Factoring: Another Successful Lending Solution

By |2017-09-14T11:21:19-07:00September 9th, 2013|

Access to Capital Chicago SHS C1-54-SWhen it comes to small business loans, there is no shortage of options, but finding the right source of funding for your company may be tough. Traditional lending is not practical for everyone, so alternative lending may be your best bet. Factoring is just one type of alternative lending that could be a possible solution for your business.

Factoring, a subset of Asset-based lending, is a unique lending model that essentially exchanges a company’s accounts receivable for an agreed term for instant cash. The company can then fulfill an invoice with the borrowed money and receive the balance once the customer pays the factor. This lending model allows businesses to grow and even gain the breadth necessary to qualify for a traditional loan. To break it down:

  • You sell your accounts receivable to a factor at a discounted rate.
  • The factor gives you a cash advance to finance the invoice.
  • Once the customer receives the order and pays, the factor is reimbursed, and you receive the balance.

Yousuff Razzak, CEO of Chicago Printing and Embroidery, shared his story at Access to Capital: Money to Mainstreet in Chicago. He used factoring to grow his business and pay off his debt. Franklin Capital, a national factoring lender based in Illinois, provided Chicago Printing and Embroidery with the funding necessary to fulfill their invoices, expand their client base, and ultimately help them to qualify for substantial traditional loans. Hear his testimonial here.

Franklin Capital serves small to medium-sized businesses across a variety of industries, at all stages of the business cycle, whether a start-up, an expanding business or on the brink of bankruptcy. Loans are approved based on the client’s creditworthiness to avoid losses, and funding is usually provided the day your invoice is submitted. Fees will vary based on the client.

Franklin Capital is not the only company basing its alternative lending strategy on factoring. Liquid Capital, the Interface Financial Group, the Hamilton Group and a fleet of other firms offer similar types of factoring. So if you are a small business owner still searching for financing, consider factoring. It could be the key to boosting your company’s revenue, growing your business and qualifying for a traditional loan.