strategies for working capital funding

How to Improve Cash Flow While Waiting for an SBA Loan Approval

There are a couple of SBA programs that are offered to small businesses to weather the COVID-19 slowdown. The Paycheck Protection Program and the Economic Injury Disaster Loans are great resources that small business owners can apply to for inexpensive business financing to keep their business healthy during this time. The negatives of these programs is that it will take some time for approval decisions to be made due to the high volume of businesses applying to these loans. The best course of action a small business owner can take is to get fast cash flow improvement from a reliable lender while waiting to receive an approval decision from the SBA.

Waiting for SBA Loan Approval

There is a lot of frustration over the process and length of time SBA loan approvals are taking. With so many business owners applying and only a finite amount of funding available, there is a lot of uncertainty about the programs. Even after you apply, you must still wait at least a month for funding to be approved or denied, and banks offering SBA loans are making difficult decisions on which businesses to lend to. Larger banks are only lending to existing customers and many small business owners are struggling to find lenders willing to lend with the SBA requirements because of the uncertainties around them. This being said, these programs appear to be inexpensive and beneficial to weathering the downturn associated with flattening the curve, so it is worth looking at and applying to. The problem facing small business owners applying to these emergency SBA programs is the waiting period between application and funding. This can be solved through invoice factoring which will improve your cash flow and unlock your working capital while waiting for SBA approval or even after you have your SBA funding decision.

How to Improve Cash Flow Now

Invoice factoring is a method of business funding that improves cash flow immediately. You submit invoices to a factoring company, they provide funding the same day, and you can cover the costs of production, office space, utilities, and payroll with the cash you have from factoring. Credit terms can hurt your cash flow, but it can be unavoidable at times to sell B2B without credit terms. So, factoring can improve your cash flow by advancing the invoice amount to you. There is no debt or repayments to make. Since the collateral is your receivable, factoring is a great funding option that can work alongside a bank loan or line of credit.

invoice factoring timeline

How Can You Use Factoring and Get an SBA Loan?

Factoring is a great way to access your working capital needs. Not only is it fast, but it is flexible. The amount you factor is up to you, and grows with the volume of your business. If you want to use factoring services long term, that is an option. If you only want short term cash flow improvement while waiting for a loan approval, then factoring is perfect for that as well. This funding works around your needs as every factoring facility is customized to your unique business needs.

time to funding

You can apply for an SBA Loan and still use factoring. We work with many lenders to take a second position, so you have the line of credit or loan amount from a bank while also having the strength of cash flow that factoring provides. Invoice factoring can be a stand alone financing option or a supplemental financing option. It all depends on the specific needs of your business.

Invoice Factoring and SBA Loans

Invoice factoring boosts cash flow for small businesses while also allowing flexibility of working with other lenders. The team here at Eagle has over a century of combined experience in small business lending. We work with many other lenders to ensure that a business has the unique funding solutions they need to thrive. If a business owner wants to apply for the EIDL program or the PPP, invoice factoring can help with the financing gap associated with the application process as well as the financing after approval or denial.

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