How it Works

The initial application process is completed relatively quickly. The paperwork is minimal for the world of corporate finance. Most of the paperwork should already be on hand or easily obtainable. Paperwork includes a two year history, if applicable, of the company P&L, balance sheet, and income statement. Prior invoices may need to be submitted so that the factoring agent may get a better understanding of the invoicing process and format used in your industry and by you and your clientele. The packet is then reviewed by the factoring agent. Upon approval, a Letter of Intent (LOI) is submitted to the client company. This LOI is then signed by the company and returned. A contract is submitted. Due diligence is performed one last time by the factoring agent. Final approval is granted. The invoice factoring begins. The entire application process takes as little as two weeks. If open invoices are submitted during the application process, funding for these invoices generally takes a few additional days due to the newness of the account.

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The funding process takes 24 to 48 hours. This is the amount of time from submission of the invoice until funding is received into the business account. As any business owner can tell, this is a fraction of time when compared to waiting 35 to 45 days for payment of an invoice.

Small Business Factoring Receivable Financing

Funding amounts vary depending on the terms of your businesses loan. Typically, the factoring is done at 80% of the face value of the invoice. Say for example the invoice your company submits to the factoring agent is for $200,000. The amount of funding your company would receive initially would be 80% of the face value which would be $160,000. Once payment is received by the factoring agent, the factoring fee is taken out of the remainder. This can be anywhere from 2 to 3% of the funding amount. At a 3% funding rate the fee would be $4,800. This amount is then deducted from the $40,000 and the remainder is transferred directly into the account.