Factoring is the sale of a company's accounts receivable invoices to a factor; in order to obtain working capital. Although there are numerous types of factoring; lenders in this category offer full notification, non-recourse factoring. This means that account debtors (customers of the client company) are notified to pay the lender directly while the credit risk of non payment is also assumed by the lender.
    Factoring Product Summary
    Product Purposes
    • Project Financing
    • Business Growth Financing
    • Business Acquisition Financing
    • Bridge Financing
    • Financing Working Capital Needs
    • Realization of Supplier Discounts
    • Crisis Management
    • Debtor-In-Possesion (DIP) Financing
     
    Monthly Receivable Volume: $100K an up
    Advanced Rate of Receivables: Up to 75%
    Factoring Term: Generally 2 Years

    Factoring FAQ's
    What is Factoring?
    The sale of a company's accounts receivable invoices to a factor, in order to obtain working capital.

    What are the basic requirements for factoring?
    That prospective clients provide goods or services to credit worthy customers and that we can verify that the invoices being considered for factoring are accurate.

    Does LeadLending.com offer factoring in all U.S. states?
    Yes

    Do you require certified financial statements in the application process?
    No, there are no financial statement requirements.

    Does a company have to be profitable to qualify for factoring?
    Not always, some clients are new companies that have not yet turned a profit, or they have suffered recent financial losses. Lenders look at the quality of a company’s customers rather than its specific financial condition.

    How long does the closing process take?
    A typical deal can be closed and funded within two weeks of the initial referral - in some cases a closing can be expedited.

    What industries do funding companies purchase accounts receivable from?
    Almost all industries - except medical and construction – where clients sell a service or goods and their account debtors (customers) have good credit.

    Does it require personal guarantees?
    No – this is because our lender takes the credit risk based on the factored invoices. Our lender does require a Performance Guarantee to assure that the invoices are valid. The principals may be responsible for loss suffered by the lender if there is a non credit problem with the accounts receivable.

    Who qualifies for factoring?
    A wide range of companies in a multitude of industries, including some with a negative net worth, that are losing money, and often even companies in Chapter 11 Bankruptcy. Companies that have a bank loan secured by its accounts receivable may not qualify for factoring unless the bank agrees to release its lien on the accounts receivable.

    Can a company with little or no credit history qualify for factoring?
    Yes, as long as they have creditworthy customers.

    Will a company seeking factoring be viewed negatively by its customers?
    No, factoring is used by many large corporations in the U.S. and globally to improve cash flow, support growth and increase profits. In fact, more than 300 billion worth of factoring is done every year in the U.S.

    Do a company’s customers always know when a company is seeking financing through factoring?
    Yes, the lender must notify the account debtor to pay the amounts due to the lender..

    Is there a minimum volume of receivables that needs to be committed to in order to qualify for factoring?
    In most cases, for this size of receivables, lenders will look for a minimum monthly volume of no less that $100,000 per month.
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