This article is part of a larger series on Business Financing.
The best accounts receivable (A/R) financing companies should be able to assist companies by advancing a large percentage of unpaid invoices back to the company, allowing them to cover short-term cash flow gaps. Once the customer pays the invoices, the loan is satisfied.
All of the providers listed here offer a variety of terms. Some provide short-term loans, while others offer A/R lines of credit. Fees, terms, and qualifications will vary depending on the provider, the credit strength, and the financial viability of the business and its owners.
Here are the five best accounts receivable financing companies:
- FundThrough: Best overall terms for A/R financing for small businesses
- First Commercial Credit: Best for businesses that want the highest percentage of largest advances
- Crestmark: Best A/R financing for startup businesses
- Universal Funding Corporation: Best accounts receivables line of credit
- Lendio: Best for shopping multiple loan offers in lending marketplace
Best Accounts Receivable Financing Companies At a Glance
Origination or Maintenance Fees
$500 to $15,000
Up to 100%
Starts at 0.5% per week
Within 24 hours
$10,000 to $10 million
Up to 97%
0.69% to 1.59% per 30 days
8% to 20%
3 to 5 days
Up to $10 million
Up to 90%
Customized to borrower
7 to 10 days
$25,000 to $5 million
Up to 95%
0.55% to 2% per 30 days
6% and up
$35 credit approval; $50 lockbox fee
As soon as 2 days
$5,000 to $5 million
Up to 90%
6% and up
FundThrough: Best Overall Terms for A/R Financing for Small Business
Why We Like FundThrough
FundThrough is our best accounts receivable financing company thanks to fast application and funding times combined with the highest advance rate on this list: 100%. It requires a minimum time in business of only three months, with no stated personal credit score minimums and typically no personal guarantee required.
The drawback to Express Invoice Financing—its A/R financing product—is a limit of $15,000 in invoices financed. However, FundThrough also has an invoice factoring product called Velocity Invoice Factoring, and its only limit is the invoice size. You can receive funding as soon as 24 hours after approval, which is why FundThrough is also our best invoice factoring company.
Visit FundThrough’s website for more information or to start your application and see if you qualify. You can also reach the provider via a toll-free phone number, an online chat, or email.
First Commercial Credit: Best for Businesses That Want Highest Percentage of Largest Advances
Why We Like First Commercial Credit
For businesses with large invoices wanting most of it advanced to them, First Commercial Credit is an excellent choice. It will provide funding of up to $10 million with an advance rate of 97%. Of the providers that will go up to $10 million, it has the highest advance rate.
Rates and terms are very competitive. There’s no minimum revenue requirement, but the company’s revenue numbers must support the advance request. Because there are no fees listed, you should check your financing contract to clarify any fees before signing the agreement.
You cannot apply for funding through the First Commercial Credit website. Instead, call a toll-free number or fill out a form, and a representative will call you back. See First Commercial Credit’s website for more information.
Crestmark: Best A/R Financing for Startup Businesses
Why We Like Crestmark
For startup businesses looking for accounts receivable financing, Crestmark is an excellent option. It offers up to $10 million in funding, with up to a 90% advance rate. Payments can be flexible, and rate solutions are customized for each borrower. As your business grows and your credit profile strengthens, you can get better terms and rates with Crestmark.
This provider touts competitive pricing with proposal turnaround within one day. However, closing the loan takes seven to 10 days, with funding within a day after closing. This is the slowest loan funding process on our list.
Like First Commercial Credit, you cannot apply directly through Crestmark’s website. You can either call the provider toll-free or fill out a form to have it reach out to you. Head over to Crestmark’s website for more information.
Universal Funding Corporation: Best Accounts Receivable Line of Credit
Why We Like Universal Funding Corporation
Universal Funding Corporation provides an invoice line of credit as part of its accounts receivable financing. This line of credit can range from $25,000 to $5 million with a 95% advance rate. It doesn’t require access to your private banking and accounting information.
It offers accounts receivable financing and invoice factoring products that seem very similar. While there may be more fees with Universal Funding Corporation, the fact that fees are clearly stated allows the borrower to understand the actual credit costs. Rates are competitive, and funding can be received in as little as two days.
To start the application process, go to Universal Funding Corporation’s website and fill out an information form. You can also call the company toll-free.
Lendio: Best for Shopping Multiple Loan Offers in Lending Marketplace
Why We Like Lendio
If you’re looking to shop around for many accounts receivable financing companies instead of only one, Lendio is the best choice, as it has a marketplace of more than 75 lenders. You can get multiple offers with only one application and choose the A/R financing company with the best rates and terms. It’s the best choice for more established startups with high revenue and business owners with solid credit profiles.
It also gives you access to other business loans, including working capital loans and lines of credit. However, its qualifications are generally higher as a 680 personal credit score is required. You must also be in business for at least two years and have $1 million or more in annual revenue.
You can apply directly through Lendio’s website. Once approved, you can be funded in less than 24 hours. Head over to Lendio’s website to begin the application process.
Who A/R Financing Is Best For
Many types of businesses can benefit from accounts receivable financing, including:
- Business owners with low credit scores: Accounts receivable financing companies rely on the creditworthiness of a borrower’s customers and offer lower credit score requirements than some other lending options.
- Small businesses that invoice customers: Businesses must invoice customers to qualify, and A/R financing can shorten their collection period and provide access to working capital.
- Companies with slow-paying customers: If customers take too long to pay, A/R financing can be an inexpensive, short-term funding solution.
- Independent contractors who bill clients for large projects: Long projects require contractors to cover expenses until the project is complete or a customer pays the invoice. A/R financing allows your business faster access to the amounts you have invoiced.
How We Evaluated the Best Accounts Receivable Financing Companies
There are several factors we considered when choosing the best accounts receivable financing companies. They include:
- Funding amount available
- Advance rate
- Repayment terms
- Discount rate
- Expected APR
- Origination, maintenance, prepayment, and termination fees
- Application length and funding speed
- Funding requirements, including credit score, personal guarantee, time in business, and revenue requirements
Before choosing an accounts receivable financing company, check out our guide on how to get a small business loan for general guidelines and requirements.
Best Accounts Receivable Financing Companies Frequently Asked Questions (FAQs)
How do accounts receivable loans work?
Accounts receivable loans allow businesses to address short-term cash flow gaps by borrowing against their unpaid invoices. The lender typically collects the invoice on behalf of the business and uses the proceeds to repay the loan. Unlike invoice factoring, customers are largely unaware of the third-party financing company.
What is an account receivable loan?
Accounts receivable loans are lending products where providers will advance up to 100% of the unpaid invoice amount to a business to help them with short-term cash flow. When the invoice is paid, the loan is paid off.
How do you borrow against accounts receivable?
Unpaid invoices are leveraged as collateral to a financing company, which will advance up to 100% of the invoice to allow the company to cover short-term costs. The loan is paid off once the invoice is paid.
For businesses looking to cover short-term cash flow gaps caused by unpaid invoices, accounts receivable financing can assist them with advances of up to 100% of the invoice amount. Each provider on this list is a good option for covering those potential cash flow issues. Compare terms, rates, and qualifications of multiple providers and choose the one that best fits your business needs.