Factoring vs Bank Loans, What’s Best for You?

It’s next to impossible to run a business without some sort of access to capital. It makes it possible to add employees and equipment to meet demand, as well as expand your facilities. It can also help you through tough times helping to keep the lights on.

There are two common ways to do this: invoice factoring and bank loans. Most of us know how bank loans work. You get money from the bank and have to pay it back over time, with interest. While these can be a good way to generate funds, they come with several problems, most notably that banks will very often say no to loan applications, for a variety of reasons. This is where invoice factoring services in Atlanta can be a solution for your business.

What Are they?

Invoice factoring services work by paying you upfront for invoices that would otherwise be paid to you 30, 60, or 90 days down the road, allowing you access to the money you need without having loans hanging over your head.

No Credit Worries

When you’re taking out a bank loan, you will often have to answer for your credit history. This can be problematic, as we are often forced on hard times, through no fault of our own, especially in the business world. As banks are often looking for reasons to say no, this can hold your business back as you attempt to grow. Since factoring doesn’t have nearly as stringent requirements, you can get the capital you need with none of the stress.

Need It Now

Banks are notoriously slow, and, to be fair, this is mostly by design. However, it can make getting quick access to the money you need notoriously difficult. By going through a long and painstaking process to try and gain access to a bank loan, you may lose your window to get the equipment or advertising needed to grow your business. Factoring does not have the same struggles, as it’s possible to get approved for invoice factoring in as little as one day in some cases.

Simple and Flexible

When you have a line of credit approved through your bank, you may find yourself with a lack of available credit once reaching your limit. Getting your limit increased is often a difficult and time-consuming process, which does little to help your business. When using factoring, your ability to get quick capital is only limited to your businesses ability to grow, as it’s directly tied to your businesses income. In short, factoring grows in real time, as you grow, rather than forcing you through a complicated process to gain access to additional capital.

As all businesses are different, there is no one size fits all solution that works for all businesses. However, while both can be used in tandem to grow, factoring offers a level of flexibility and ease of access that can help your business.

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