Security company loans cover the financing that guard, patrol and event-security firms use to meet payroll while clients take 30 days or more to pay, to take on new contracts, and to buy vehicles and equipment. The most common tool is security guard factoring, where a factoring company advances most of an invoice’s value and collects from your client. Lines of credit, SBA loans and equipment financing fill the other gaps. For the wider picture of financing for service businesses, start with our professional services business loans hub.
The core problem is that guards are paid every week or two, while commercial and government clients pay on their own schedule. A growing firm can run short of cash precisely because it is winning work.
Why security firms need financing
Security is a labor-heavy business. The Bureau of Labor Statistics counts about 1.3 million security guard jobs in 2025, with a median annual wage of $38,020 in May 2025, and says 58% of security guards work in the “investigation, guard, and armored car services” industry (BLS). For a contract security firm, wages make up a large share of costs, and they come due before the client pays.
Common reasons to borrow:
- Payroll between invoices. Covering guard wages and payroll taxes while waiting on net-30, net-45 or longer client terms.
- Starting a new contract. Hiring, licensing, training and uniforming guards before the first invoice goes out.
- Government and large commercial contracts. Public agencies and large property managers can be reliable payers, but their payment cycles can run for weeks.
- Vehicles and equipment. Patrol vehicles, radios, cameras and access-control gear.
- Insurance and licensing costs. “Most states require that security guards be licensed by the state in which they work,” according to the BLS, and firms carry their own licensing and insurance costs on top of that.
- Buying a competitor or a book of contracts. An acquisition is usually financed with a term or SBA loan.
Financing options compared
The table sets out the main options with the figures providers publish. Figures checked on September 21, 2026. Your pricing will depend on your clients, volume and credit, so treat these as reference points.
| Option | How it works | Published figures | What to know |
|---|---|---|---|
| Security guard factoring (example: 1st Commercial Credit) | Sell invoices; factor advances cash and collects from your client | “Rates from 0.69% to 1.59%”; typically 90% advance; facilities from $10,000 to $10 million; set up in 3 to 5 working days | Clients pay the factor directly; invoices need proof of performance |
| Security guard factoring (example: Charter Capital) | Same structure | “Up to 98 percent advance rates”; cash “within 24 hours” | Page gives two general fee ranges (see below); no long-term contracts |
| SBA Contract CAPLine (7(a)) | Line tied to specific contracts | Maximum maturity 10 years | Finances costs “allocable to the specific contract(s)” |
| SBA 7(a) loan | Term loan through a participating lender | Up to $5 million; up to 10 years for working capital or equipment | Longer approval; suits acquisitions and planned growth |
| Business line of credit (example: OnDeck) | Draw and repay as needed | $6,000 to $200,000; average line of credit APR of 59.8% | 1 year in business, $100,000 annual revenue, 625 FICO |
How to read the costs. A factoring fee (also called a discount rate) is a percentage of the invoice value, charged for a set period or per invoice; it is not an annual rate. The advance rate is the share of the invoice you receive upfront; the rest, minus fees, arrives when your client pays. An APR (annual percentage rate) is the yearly cost of credit, including interest and certain fees, and is the number to use when comparing loans. Because a factoring fee and an APR measure different things, convert any factoring quote into total dollars for a typical month before you compare it with a loan. 1st Commercial Credit’s page does not say whether its rates apply per 30 days or per invoice, so ask any factor to state the fee period, the reserve and all other charges in writing. Our guide to invoice factoring rates explains the usual pricing structures.
How security guard factoring works
Factoring is built for the payroll gap. The process is usually:
- You complete the work and invoice your client.
- You send the invoice to the factor, with proof the shifts were worked. 1st Commercial Credit asks firms to “Submit Invoices with Proof of Performance.”
- The factor verifies the invoice and advances most of it. 1st Commercial Credit says it “typically” advances 90% of the invoice’s value, based on your customers’ creditworthiness (1st Commercial Credit).
- Your client pays the factor. “Your customers will pay the invoices directly to us,” 1st Commercial Credit explains, after which it sends you the remaining balance minus its fee.
Charter Capital advertises “up to 98 percent advance rates” and says “funds are typically wired to your account in less than 24 hours.” Its page gives two general fee ranges, “one to five percent” and “between one and three percent” of the invoice value, so confirm which applies to your firm. It also says “There are no long-term contracts, and you control which invoices you factor” (Charter Capital).
Because factors lean on your clients’ credit, factoring can be easier to get than a bank line for a young firm with strong clients. The trade-offs are cost, the fact that your clients will know you factor, and the paperwork for each invoice. See our guides to customer notification and, if you hold public contracts, government contract factoring.
Protect your payroll taxes first
Whatever you use to fund payroll, keep up with payroll tax deposits. The withheld share of employment taxes is held in trust for the government. The IRS explains: “These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit.” If they go unpaid, the IRS can assess a Trust Fund Recovery Penalty on a person who is “responsible for collecting or paying withheld income and employment taxes” and willfully fails to do so, and “the amount of the penalty is equal to the unpaid balance of the trust fund tax.” The IRS also says that “using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness” (IRS). If cash is short, financing should cover the gap so tax deposits are never used as a bridge.
SBA loans and lines of credit
The SBA’s Contract CAPLine “finances the costs of one or more specific contracts, including overhead or general and administrative expenses, allocable to the specific contract(s),” with a maximum maturity of 10 years (SBA types of 7(a) loans). That makes it a fit for a firm that has won a large guard contract and needs to staff it. The broader 7(a) program goes up to $5 million and covers working capital, equipment and “changes of ownership (complete or partial)” (SBA), with maximum terms of 10 years for working capital or equipment (SBA terms and conditions).
If you are buying another security company, note that the SBA’s updated rulebook, SOP 50 10 8.1, takes effect October 1, 2026 (SBA Information Notice 5000-880695). Ask your lender which version applies and get the equity requirement in writing.
A bank or online line of credit can also bridge payroll. OnDeck, for example, offers lines from $6,000 to $200,000 with 12-, 18- or 24-month repayment terms (OnDeck). OnDeck says it charges no annual, monthly or draw fees, so an unused line costs nothing there, but approval relies more on your own revenue and credit than factoring does. Our business line of credit guide covers the basics.
For patrol vehicles, cameras and radios, equipment financing uses the equipment as collateral and keeps working capital free for payroll.
What lenders and factors look for
- Client quality. Factors care most about whether your clients pay reliably. Government agencies and established commercial clients help.
- Signed contracts and post orders. They show the work is real and ongoing.
- Timesheets and proof of service. Invoices backed by shift records are easier to verify and fund.
- Licensing and insurance. Current state licenses and liability coverage, since a lapse can end a contract.
- Tax status. Expect questions about payroll tax deposits and any tax liens, since unpaid taxes put both you and the funder at risk.
- For loans, owner credit and cash flow. Bank statements, tax returns and personal credit. See our list of documents lenders ask for.
Pitfalls to watch for
- Comparing a factoring fee with an APR. They are different measures. Compare total dollar cost for the same period.
- Missing contract terms. Check for minimum monthly volumes, termination fees and whether you must factor every invoice.
- Client concentration. If one client makes up most of your invoices, a slowdown in its payments hits your payroll directly.
- Using payroll tax deposits as a bridge. This carries personal liability for responsible people in the business.
- Daily-payment advances for a payroll business. Products that debit your account daily can compete with payroll for the same cash. If offered one, read our guide to factor rates vs. APR.
FAQ
What is security guard factoring?
It is invoice factoring for security firms. You sell unpaid client invoices to a factoring company, which advances most of the value, collects from your client and sends you the balance minus its fee.
How much of an invoice will a factor advance?
It depends on the factor and your clients. 1st Commercial Credit says it typically advances 90%, and Charter Capital advertises advance rates of up to 98%.
Can a new security company get financing?
Factoring is often the most accessible option for a new firm because it relies on your clients’ credit. 1st Commercial Credit, for example, says “No financials required.” Lines of credit and SBA loans usually ask for more operating history; OnDeck asks for 1 year in business.
Is factoring the same as payroll funding?
They are closely related. Payroll funding is factoring used mainly to meet payroll, and it is common in staffing. Our guide to payroll funding for staffing agencies explains how it works.
Next step
If you are comparing factoring, a line of credit or an SBA loan for your security firm, our professional services business loans page explains how we help you compare offers from the lenders and factors we work with. Other labor-heavy service businesses use similar tools; see factoring for staffing companies and cleaning business loans. Have your client list, recent invoices and payroll records ready.
Sources
- Bureau of Labor Statistics: Security guards and gambling surveillance officers
- IRS: Employment taxes and the Trust Fund Recovery Penalty
- U.S. Small Business Administration: 7(a) loans
- U.S. Small Business Administration: Types of 7(a) loans
- U.S. Small Business Administration: 7(a) terms, conditions and eligibility
- SBA Information Notice 5000-880695: Issuance of SOP 50 10 8.1
- 1st Commercial Credit: Security guard company factoring
- Charter Capital: Invoice factoring for security firms
- OnDeck: Business line of credit
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.