Small Business Factoring Gets New Businesses Off the Ground

If you’re in the process of starting a new business, small business factoring may be just what you need to take you to the next level.

The job ahead of you and your new business can seem nothing short of overwhelming. Like carrying a loaded backpack, the burden may feel heavy.

You’ve got to…

  • Figure out your business plan

  • Develop your marketing position

  • Pick a logo

  • Establish a website and etc., etc., etc

You’ll also have to decide…

  • To go it alone or hire employees

  • To “in-source” or outsource

  • The best customer delight plan

  • And so much more

Like the Energizer Bunny, your job just keeps on going and going and going.

You may calculate that, to get the business moving the way you’d really like, you need anywhere from $10,000 to $25,000, or maybe more. That’s when that infamous question jumps into your head…

Your Questions

Where am I going to get that kind of money?

If I want to start a new business can small business factoring really help?

Using factoring on a start up business – Is it a good Idea?

Real Answers

Where am I going to get that kind of money?

The mere asking of this question is a fundamental step toward moving your business forward. Whether you need is as little as $2,000 or as much at $2 Million the way you decide to finance your business could determine your success.

So what are your choices anyway? Let’s see. You could…

  • Use your own savings

  • Borrow from friends and family

  • Do fundraising activities

  • Borrow from a bank or traditional lender (In the form of secured or unsecured credit)

  • Borrow from a private lender

  • Sell your account receivable credit card sales

  • Sell your account receivable invoices or claims – (small business factoring)

  • Any other creative and legal way you can think of - like using the profits from another business.

If I want to start a new business can small business factoring really help?

Let’s focus on the option of selling your account receivable invoices or claims. By the way, this option assumes that you have clients that have already been serviced and therefore owe you money.

If your business is so new that you don’t have clients yet, consider one or more of the other finance techniques listed above.

Financing your new business by selling your account receivable claims/invoices is likely a viable option if you have been in business for at least 3 to 4 months and have established account receivables within that time frame.

This is good news because most traditional lenders expect you to have been in business for at least two to three years before they’ll open their wallets to your business.

Using factoring on a start up business – Is it a good Idea?

Let me tell you about LaNell Earnhardt. She knew about the benefits of selling account receivables long before she and her husband began their own textile business. She had previously worked for a company that purchased receivables.

She says, “In textiles, the moment I had a signed bill of lading and generated an invoice, I factored the invoice with our factoring company. I already knew of the benefits of factoring, but this arrangement gave me so much PEACE. All I had to do in the textile company was sell, wind, and ship!”

Why did small business factoring give LaNell "so much peace?" Ultimately, because she didn’t have to wait to get paid. As a result, she could focus on building the business.

What was she referring to when she referenced, “the benefits of factoring?” Well, here are a few…

  • Get funding with or without good personal credit

  • Control your own cash flow; you decide how many receivables you sell at any given time

  • Let someone else do the work of “debt collecting”

  • Get the money that is owed to you now instead of waiting for potentially months on end

And here are a few more…

  • Use those funds anyway you see fit

  • Use the cash to grow and expand your operation, pay bills, improve cash flow, and more

  • Avoid long term loan contracts as you can stop factoring whenever you choose

  • Leverage your assets with no monthly payment attached

  • Maintain a consistent source of financial support as your business grows

Like your to do list, the benefits really do go on and on and on. So, is small business factoring on a start-up company a good idea?

It absolutely can be! In fact, it’s among the few viable ways to finance a new business that is as young as a few months old.

(By the way, another viable option for financing a new business is by means of the merchant account cash advance. )

There is one caution, however. Small business factoring won’t be a good choice for everyone. For example, you might decide to put factoring on hold if…

  • The discount charged for selling the receivables is too steep to allow enough cash flow to run your business.

  • And/Or

  • You presently have a reasonable time frame of receiving payments - like within two to three weeks.

But, if your new business is…

  • Waiting too long for payment

  • And/Or

  • You need money now

Then like LaNell Earnhardt, choosing to factor your account receivables may be among the best financial decisions that you ever make.

To find out if small business factoring will help you grow your business, feel free to Contact Us. We’ll give you the facts so you’ll be in a position to make the best decisions for your business.

(800) 778-5361

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