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It’s a well know fact that small businesses have a hard time qualifying for loans. But for businesses with bad credit, securing a business loan can be even more difficult. When traditional lenders turn you down, you can apply for a funding solution that favors business with bad credit: namely, invoice financing.

The Perfect Financing Option for Businesses with Bad Credit

Invoice financing is the process of selling your outstanding invoices to a factoring company at a discount. This type of funding solution is viable option for small businesses needing cash flow but don’t qualify for traditional loans.

Unlike conventional funding solutions, you receive the funds based on the creditworthiness of your customers, rather than your personal or business credit rating. The factoring company runs a credit check on your customers to determine whether you can factor your invoices or not. If your customers have good credit scores, factoring companies will most likely approve your transaction.

 

The Benefits of Invoice Financing

Some of the benefits of this type of financing include:

  • Improved Credit Rating: The funds from invoice financing allows you to pay your bills, taxes, etc. on time, which can improve your credit rating.
  • New Opportunities: By freeing up the cash flow tied to your invoices, you’ll be able to seize growth opportunities that come your way.
  • Boost in Cash Flow and Working Capital: You don’t have to wait for months before your customers pay their invoices. Invoice financing gives you money upfront once you’ve sold your invoices to them.
  • Alternative to Business Loans: Many lenders don’t lend money to small- to medium-sized businesses, and especially to startup companies. Invoice financing offers business owners the working capital you need for daily operations.
  • Not a Loan: Invoice financing is not a loan, so it doesn’t contribute to the debt level found on your balance sheet. This means that invoice factoring won’t affect critical financial ratios.

Financing Your Invoices Even with Bad Credit

As mentioned, financing your invoices is the process of selling pending invoices from creditworthy customers to a factoring company-. The factor gives you 80% to 90% of the total invoice value upfront. Once your customers pay their invoices, the factoring company will give you the remaining balance minus a small fee. Instead of waiting for 30, 60, or 90 days for invoice payments, invoice financing immediately provides you with working capital.

Unlike traditional loans, you can qualify for invoice factoring even with bad credit because factoring companies are more concerned with your customers’ creditworthiness than yours. You can even factor your invoices after your company filed for bankruptcy protection.

Invoice Financing for Small Business Owners

Invoice financing is one of the most affordable funding solutions for businesses with bad credit. You don’t have to wait for months for invoice payments. SMB Compass offers invoice financing for companies in the United States. If you have pending invoices, you may apply for this type of financing. Our trusted financial experts will help you every step of the way.

Simply call us Now at (888) 853-8922 or email us at info@smbcompass.com for more details.