If your small business needs working capital and has outstanding invoices from slow-paying customers, one option is to sell those invoices to a factoring company for immediate cash.
This is known as invoice factoring, and although it can be expensive, the speed and convenience could be worth the cost for your business.
If you think invoice factoring — or accounts-receivable financing — may be a good fit for your company, here are three factoring companies to consider. We’ve recommended these lenders based on cost, speed of funding, and ease of qualifying.
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No credit check or annual revenue requirements
For borrowers with a credit score of 530+, $70,000+ revenue
For borrowers with 600+ credit score and $150,000+ annual revenue
If you want to avoid credit check, minimum revenue rules, try Fundbox
- Instant approval, with funding in one to three days
- Advances repaid weekly over 12 weeks
- 44% to 64% APR
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Minimum qualifications |
|---|---|
| Personal credit score | None required |
| Time in business | No minimum — six months of activity in an online accounting or bookkeeping software required |
| Annual revenue | None required |
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Fundbox is a good choice for businesses that want to finance unpaid invoices to overcome a cash flow gap but need only $30,000. The more you use Fundbox to finance invoices, however, the more money you’ll potentially be able to borrow.
An invoice finance company, Fundbox gives you an advance on your outstanding invoices. But it does not take control of the collections process, so borrowers maintain full control over their invoices, meaning your customers will not be contacted by the third-party company. Borrowers typically receive money in one to three business days, and you’ll receive 100% of the invoice value upfront in the form of a line of credit, repaid weekly over 12 installments.
How to qualify: There’s no minimum credit score or revenue requirements. You just need to link your online accounting software (QuickBooks, Harvest, Freshbooks, Xero, Clio, InvoiceASAP or Wave) to the Fundbox website, and you must have a minimum of six months’ activity in one of these applications.
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If your credit score is 530+ and annual revenue $70,000 or more, try BlueVine
- Funding as fast as one day
- Receive 85% of the invoice value upfront, and the rest when customer pays
- 23% to 61% APR
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Minimum qualifications | Typical borrower |
|---|---|---|
| Personal credit score | 530 | 650 |
| Time in business | At least 6 months | About 3 years |
| Annual revenue | At least $70,000 a year | About $500,000 a year |
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BlueVine is a good option for businesses that need cash immediately, as customers can get funding as fast as one business day after completing a two-page registration process. It’s also a good option for financing larger invoices, as BlueVine provides up to $250,000.
The repayment process works a bit differently than with Fundbox: Instead of receiving 100% of the invoice value upfront, paid over 12 weeks, BlueVine advances 85% of the invoice amount upfront, and the rest of the money when your customer pays you, minus fees. The invoice must be due within one to 12 weeks.
How to qualify: Besides meeting the minimum credit score and annual revenue requirement, you must sign a personal guarantee, which puts your personal assets and credit score on the hook if you can’t make payments.
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If you have a personal credit score of 600+ and $150,000+ annual revenue, try Dealstruck
- Average of 10 days to funding
- Draws repaid over a six-month period
- 11% to 22% APR plus the prime rate
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Minimum qualifications |
Typical borrower |
|---|---|---|
| Personal credit score | 600 | 660 to 700 |
| Time in business | 1 year | About 5 years |
| Annual revenue | $150,000 | About $1 million to $2 million |
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Dealstruck provides an asset-based line of credit, which lets larger businesses borrow up to 85% of the value of their unpaid invoices up to $500,000. Each draw is repaid over a six-month period. Your customer’s payments are directed into a Wells Fargo bank account that is managed by Dealstruck but maintained in the name of your business.
How to qualify: Besides needing $150,000 in annual revenue and a credit score of at least 600, your business must be profitable. A personal guarantee and a lien on your business assets are also required, which means Dealstruck can seize your business assets if you fail to repay the loan.
Factoring companies: The bottom line
Factoring companies provide working capital for businesses that have reliable but slow-paying customers. Finding the right company means taking into consideration the size of your invoices, the repayment term, the costs, the speed of funding and whether you meet the lender’s qualifications.
Find and compare small-business loans
If invoice factoring is not the right fit, check out NerdWallet’s list of small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Compare business loansThis post has been updated. It was originally published Dec. 4, 2015.
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