All businesses today need to maintain a good cash flow and to do this, they often have to turn to lenders that can help them out. In the past, there were banks that would do this, but the market has shifted and this is why so many companies are now exploring options other than a standard bank loan. In today’s market, many can use factoring based on future credit card receivables to get the cash flow they need a lot faster than they might get it otherwise. We are going to look more closely at this type of funding and get an idea of what it is about and what it has to offer. We will also look at which businesses benefit most from this type of funding, as well as how to choose the right financing company for your particular needs. This way, you will be well armed to decide whether or not this is funding you can use right now and, if so, where you ought to look to find it. Let’s get started!
What is Credit Card Receivables Factoring All About?
It is important that we make a distinction at this point because some funding products bear this name, yet they are not exactly factoring. You may hear or see terms such as accounts receivable factoring or invoice financing and these are the most common options out there. While they are not credit card receivables factoring per say, they are sometimes called this and that is not far from the truth. Factoring involves giving loans against invoices that a company already has coming in where as financing based on future credit card sales expected is different. The only real difference is in how the lender decides whether or not they are going to give you the money you are seeking. In a pure factoring situation, you will be judged on invoices. All you really need to do is look closely at what the lender is offering you to see the difference because both of these solutions can work.
Who Can Use Factoring Based on Future Credit Card Receivables to Their Advantage?
The short answer here is that any company which accepts payments via credit card can benefit from this kind of funding. However, as with most short answers, a few details are missing. You will normally need to have a credit score that is around 500 or so in order to be approved by the majority of financing companies, but there are some financing companies who are willing to take on a small business that they still feel will be safe to lend to even with a lower credit score. This is why you want to make sure you speak with someone at the factoring company and see what they are looking for in a borrower and what you can do to meet their guidelines. Once you get an idea of what they are looking for, then you can decide if you could use the money to do some repairs, pay off a debt or buy more inventory. In many cases, this is the easiest way to get money for those types of situations and this is what has put factoring on top when it comes to easy cash flow solutions that are good for a variety of businesses.
Why Credit Card Receivables Financing is Better Than Other Funding Types
As mentioned earlier, one of the strong points with this kind of lending is that you are not going to have to wait a long time to get your money. That is definitely a wonderful feature, but you also want to take into account that you can usually get approved by one of these lenders with a lot fewer hurdles than what you would face from a bank or other type of lending institution that is not using your credit card account receivables to judge whether or not you are a good candidate for their offerings. You will find that this is a simple and fast solution that generally gets you the money you need with two weeks or less.
Examine Credit Card Receivables Factoring Providers Before Deciding
As with any lending situation, shopping around for the best deal on credit card receivables factoring is a great way to get better terms or lower interest rates. You will find that this is going to be simpler to do with the web today. You can find sites like www.smallbusinessloanrates.com that let you compare funding offers and decide which provider you want to work with. That is one very simple way to make your decision making process simpler and make sure that you get the best terms for your business.