Click me

How Does Invoice Factoring Differ From a Small Business Loan

HOW DOES INVOICE FACTORING DIFFER FROM A SMALL BUSINESS LOAN 2$ WHAT IS INVOICE FACTORING? This is a method of alternative finance wherein your business can get a cash advance on its invoices before you get paid by the customer. Invoice factoring Company Seller Buyer П You submit invoice to us for purchase We verify your invoice with your customer You sell to your customer We purchase invoice & you receive cash immediately П (Minus Reserve) п П П We notify your customer to submit payment for factored invoices to us Your customer pays us for the full amount of the invoice We release the reserve to you minus our fee WHAT IS A SMALL BUSINESS LOAN? These are loans offered to small businesses by Small Business Administration (SBA) programs, banks, government agencies, and other financial institutions. Disburse Email Funds Notification 50% YES Approve Loan Application Loan Review Loan Application Applicaiton х 50% NO Reject Applicaiton and notify customer Email Notification POINTS OF DIFFERENCES SMALL BUSINESS LOAN INVOICE FACTORING NUMBER OF STAKEHOLDERS п Factor П П П Lender Borrower Seller Debtor PAPERWORK / DOCUMENTATION Personal Background and Financial Statement v Corporate or personal tax returns Business Financial Statements V Corporate or personal financial statements V Ownership and Affiliations V Articles of incorporation, (if corporation) Business Certificate/License V Partnership agreement, (if partnership) Loan Application History Current aging of accounts receivables Income Tax Returns Current aging of accounts payable V Resumes - Some lenders require evidence of Copies of any UCC filings if you presently have management or business experience, assigned your accounts receivable to another especially if you want to start a new business secured party TIME FRAME If all goes well, you get hands on the money in You get your hands on cash in as little as 1-2 months a Week WHO SCORES OVER THE OTHER? DID YOU KNOW ALMOST 61% OF SMALL BUSINESS LOANS WERE REJECTED LAST YEAR ALONE? BY JUNE 2012 SMALL-BUSINESS LOANS WERE DOWN FROM THEIR JUNE 2008 PEAK OF $56 BILLION $336.4 BILLION A large number of small businesses were left high and dry looking for alternative financing options. RESULT The market for "factoring" (B2B loans against outstanding invoices) is getting bigger by the day. Morgan Stanley estimates that factoring produces $13BILLION - $15 BILLION PER YEAR WHY IS INVOICE FACTORING GOD SENT FOR SMALL BUSINESSES? Factoring is not a loan Minimal credit checks and documentation Startups usually qualify for factoring The credit of the individual owners is not a parameter for qualification No personal guarantees needed in a factoring relationship With factoring, only the receivables need to be pledged IF YOUR SMALL BUSINESS WANTS IMMEDIATE CASH, INVOICE FACTORING IS DEFINITELY A BETTER BET THAN A SMALL BUSINESS LOAN. SOURCES: PRESENTED BY: CBAC

How Does Invoice Factoring Differ From a Small Business Loan

shared by andrewcravenho on Jul 28
If you are a small business owner and confused between small business loan and invoice factoring for your startup funding, here is the infographic for you to know the difference between Invoice Factor...


CBAC Funding


Did you work on this visual? Claim credit!

Get a Quote

Embed Code

For hosted site:

Click the code to copy


Click the code to copy
Customize size