Getting a small business started and getting those first orders to develop your customer base is often a challenge. For many small businesses, particularly those that have cyclical or seasonal sales, providing a continual cash flow can be a challenge.
To address these issues, many businesses turn to what is often called factoring lending. Just to be clear, this is not the same as a loan and it is not lending. It is funding or advancing cash on what you have already earned – the invoices your customers are in the process of paying.
The Basics of Factoring
When comparing a loan to factoring lending, a loan entails the payback of both principal and interest on the amount borrowed. It also means having collateral to cover the loan. With factoring, the accounts receivables for work completed, is all that is needed to allow us to advance the funding for approximately 80% of the total value.
We retain 20%, but we also handle all collections, payment processing and paperwork for each account. Once your customer has paid the invoice in full, we deduct our set rate and forward the balance to your account.
The Benefits for a Small Business
With the 80% cash delivered into your business account in days, you can keep your business running with the cash you need. Since you have control over the accounts receivable factored through United Capital Funding, the business financial management is in your hands.
With the funds, you can pay off vendors, make purchases, hire new employees or make payroll. You can also have the freedom to take on new work without having to delay.
If this sounds like a good match for your business, call our team today. We are easy to reach at 877.894.8232 and we would be happy to talk to you about your funding needs.