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Invoice Financing is a great way to accelerate cashflow by getting paid on your outstanding invoices today, rather than waiting 30, 60, or 90 days to be paid. Invoice Financing acts like a Line of Credit, when your invoices are paid, your balance goes down, when you create new invoices, you can draw more money. The purpose of Invoice Financing is to bridge the gap between your Accounts payable and accounts receivable, which not only helps with day to day expenses, but helps you take on additional customers and grow your business.
There are various different terms and fees that come with Invoice Financing, and all of this is determined by the strength and credit of the business, but most importantly, the strength and credit of its customers. As an example, if a food vendor sells their goods to a restaurant that recently opened, the quality of those invoices wouldn’t be considered strong. If that same food vendor sells to Walmart and they have been for 2 years, the quality of that invoice would be very strong. The first example would result in higher rates and less competitive terms where the second example would have Invoice Financing companies competing for the business!
The application for invoice processing is simple, but the larger the amount that’s needed, the more paperwork that a lender wants to see. The process can take anywhere from two to thirty days and is usually dependent on how prepared a business owner is when they apply and what type of existing debt there is.
SMB Compass's simple and secure online loan application can be completed in a matter of minutes. Quick & Easy!
After we process your application we will contact you and provide you with the best loan offer.
Once your loan is approved in as little as 24 hours. You will have capital deposited directly to your business bank account.
In order to qualify for Invoice Financing a business must be in an industry that sells to other businesses, or a b2b industry. The reason for this is because b2b industries invoice their customers and sell on terms, while b2c industries collect payment at the point of sale (POS). The most common and best industries for Invoice Financing are; transportation and logistics, wholesale and distribution, temporary staffing, and manufacturing.
The flexibility of Invoice Financing gives business owners the ability to use the money for a wide variety of purposes. Some of the ways a business can use the money is:
A real example of a company that used Invoice Financing was a solar distributor based out of Arizona. The solar industry relies on sales people that are paid commissions, local utilities companies that give tax credits, and buyers that receive financing from third parties. All of the stages in billing and the complications around it caused a big cash flow cap and extended payment for the business. At the time we started working with the solar supplier they had $4,000,000 in outstanding a/r that was aging near 45 days, but they needed to pay sub contractors, vendors, and payroll every 15 days. Within 21 days we were able to have $3,000,000 deposited into their account and within 6 months there was over $15,000,000 of invoices financed!
If you’ve been in business at least one year, have at least $100,000 in annual revenue, and have a personal credit score of at least 600, you are eligible.
We use a number of different data points to instantly provide you with the best possible loan offer, including competitive rates and payment terms that work for you and your business.