Recourse factoring is the most common type of invoice factoring. The business that sells a customer’s invoice retains the risk and liability if the debtor fails to pay. This means the seller will essentially have to repurchase receivables sold to a factor if the lender can’t collect on the invoice. This effectively converts a factoring…
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What Is Non-notification Factoring?
Non-notification factoring, also called confidential factoring, is a kind of factoring relationship where there is minimal involvement from the factoring company. The seller typically retains the responsibility of collecting on the factored invoices, thereby limiting any interaction between the factoring company and its clients. In cases when a factor needs to communicate with a seller’s…
What Is an Assignment of Claims?
An assignment of claims is the transfer of the right to claim from one creditor to another. This enables a small business owner to transfer an unpaid invoice to a lender creating an invoice factoring transaction. The transaction may be governed by the Assignment of Claims Act, which outlines the rights and obligations of each…
What Is Spot Factoring?
Spot factoring, also known as single-invoice factoring, is when a business sells an individual customer invoice to a lender to receive advance funding. The factoring relationship typically ends as soon as the debtor pays the invoice. It’s best for businesses that prefer flexibility because their invoices or factoring needs are less predictable. How Spot Factoring…
Who an Account Debtor Is
An invoice factoring transaction typically consists of three parties. They are the factoring company, the seller of the invoice, and the debtor who’s responsible for paying the holder of the invoice. For a small business, the account debtor is the customer who owes the invoice. How an Account Debtor Can Impact Factoring The creditworthiness of…
What Is Advance Factoring
With advance factoring, a factoring company pays a business a percentage of future receivables in advance, typically between 75% to 90%. The arrangement between the seller and the factoring company is kept confidential. Hence, the responsibility of collecting on the receivables remains with the small business. This option is rarer than traditional invoice factoring and…
4 Invoice Factoring Companies With No Credit Check
Small business financing can be difficult to qualify for without a good personal credit score. However, invoice factoring companies rarely check credit scores. Instead, these companies rely on the credit score of your debtors when you assign unpaid invoices to the factoring company. We evaluated over 50 invoice factoring companies and selected the top four…
What Is Contract Factoring?
Contract factoring is the solution small businesses use for long-term factoring agreements. A small business may contract to factor invoices for a particular project or from a particular customer for an extended period in exchange for paying a lower fee. This ensures the business can receive financing and reduces the research costs for a lender….
SBA Form 413: What You Need to Fill Out the SBA Personal Financial Statement
SBA Form 413 is a personal financial statement form used to apply for Small Business Administration (SBA) 7(a) and SBA 504 loans. Your lender will incorporate the personal financial information you report into its analysis of your company’s creditworthiness and repayment ability. To complete SBA Form 413 quickly and easily, have your financial paperwork organized…
SBA Loans: Types, Rates & Requirements
The Small Business Administration (SBA) guarantees business loans issued by approved lenders. SBA loans, though difficult to qualify for, carry low interest rates up to 11% with terms up to 25 years. The six types of SBA loans are 7(a) loans, community development corporation (CDC)/504 loans, CAPLines, export loans, microloans, and disaster loans. Types of…
50+ Paycheck Protection Program Loan FAQs
The Paycheck Protection Program (PPP) is a new loan from the Small Business Administration (SBA) intended to help businesses meet payroll costs. The loan can be forgiven and converted effectively into a grant for up to eight weeks of qualified expenses. We’ve collected questions from around the web and on Facebook and provided answers to…
SBA Form 1368: The Ultimate Guide
SBA Form 1368 offers small business owners the opportunity to show the financial impact of an economic disaster on a business. It comprises three sections that require you to disclose monthly sales figures, an economic forecast, and additional information not captured in the forecast. The last part is an important opportunity to explain any details…