Factoring vs. Online Business Loans

Dependable cash flow is critical in today’s competitive business world. Many business owners are learning that the fast pace of business these days requires faster turnaround of payments from their customers. If your growth plans stall and your business slows while you wait weeks and months to get paid for work you’ve already finished, you’re not alone.

What’s your next step? Some people see all the online noise about merchant cash advances and online lenders and don’t realize that they have a much more economical option with invoice factoring. Both funding sources can get you paid fast – usually the same day — when you need working capital, but the similarities stop there. Let’s look at the differences between racking up debt by borrowing money online or working with a factoring company that turns your receivables into cash in your pocket.

Online lending websites …

  • require you to agree to daily automatic deductions from your bank accounts or credit cards
  • charge high interest rates with no services or benefits to their borrowers
  • receive low marks for hiding extra fees and not disclosing all the terms in their agreement
  • want to sign you up even if you are paying off second, third, or even fourth online loan

Invoice factoring specialists at top factoring companies …

  • get to know your business and cash flow needs and develop a factoring plan customized for you
  • provide a variety of time- and money-saving services that can offset your factoring fees
  • invest the time to ensure that you completely understand your factoring agreement, with no surprises
  • focus on your continued success: if your company grows, the factoring company grows also

Online websites may promise instant cash, but at a debilitating cost. With interest as high as 350% a year, borrowers can end up owning these lenders twice and three times more than they borrowed. The bankruptcies that follow don’t do the business people – or our country – any good. Broken businesses are tough on families, our communities, and our nation.

On the other hand, invoice factoring brings a fresh start and a debt-free cash flow solution to a business owner. Since factoring clients simply receive advance on funds that are already owed to them, they are not taking out a loan. They can enjoy the strategic business advantage of speeding up their cash flow, while enjoying free credit checks on their customers, professional collections services, 24/7 access to bookkeeping status reports on paid and unpaid invoices, and much more.

Unlike the financially devastating results brought on by online borrowing, a top factoring company will have countless stories of how clients have built their businesses and increased their profitability through factoring. When you’re ready to partner with one of North America’s leading factoring companies, Interstate Capital’s friendly factoring professionals are ready to help you access the working capital you need. It starts with a complimentary cash flow consultation.

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