Invoice Factoring vs. Conventional Business Loan

Invoice Factoring vs. Conventional Business Loan

When businesses need financing, one of the first places they often look is to their local bank. A conventional loan from a traditional bank may be perfect in some cases. In other situations, however, conventional loans may not work out.

The Pitfalls of Conventional Business Loans

A conventional loan involves receiving a lump sum finance amount that must be paid back, usually in monthly installments, along with interest charged against the loan. It can be difficult to get a term loan from a traditional bank. Their application process is generally quite involved, can take a long time before a decision is made, and the business can be denied the loan.  

Invoice Factoring as a Smart Alternative

Fortunately, there are other forms of financing that have simpler and less-intrusive applications compared to a term loan. One of the types is termed invoice factoring.

Factoring is not a loan and does not have to be paid back. Instead, it is a sale and the business is free to use the money received as it sees fit.

Here’s how it works: A business sells its unpaid invoices to a financial agent. The agent pays slightly less than the total value of the invoices. A classic win-win situation is created: The business owner gets a quick infusion of working capital and the financial agent gets to collect the full value of the invoices.

Once approved, the funding generally arrives very quickly. In addition, the business owner doesn’t need to chase down unpaid invoices; that becomes the financial agent’s responsibility.

Obtain Financing from Green Apple Funding

The folks at Green Apple Funding are interested in seeing your business succeed. The would love to be your preferred financial business partner. Give them a call today to learn more about invoice factoring and other business financing options that could work for you.