Invoice factoring is one of the fastest ways to fund your small business. However, this option is only available to business owners who get paid through invoices. Invoice factoring is a form of small business lending where a factoring company will purchase your outstanding invoices as a percentage. This company will offer you a lump sum and then your customers will pay their invoices to them. The factoring company may charge fees for the process. They may also have some qualification requirements. This article mentions the best invoice factoring companies and how it is like to deal with them.
- Paragon Financial Group
This company is very popular in the invoice factoring industry due to its low rates and terms. Paragon factors up to $10 million per month. However, they have a minimum invoice amount you can factor; you cannot factor invoices less than $25,000 when you work with Paragon. The advance rate is from 80% to 90% and they will fund your initial request in 3 to 10 days. All subsequent applications will be funded in 24 hours. With Paragon, you can even qualify for invoice factoring if you do not have a good credit score. There is no required time in business specification when you deal with this institution. However, you must have a minimum annual revenue of $300,000 to qualify. Paragon focuses on the creditworthiness of your customers and they only accept invoices of customers that are creditworthy.
- Blue Vine
Blue Vine offers several business loan options and they happen to offer factor invoices as well. their discount rate starts at 0.25% per week. They do not charge maintenance fees and there are no prepayment penalties as well. They, however, charge a flat wire fee of $15. Blue Vine funds invoice amounts that range from $5,000 to $5 million. The typical advance rate on their invoices ranges from 85% to 90%. The rate depends on the evaluation of your company and the customers whose invoices they are going to factor. Blue Vine requests for a personal guarantee for the invoices they will factor. This means that you will need to provide personal collateral. This means you will lose that collateral if your customers do not pay their invoices and you are also unable to raise funds to cover the cost of that invoice. Although Blue Vine does not bother about the creditworthiness of the borrowing company, they still conduct some checks on the borrower. They require that your business should have a minimum credit score of 530, and you should also be in business for at least 3 months. Your minimum annual revenue should be $100,000.
- Harper Partners
This firm also a good invoice factoring company for businesses. Their discount rate is 1% to 3% of the invoice amount. The advance rate is typical advance rate is 90%. It takes 2 to 5 days for this firm to fund your initial invoice factoring request. The subsequent ones take less than 24 hours. Unfortunately, Harper Partners have a high minimum amount you can factor. The minimum amount of invoice you can factor for a month is $50,000. If you cannot factor up to $50,000 in a month, then Harper Partners is not for you. This lender does not consider your business credit score or the number of years you have been in operation. Their emphasis is on the creditworthiness of the customer. If the customer has a good credit history and a good credit score, this firm will agree to factor their invoices. They also factor invoices up to $5 million a month. If you need to factor invoices as much as $5 million you should consider dealing with this firm.
If you have outstanding invoices and you are confident that your customers will pay them in less than 30 days, you can factor your invoices at a rate as low as 0.75% with Altline. With Altline, the discount rate is cheaper if you factor a large number of invoices and your customers pay their invoices on time. The discount rate ranges from 0.75% to 3.5% per invoice, however, the rate increases every 15 days. You will pay a $500 one-time origination fee and a $30 wire fee. If you are unable to meet the $30,000 minimum monthly requirement, you will pay a $500 fee. Altline funds up to $5 million invoices each month. The advanced rate is 90% and the advance is automatically repaid when the customer repays his or her invoice. When you apply for the first time, Altline approves your request and gives you the advance within 5 to 7 days. After that, all subsequent requests will be funded within 24 hours. Altline does not look at your business credit score or the age of your business. They rather focus on the creditworthiness of your customers.
- TCI Business Capital
TCI Business Capital is another invoice factoring company that is worth mentioning. This company factors invoices at a rate of 1% to 4%. They fund $50,000 to $20 million invoices per month. You will need to factor at least $50,000 worth of invoices to qualify for their invoice factoring. The initial funding can take between 3 to 4 days but subsequent invoice funding takes less than 24 hours. They do not charge an origination fee, however, there is a $12.95 ACH fee and a $19.99 wire fee. TCI Business Capital does not consider your business credit score or your time in business but you are expected to factor at least $50,000 invoices per month.
Invoice factoring is reliable and fast. It is also easy to qualify for this funding option. However, you should consider other affordable options first. This is because this form of funding is expensive and business owners who do not have reliable customers can incur more debts.