions offered by Canadian chartered banks and provide the additional working capital needed.

 

From a financial perspective, your company's health will typically dictate the type of credit line your firm can access. The two most typical solutions are traditional banking or asset-based lines of credit for funding current assets offered by non-bank commercial lenders.

 

UNSECURED LINES OF CREDIT

 

Unsecured, revolving lines of credit  & unsecured loans are effective tools for augmenting your working capital for a more established business. They provide you with a valuable tool via the ability to finance temporary needs via a small business line of credit.

 

The Line of Credit is a business tool that can be used to help you grow your company. It's important for businesses since they may not always want or need one. Still, instead, use it as needed based on their revenue and balance sheet needs -your firm will pay interest on the facility used at any given time -A personal guarantee is required on unsecured credit lines.

 

Banks as an example, will consider focusing on issues such as business credit history and looking into the healthiness (and longevity) outside an individual’s financial statements: working capital ratio, networking cash position versus annual revenues, copies of bank statements, etc. Although many factors may affect the size of your working capital line of credit, a rule of thumb is that it shouldn’t exceed 10% of your company’s revenues.

 

Knowing how well your business is running and how to calculate working capital needs in the short term is key to both supplier and credit line provider relationships. While volumes are written on how business financial health is determined, the real world dictates it all boils down to:

 

Profit/loss generation

Operating Cash Flows

Positive/Negative net working capital positions

Existing debt

 

 

  

KEY TAKEAWAYS - ASSET FINANCING AS A WORKING CAPITAL CASH FLOW SOLUTION  

 

Asset Financing is tied directly to business asset values.

 

Asset finance for working capital is a good choice if options are limited for other cash flow financing needs.

 

Business lines of credit  are asset-based loans around a fixed amount based on asset values

 

Lines of credit can be secured or unsecured.

 

Businesses use working capital facilities to fund seasonal or cyclical cash flow gaps and fund day-to-day needs and expenses.

 

 

 

 

  

CONCLUSION - THE BENEFITS OF ASSET FINANCING FOR A BUSINESS CREDIT LINE AND WORKING CAPITAL GROWTH

 

If you’re looking for solid assistance and the cash flow/working capital solutions available in the Canadian marketplace call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can provide business credit line offerings and business growth strategies that meet your needs in the small business lending marketplace.

 

Let's explore those asset finance advantages: a working capital loan solution or a business credit line via traditional lenders or non-bank alternative financing firms.

 

FAQ/FREQUENTLY ASKED QUESTIONS / MORE INFORMATION

 

  

What is working capital financing? 

 

The funding of working capital financing is borrowing solutions focused on a company's ability to cover day-to-day expenses and commitments around current liabilities. This type of financing should not be used to purchase equipment and other long-term assets or real estate.  Businesses can also use short-term working capital loans or business credit for immediate cash flow needs.

 

  

What are the benefits of using asset finance for business credit lines and working capital?   

 

A key benefit of using an asset finance strategy for a business credit line is that it allows businesses t obtain financing using only the business assets as collateral while at the same time retaining the full use of those assets. This method of financing a company provides a flexible financing option versus the constraints around traditional bank loans as funding can be achieved more quickly and easily. The ability to generate additional revenue and profits based on cash resources is a key benefit.

Firms that are financially challenged but who have or can increase good gross margins can typically absorb the higher interest rates that come with non-bank business credit lines, often referred to as 'ABLs' -  Asset-Based Credit Lines.

 

 How can businesses determine if asset finance is the right option for their credit lines and working capital needs? 

 

Businesses should consider several factors when deciding if asset finance is the right option for their credit lines and working capital needs.  Issues that should be considered include the value of key business assets and the amount of cash flow financing/working capital the business needs. 

 

Asset financing should be compared to other potential financing options such as unsecured credit lines offered by banks to determine the best suitable option for running and growing the business. Borrowers should also ensure business loan requirements are understood around key issues such as business creditworthiness and credit history.

 

 

What is an asset-based lending line of credit? 

Asset-based lending lines of credit, also called ' ABL'S) is a type of business borrowing and financing where business lenders provide revolving credit facilities based on accounts receivable generated by ales, inventories, and fixed assets - If a company owns real estate that can also be factored into the facility.  These credit lines are used by businesses that can't access some of the business credit they need to fund working capital needs around cash management. These facilities allow a company to arrange borrowed capital they require in the future.

 

 How does asset finance work in Canada?  

 

Asset finance allows Canadian firms to use assets as collateral for a loan or line of credit. Lenders value assets and provide financing based on that value. In addition to working capital lines of credit asset finance is a valuable asset strategy that can also be used to describe equipment financing and real estate financing in business operations.

Fuelling Business Growth - Guide To Commercial Business Loans

Tweet

YOU ARE LOOKING FOR A COMMERCIAL BUSINESS LOAN

UNLEASH BUSINESS POTENTIAL WITH THESE DIFFERENT TYPES OF COMMERCIAL BUSINESS LOANS

You've arrived at the right address!  Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the  biggest issues facing businesses today 

               Unaware / Dissatisfied with your financing options?

Call Now !  - Direct Line  - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs.

Email  - sprokop@7parkavenuefinancial.com

 

UNLOCKING THE POWER OF COMMERCIAL BUSINESS LOANS

 

 

 

INTRODUCTION 

 
In many cases, access to different types of commercial loans can be challenging for business owners to achieve. 

 

Certain types of funding are often much better suited to small business financing needs. There are different types of commercial business loans for funding your business. These essential types of financing help start, grow, and sustain business operations. Other qualifications apply to different kinds of business financing - Choosing the right loan for your business should be job 1! Let's dig in.

 
 

As a business owner, you want to make informed financing decisions. Some loans may offer lower interest rates but more rigid qualifications for borrowing when it comes to qualifying for traditional financial institution bank credit or a similar business credit union solution.

 

WHEN ACCESS TO CAPITAL IS TIME SENSITIVE

 

The time-sensitive borrower must weigh their options to determine which type best meets their needs and circumstances at any given point in time. Some conditions can change over time due to market fluctuations or other factors outside of one's control - whether long-term loans or short-term funding solutions for the loan type.

The good news is that several business finance solutions are more accessible than ever.  Naturally, the ' go-to ' in the minds of many owners and their financial managers is ' the bank. '  Here, capital is virtually unlimited, and the interest rate via fixed or floating rates is typically the lowest regarding the cost of funds for business borrowers.

 

TRADITIONAL FINANCING

 

Traditional loans from banks and other financial institutions are the most common type of commercial business loan. The majority of these loans require collateral,  good personal and business credit, and in some cases, a business plan.

 

The most popular financing in this area is bank term loans, government-guaranteed loans, and business lines of credit. Term loans are lump sum installment type loans for specific projects or investments in the business -  Federal guaranteed loans have less stringent qualifications as the government of Canada backs them.   Access to a business line of credit provides funding for day-to-day business operations, focusing on flexibility/access to capital.

Bank financing comes with a challenge, though - the need to provide full financial disclosure around financial statements, owner personal credit history and net worth,  collateral, personal guarantees,  and in many cases, the requirements to produce a business plan or cash flow forecast. Don't forget to take into consideration the ' timing ' factor, in that the processing time might often be weeks stretching into a month.. or more.
 

 

 

 

 

WHAT TYPES OF BUSINESS LOANS ARE OFFERED BY BANKS?

Types of business loans offered by banks :

Business lines of credit / online banking facilities

Term Loans

Equipment Loans

 

Commercial Mortgage

We can safely say that Canadian banks offer business financing options with the most flexibility, lowest interest rates,  and access to unlimited capital when a firm qualifies.

 

 

 

KEY FACTORS IN BANK LOAN APPROVAL 

 

In recent years access to  SME Commercial financing solutions has changed. Banks and credit unions have become more difficult to get traditional loans from for some businesses; fortunately, there are other options for easy access to the funding they can turn to if this is the case.

 

 

Factors such as years in business, profits, acceptable balance sheet ratios, etc., are key to bank loan approval in a bank's desire to mitigate risk.

Early-stage businesses often utilize personal financial resources to access cash, including business credit cards, loans from friends and family, etc.

 

 

 

At 7 Park Avenue Financial, we encourage clients to separate personal and business financing. Those types of resources are not often the best choice to finance a company, as business failures can significantly damage personal credit.

 

 

ASSESSING THE COST OF FINANCING VERSUS ACCESS TO CAPITAL

 

Is there a clear winner when it comes to interest rates? It turns out not necessarily. Sometimes the longer-term loan will cost you less than its short-term counterpart—even if that one has lower monthly payments and a more affordable interest rate.

 

A lower bank loan, as example, isn't always the lowest-cost loan. This can be true when comparing a long-term lower-interest-rate loan with short-term financing at a higher cost.

 

 

 

ALTERNATIVE FINANCING SOLUTIONS 

 

Alternative loans in Canada are known as non-traditional / non-bank financing for businesses that might in some cases, not qualify for traditional bank financing.  The broad category of these loans comes under the term ' Asset-based Lending'  and includes non-bank business credit lines and invoice factoring. Peer-to-peer lending and short-term working capital loans, also known as merchant cash advances,

Those firms that can't access all or even some of the funding need lender alternative financing to the rescue. Alternative lenders provide the same types of loans available from banks - and are often quicker to approve loans. This financing cost is higher, but it provides access to capital.

 

 
 SPECIALTY LOAN FINANCING  

 

Numerous types of business comes come under the category of  ' specialty finance '. This includes lender financing ( financing for lenders ), equipment and lease financing, commercial real estate financing via mortgages or bridge loans and franchise financing. Talk to the 7 Park Avenue Financial team about how these loans might help your business!

Non-bank business credit lines - focusing on the actual borrowing power of your assets. Asset-based lending is a form of commercial financing in which the company's collateral such as accounts receivable and inventory, is used to provide working capital.

Inventory Financing

A/R financing  ( aka ' factoring ' )

Short-term financing / Merchant Cash Advances /  Corporate credit cards / working capital loans - flexible payment structures to cover operational costs - transactions are approved quickly, and funding is fast compared to traditional financial institutions.

Tax Credit Financing  ( SR&ED loans )

 

Franchise loans - Eligible costs to finance a franchise

 

 

 TALK TO THE 7 PARK AVENUE FINANCIAL TEAM ABOUT YOUR FUNDING NEEDS

Both banks and alternative finance companies provide loans for long-term business growth - These needs might include :

Commercial real estate  mortgages for owner-occupied buildings and  facilities

Mergers and Acquisitions

Franchise Financing

Leasehold Improvements -  ( leaseholds can be easily financed via the Government guaranteed business loan ) New assets can enhance the value of your business.

 

 

Thousands of businesses annually use Government guaranteed loans with competitive interest rates and limited personal guarantee. The total amount available under the program is 1 million dollars.

These types of lending for small businesses are typically longer in duration - ranging from 2-5 years - Government loans can be accessed at competitive fixed or variable rates. This is not an operating line of credit but a term loan structure. Revolving lines of credit are available from banks and alternative lenders if a company is not a start-up. Start-up business loans can be a challenge for entrepreneurs.

 

 

Export Development Canada, another crown corporation, provides purchase order financing, contract financing, and credit insurance for an existing business expanding into other markets in the U.S. and internationally.

 

Talk to  7 Park Avenue Financial about EDC/Export Development Canada and BDC crown corporation financing solutions for a growing business.

 

 
 

 CONCLUSION - TYPES OF FINANCING FOR COMMERCIAL LOANS FOR SMALL BUSINESS & CHOOSING THE RIGHT COMMERCIAL LOAN  

 

Choosing the right type of business loan will help guarantee business success. For approval, business owners and financial managers should carefully assess the financing they need, repayment terms, business loan rates and qualifications, and business loan requirements.  Canadian business financing can sometimes be a long process, so plan and be prepared to weigh the pros and cons of each type of financing that will allow you to fulfill unique business needs and growth plans.

 

Talk to the 7 Park Avenue Financial team about financing and supporting your growth needs without diluting equity. Whether your funding revolves around growing sales revenues, focusing on turnaround financing,   or accessing working capital, we've got the solutions you need. Looking to buy a business or execute a management buyout? Talk to us about our work in this area.

 

When small businesses need capital, it often looks like commercial loans. Commercial loans are different for large businesses because the scale of a loan differs in size, but small and medium-sized businesses also need to rely on access to funds to help fuel growth or fund day-to-day operations.

 

Small businesses rely on commercial loans to fuel growth and fund many day-to-day operations like large corporate entities do. Commercial loans might differ in company size, but access to capital is important for any business looking to grow or operate successfully without having a negative impact or risk financially.

 

For more information about the full potential of different types of business loans, especially if you are focused on ensuring you understand and have access to the right type of commercial loans for your company, speak to 7 Park Avenue Financial,  a trusted, credible and experienced  Canadian business financing advisor with a track record of success in solving Canadian business needs and your goals to stay competitive.

 

 

 

 FAQ: FREQUENTLY ASKED QUESTIONS  / MORE INFORMATION / PEOPLE ALSO ASK

 

 

What is a commercial business loan? 

 

A commercial loan is a financing arrangement between a business and a financial institution like a bank. Loans can be used for various services and are arrangements that typically bring debt to the company's balance sheet. Commercial loans are for corporations and not consumers and generally are under a term loan structure. 

The financing provides the funds to start, grow and sustain ongoing operations. Commercial business loan solutions providers include bans, alternative lenders, commercial non-bank financing companies and business-oriented credit unions. Each provider of business loans will have different credit approval and qualification requirements and different interest rates based on transaction size, credit risk, etc.

 

What are the different types of commercial business loans?

Different types of commercial business loans include traditional bank loans, specialty loans and asset-based lending loan solutions. Conventional loans will be in the form of term loans or business loans of credit, and specialty loans are related to specific industry needs, examples include real estate financing, franchise loans, equipment purchase leasing, etc.

 

How do I choose the right commercial business loan for my business?

 

Choosing the right loan for a business should include assessing factors such as the type of financing needs, availability of flexible repayment terms, interest rate, and approval qualification requirements from the business lender. A business plan will often help identify the type of financing needed, and businesses should be prepared to provide appropriate documentation around financial statements, business plans, and the availability of collateral.

 

 

What are some forms of equity financing?

Forms of equity financing available for a business include angel investors, venture capital companies, private equity firms, and crowdfunding. These forms of financing will often require the business to be in a higher growth stage.

 

   

 What is the minimum credit score for a commercial loan from a bank?   

Commercial banks require a 650+ credit score to lend.

 

 

 What are the most common commercial loans? 

 

 

The most common commercial loans are commercial mortgages, term, government, and bridge loans/business credit lines.

Unleashing the Power of Factoring: The Ultimate Working Capital Financing Solution / Does Your Cash Flow Need Have An Identity Crisis? Here’s One Solution!

 

Tweet

YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS FINANCING!

Working Capital Financing Made Easy: The Benefits of Confidential Receivable Financing

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today 

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

CASH FLOW FREEDOM - EMPOWERING YOUR WORKING CAPITAL FINANCING NEEDS 

 

Cash flow is almost always the focus of business owners and financial managers. Most realize it turns about to be a full-time job! It's relevant if only for the fact that working capital financing is all about growth in sales and hopefully profits.

 

One solution, among several available, is receivable financing and  'factoring'.

 

  

WHAT IS WORKING CAPITAL FINANCING?  

 

Working capital financing is the funding a business uses to finance day-to-day operations of the business When using accounts receivable factoring ' as a working capital solution the business finances its receivables with a third-party finance company, called a  'business factor'   The business receives immediate cash for the goods and services they have provided to their customers.

 

One popular method of factoring is Confidential Receivable financing which allows a company to maintain control over both billing and collections while at the same time receiving same-day cash for the outstanding invoices the company wishes to finance.  Financing provided by accounts receivable financing providers improves cash flow and eliminates the waiting for payments to be made from customers.

 

 

BREAKING THROUGH THE CASH FLOW BARRIER 

 

Businesses need working capital to cover expenses in the day-to-day operations of the company. But for many businesses in Canada the access to capital is limited for a number of different reasons, so ongoing healthy cash flow is not always abundant!  A/R finance helps a business overcome the cash flow gap while eliminating the financing challenges a business faces.

 

 

The 2008-2009 world economic crisis drastically affected business liquidity. Every financial institution in Canada, i.e. Banks, trust companies, life insurance companies, third-party independent finance companies, etc. all had liquidity issues and concerns, and these were the lenders! And let us not talk about Covid and Pandemics and the worldwide  economic challenges of 2022-2023 around supply chain struggles as well as increasing interest rates after a period of low financing costs / aka ' easy money '

 

 

THE SME FINANCING CHALLENGE! 

 

Larger companies can look at equity financing, long-term permanent working capital, and other esoteric solutions the 'big boys' use.

 

But what about SME COMMERCIAL FINANCE needs? Start-up, smaller and yes even medium sized firms have to ' scramble ' to fill the void that top experts acknowledge exists in the Canadian business financing arena.

 

 

UNDERSTANDING RECEIVABLE FINANCE / FACTORING 

 

Factoring is a receivable finance cash flow strategy, allowing a business to finance their accounts receivable t commercial factoring companies in exchange for immediate cash. Traditional " old school'  factoring has the finance company then assume collection of the receivable from the business customer. The company pays a fee based on a percentage of the total invoice amount. The finance company pays the balance of that ' holdback' amount when the client pays the invoices, less a financing fee. Simple as that.

 

For businesses that can't, or do not want to!.. wait for clients to pay in 30-60 days ( or more?!) the factoring financing solution delivers immediate cash as a company generates sales - allowing the business to meet their obligations for key areas such as payroll, inventory purchases, and growth opportunities.

 

 

WHAT ARE THE DIFFERENT TYPES OF FACTORING

 

Business owners should understand that are some different types of factoring, and the industry at times makes it hard for customers to understand how basic these different solutions are

 

Recourse factoring is a/r financing with the company continuing to assume full bad debt and collection risk in terms of a potential non-payment from a client. If the company has received funding from the invoice factoring company for that now uncollectible invoice it must pay back the finance firm, or provide an invoice of equal value as payment.

Non-recourse factoring is when a company chooses to transfer the risk of bad debt to the finance company - although this method of financing is typically more expensive when collection risk is transferred to the finance firm.

 

Confidential Receivable Financing

 

Confidential receivable financing is a method of receivable factoring that allows the company to enjoy all the benefits of traditional factoring for unpaid invoices while maintaining full account control and communication with its client - The company continues its normal billing and collection process while still receiving immediate cash for sales that are generated and invoice to clients - This solution provides positive cash flow and keeps client relationships the same as they were in the past without any knowledge of how the business is financing its business.

 

Additionally,  the factoring fee in confidential a/r financing does not cost more!

 

So why factoring as a cash flow financing vehicle?  Yes, it will always have a higher cost, but... it's available, and it works. CONFIDENTIAL RECEIVABLE FACTORING even mirrors traditional bank lines - i.e. you can bill and collect and manage your own A/R without notification to any other firm, i.e. your customers.

 

IMPROVING CASH FLOW VIA FACTORING  AND A/R FINANCING

 

Factoring financing is a proven financing mechanism used by thousands of companies in Canada - providing a quick and efficient method of cash flow generation - allowing a business to operate efficiently and meet its day-to-day operational needs around cash flows.

 

What then are any challenges around factoring receivables? Although it's historically been around for almost forever it's incredibly misunderstood. Many players aren’t Canadian, (which doesn't necessarily have to be a concern) but the real truth is the way these firms operate and deliver on your financing. Also, prices and fees vary.

 

But whatever challenges come from factoring A/R it's safe to say that the ability to turn sales into 'immediate cash' is the greatest selling point to clients we talk to.

 

THE DIFFERENCE BETWEEN WORKING CAPITAL LOANS AND  RECEIVABLE FINANCING

 

At 7 Park Avenue Financial, we are often asked about the difference between working capital loans are a term loan structure, versus invoice financing .  Each method has its own benefits. While banks and other business lenders offer working capital loans for short-term ash needs these loans to have long amortizations and require regular installment payments. They can be viewed as a source of permanent working capital.

Invoice financing is the receipt of immediate cash for invoices which are the collateral for the cash - Companies receive the cash immediately and the company pays a fee on the invoice they choose to finance.

In general, receivable finance is easier to get approved versus long credit checks and due diligence performed by working capital providers.

 

  

KEY ISSUES TO UNDERSTAND IN FACTORING FOR WORKING CAPITAL NEEDS  

 

Things to both understand and consider when looking at factoring working capital financing include:

 

The requirement to finance all your A/R & Sales - Spoiler alert - you don't have to!

 

Rates/cost/fees -

 

Security arrangements - in all cases the key collateral is of course your A/R

 

Size of facility and quality of your customer base

 

Amount of financing extended against invoices - typically it should be at least 85-90%

 

THE DOWNSIDE OF TRADITIONAL FACTORING - IS THERE A SOLUTION? SPOILER ALERT !! YES, THERE IS!

 

Factor firms have very different levels of involvement in your business when you have such a facility. The factor financing can have a strong level of daily 'intrusion' into the Canadian firm's business - the invoice factoring company might insist on delivering invoices to your customer, notifying them of the financing arrangement, and yes, you guessed it, even calling the customer and collecting the receivable.

 

  

UNDERSTANDING CONFIDENTIAL RECEIVABLE FINANCING / FACTORING  

 

Naturally in a perfect world, most firms would rather perform these functions themselves as part of the overall 'customer relationship '. That's why we don't recommend that solution to our clients, instead, we prefer CONFIDENTIAL A/R FINANCE.

 

CONCLUSION - Unlock Your Business Potential with Factoring: The Working Capital Financing Strategy for Cash Flow Success

 

If you're focused on winning the working capital financing game,  call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who is focused on the cash flow and factoring solution you need to grow and survive.

 

Find out why 7 Park Avenue Financial is your best choice for a business financing partner for financing solutions tailored to your firm's needs. Use our industry experience and reputation to ensure you have access to the best business finance solutions.

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK/ MORE INFORMATION

 

Does factoring decrease working capital?

No factoring does not decrease working capital -  it allows a business to improve cash flows and to have the ability to run and grow a business. Factoring monetizes accounts receivable into cash.

 

 

Is there a drawback in factoring in receivables? 

While factoring receivables improves cash flow for a company cost is often seen as a potential drawback as it is a higher cost of financing in the majority, but not all cases. Companies who choose traditional factoring versus confidential a/r finance might view this method of financing as a negative to their reputation which is not really the case.

 

What are the benefits of working capital financing? 

Working capital financing provides businesses with numerous benefits, including:

 1. Ability to be  cash flow positive

2. Providing flexibility in cash flow management

3. Improved chances to access growth opportunities in areas of expansion staffing, technology access, etc

4. Minimizing credit and collection risk and management while providing positive working capital to the business

 

 Why do companies utilize factoring as a working capital solution? 

 

Factoring allows a business to meet the obligations of the business as is a popular financing tool in many industries - Businesses can have ongoing positive cash balances and cash control around different aspects of the business.
Businesses should focus on the tradeoffs in financing costs versus their ability to generate a positive return on capital in their business operations.

 

Traditional factoring solutions provide credit information on new clients, manage risk on approved non-recourse accounts, a well as providing a collection process without the need for additional staffing investment in managing an accounts receivable investment.

 

How does  The Factoring Process Work

The factoring process is a basic financial transaction around the initial setting up of the account facility as well as the ongoing financing of receivables.

Initial approval requires a business to submit a standard business application as well as a detailed account receivable  aging and sample client invoices - Typical other requirements include copies of several months' bank statements and info on business owners  and incorporation details,

Once the facility is established and a facility limit is approved factoring companies send out a notice of assignment to customers of the business - Companies submit invoices for financing and funds are remitted to the company, usually on the same day. Typical advances are in the 90% range and when the customer pays the company receives the balance of funds on the invoice, less a financing cost.

 

What are 5 Important Terms In Factoring Financing That Business Owners Should Understand  In Working Capital Factoring

Reserve Account - This is the amount that is held back on each invoice  in the factoring account until the client pays, typically in the 10% range

Spot Factoring - Spot factoring allows a company to finance a single invoice when required - it is often a more expensive solution for financing specific accounts receivables.

Advance rate - This is the amount the factoring company advances on each invoice,

Monthly minimums - clients must determine whether they will finance all of their invoices or only some of them at their choice

Discount rate - This is the financing fee for factoring - typically between 8% per annum up to 1.25% per month, depending on a number of factors such as size, overall risk profile and credit worthiness, trends in customer payments, type of industry, etc.

Many different industries are frequent users of accounts receivable factoring, such as commission advances, medical receivables, government receivables, construction, trucking,  staffing, etc. - Many factoring providers specialize in certain industries where asset-based lending solutions are a solid alternative to traditional financial institutions who would provide a line of credit.