Factoring: A Type of Small Business Loan

Factoring can be a very fast way to get financing for your company’s business credit needs. Basically, factoring means using your accounts receivable as collateral for a small business loan.

When the accounts are paid, you pay the small business loan. In some cases, your outstanding accounts receivable are actually exchanges for the money from the lender extending you business credit. The lender takes responsibility for making the collections. Using factoring to obtain financing in the form of a small business loan is a strategy for building a strong business credit score. It can also be used instead of seeking additional investments where you may be required to give up a portion of the ownership of your company. Using factoring as an alternative small business loan can help to secure a steady cashflow for your small business when you have accounts receivable. Please contact us for more information about factoring and small business loans.