Accounts receivable (A/R) financing provides fast, affordable funding to help a small business’s cash flow or provide short-term working capital. A/R financing is based on the value of outstanding receivables that lenders choose to collateralize, providing businesses the funds they need. We’ve selected five of the best companies in A/R financing.
- BlueVine: Best overall terms for A/R financing for small businesses
- 1st Commercial Credit: Best for businesses looking to get the highest percentage of their receivables financed
- Crestmark: Best funder for startup businesses
- FundThrough: Best for small businesses and businesses with small invoices
- American Receivable: Best for fast approvals
BlueVine: Best Overall Terms
BlueVine
What We Like
- Competitive rates
- Fast funding
- No origination fees
What's Missing
- One of the few lenders with a credit score requirement
Costs & Terms
- Funding amount: $5,000 to $5 million
- Advance rate: Up to 90%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: Starting at 0.25% per week
- Expected APR: 15% to 70%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None
- Additional fees: $15 wire fee—automated clearing house (ACH) is free
- Funding speed: 10 minutes to apply—decision and funding as soon as the next day
Other Features & Requirements
- Personal guarantee: Required from all business owners
- Minimum credit score: 530
- Time in business: At least 3 months
- Annual revenue: At least $100,000
- Invoice financing agreement: Recourse
- Customer interaction: Not required
Why we like BlueVine: In addition to a short application process and fast approval times, BlueVine’s terms and rates are competitive, and its customer service is very good. The total time from the start of the application to funding is no more than three business days and, once approved, applicants can select the invoices they wish to finance the next business day.
1st Commercial Credit: Best for Highest Percentage of Invoices Financed
1st Commercial Credit
What We Like
- Competitive Rates
- High advance percentage available
What's Missing
- Potential for hidden fees that are not stated publicly
- Funding speed not as fast as competitors
Costs & Terms
- Funding amount: $10,000 to $10 million
- Advance rate: Up to 97%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: 0.69% to 1.59% per 30 days
- Expected APR: 10% to 20%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None listed
- Additional fees: None listed on website
- Funding speed: 15 minutes to apply—approval in 3 to 5 days
Features & Requirements
- Personal guarantee: Required from all business owners
- Minimum credit score: Will accept low credit score; no stated minimum
- Time in business: At least 3 months
- Annual revenue: Undisclosed
- Invoice financing agreement: Recourse
- Customer interaction: Required
- Assignment of invoices: Required
Why we like 1st Commercial Credit: Qualified businesses can finance as much as 97% of their invoices through 1st Commercial Credit, which is the highest percentage for A/R financing companies surveyed. 1st Commercial Credit’s rates and terms for financing are competitive. Those who work with 1st Commercial Credit should review their contract for any restrictions or hidden fees.
Crestmark: Best Option for Smaller Businesses
Crestmark
What We Like
- Customized rate solutions for each borrower may be advantageous for some businesses
- Will provide financing to startups
What's Missing
- Potential for hidden fees that are not publicly stated
- Funding speed not as fast as competitors
Costs & Terms
- Funding amount: Up to $10 million
- Advance rate: Up to 90%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: Customized to borrower
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None listed
- Additional fees: Will be disclosed on the A/R financing agreement
- Funding speed: 15 minutes to apply—approval in 7 to 10 days
Features & Requirements
- Personal guarantee: May be required
- Minimum credit score: No minimum
- Time in business: No minimum
- Annual revenue: No minimum
- Invoice financing agreement: Recourse and nonrecourse
- Customer interaction: Depends on arrangement
- Assignment of invoices: Required
Why we like Crestmark: Crestmark is arguably the most traditional of the lending companies we looked at, customizing pricing for each borrower and each situation. While that slows down the approval process, it could offer some businesses a more advantageous rate. Crestmark will also offer funding to smaller businesses and startups.
FundThrough: Best for Smaller Businesses
FundThrough
What We Like
- Great for smaller financing needs
- High advance percentages
- Ability to link to QuickBooks
What's Missing
- Express product is capped at only $15,000 in invoices
- Lack of clear minimum revenue guidelines may impact ability to get funded
Costs & Terms
- Funding amount: $500 to $15,000 (Express program)
- Advance rate: Up to 100%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: Starting at 0.5% per week
- Expected APR: 26%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None
- Additional fees: None
- Funding speed: 10 minutes to apply—decision and funding within 24 hours
Features & Requirements
- Personal guarantee: Typically not required
- Minimum credit score: No minimum
- Time in business: Three months
- Annual revenue: Depends on business type; eligibility varies
- Invoice financing agreement: Recourse
- Customer interaction: Not required
Why we like FundThrough: FundThrough offers an Express Invoice Financing program that is geared for businesses that need smaller invoices financed quickly. Eligibility for the Express Invoicing Program may vary based on business type, but FundThrough does offer customized solutions as well as a more robust invoice factoring option that businesses can take advantage of.
American Receivable: Best for Fastest Approvals
American Receivable
What We Like
- Low minimum requirement for funding
- Will provide financing to startups
- Fast approval
What's Missing
- One-year commitment required
- Not ideal for larger businesses given $5 million funding limit
Costs & Terms
- Funding amount: $10,000 to $5 million
- Advance rate: Generally up to 90%—can advance 95% for qualified invoices
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: 0.8% to 2% per 30 days
- Expected APR: 10% to 25%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None listed
- Additional fees: Wire transfer fee
- Funding speed: 10 minutes to apply—funding next business day
Features & Requirements
- Personal guarantee: May be required
- Minimum credit score: No minimum
- Time in business: No minimum
- Annual revenue: No minimum
- Invoice financing agreement: Recourse and nonrecourse
- Customer interaction: Depends on arrangement
- Assignment of invoices: Required
Why we like American Receivable: American Receivable’s approval and funding speed are fast, typically within the next business day. What is also attractive is that it has a lower minimum threshold for invoice financing, which provides an attractive option to smaller businesses.
Who A/R Financing Is Best For
Accounts receivable financing is an effective means of getting funding for a few types of businesses. A/R financing is best for:
- 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 are taking 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.
Once a business determines that A/R financing is the best option, it’s important to select a provider that offers the right amount of funding, along with rates and terms that can help the business flourish.
How We Evaluated A/R Financing Companies
We considered a broad range of A/R financing companies to identify the five best providers of working capital. In establishing our review criteria, we considered the pain points that small business owners express. These include how much business owners can borrow, how quickly they can access the needed funds and the qualifications requirements for receivables financing.
Based on the criteria, we feel BlueVine provides the best overall terms, discount rates, and customer service of the providers mentioned. Also, the minimum receivable threshold of $5,000 is the lowest of the companies we surveyed.
Bottom Line
All of the accounts receivable financing companies reviewed are good options for filling short-term cash flow gaps. Selecting the right A/R financing provider depends on the amount of capital you need and the lender’s familiarity with your specific industry.
