Any large or start-up business requires capital to commence. Capital is what finances overhead, salaries, capital expenses, and other company-related costs. Ways to acquire it can be from personal savings accrued over time, borrowing from trusted lenders such as parents, relatives, friends, investors, etc., and obtaining bank financing.

However, these processes take more time and effort before one can start their business. Saving up means taking a job or more to finance your capital, leading you to miss out on present opportunities. Borrowing from your circle of influence or financial institution will also eat up time since your request will undergo analyses and evaluations to determine if lending to you is a profitable venture.

The thing is, you need that capital now to take advantage of current growth opportunities. Time is of the essence. This is where financial factoring, more commonly known as accounts receivable financing (ARF), enters the picture.

What Is ARF?

ARF is a financial tool that lends capital to small businesses equivalent to the number of accounts receivables with clients. Think of it as receiving payment for your services in advance with a loan amount you can pay back once you have fulfilled your obligations to your clients.

Here’s a more straightforward illustration:

  • Suppose you have twenty customer transactions amounting to $100,000 due on the 28th of this month.
  • Financial factoring lends you that $100,000 so you can pay for all your expenses before the month’s end.
  • Once your customers provide their payment for your services, you remit that amount to the institution that offered you an ARF plus the interest rate of 1.25 to 5 percent!

Sounds easy, right? That’s because it is!

How Do You Qualify?

The fantastic thing about ARFs is that you can get them even with bad credit! The only criteria needed for financial factoring are:

  • The business is open for a minimum of twelve months.
  • Good financial relationships with your clients.

If your company has been operational for at least one year and has clients that pay, you are immediately approved for an ARF! ARF providers do not look at your credit standing and instead focus on the credit standing your clients have with you to determine if you qualify for an ARF. That’s because they base your capability to pay them back on your customer’s transaction history.

How Do You Apply?

Your ARF application must include the following details for convenient processing:

  • Business bank statements covering two to three months.
  • A schedule of your business debit.
  • A report of your accounts receivable.

The business debt schedule gives the lenders an idea of your major expenses, such as real estate leases and other contracts, which are sorted according to the time it takes to finish paying (maturity).

Once your application is approved within twenty-four to forty-eight hours, you receive an advance of 80 percent. The remaining 20 percent is given to you (with the financial factoring fee deducted) once you have paid back the initial 80 percent.

The Benefits

Since ARF approval takes only one to two days, it gives businesses much-needed capital in a short period. This promptness reduces the need for additional loans to make ends meet.

This instant, extra cash empowers businesses to pay for bills, loans, and other expenses faster, boosting their credit score.

Since your business can stay afloat with less debt and continue operating without hemorrhaging funds, it can take in more customers, hire more people, and lead the company to a path of financial success in the long run.

The Final Factor

Remember these three letters for accessible and convenient business capital: ARF. It’s a system where you can easily loan from and pay back based on your client transactions on steady, renewable finances, granted current customers pay on time and new clients in the long run. Consider boosting your capital with an ARF right now.

Talk to Porter Capital today for an approved ARF! We’re a factoring company that provides asset solutions to businesses nationwide, providing $6 billion in funding since 1991. Apply now!