Invoice Factoring No Credit Check
Invoice factoring, a type of business financing that allows you to access funds against unpaid invoices, can be a valuable option for small businesses needing increased cash flow. You sell your unpaid invoices to an invoice factoring company, which collects a percentage fee against each outstanding invoice.
What if you have low or no credit, though? Is a credit check required to be eligible for invoice factory financing?
Is Invoice Factoring Possible with No Credit?
Maybe you need a cash infusion to pay for a new expense for your business to pay for equipment or to cover a growth spurt where income hasn’t yet caught up with increased expenses.
Perhaps you are seeking financing and do not have established credit that would qualify you for a more traditional loan or line of financing. Or your credit score is lower than the threshold required to qualify for most business loans, or the fees would be cost-prohibitive.
That’s where invoice factoring comes in and can be a helpful resource for your business without breaking the bank. Unlike more traditional lenders, invoice factoring companies do not look at your credit score to determine invoice factoring eligibility. Invoice factoring companies, rather than credit score, will look at your accounts receivable to determine eligibility. Since the invoice factors take a percentage off your paid invoices, relying on your customers to repay them rather than you or your business, they do not need to ensure that you have collateral or strong credit history to qualify for invoice factoring financing.
If your credit score is low or your credit history is considered young, invoice factoring is a good option. Please keep in mind that there are several variables you will want to consider when considering whether an invoice factoring loan is right for you. Invoice factoring interest rates, for instance, tend to be between 0.5% to 4% per month, generally higher than most traditional loans. You’ll also essentially be handing your direct relationship with a customer to the factoring company, which will liaise with your customer to get the outstanding invoices paid.
How to Get an Invoice Factoring Loan with No Credit?
If you’re interested in pursuing an invoice factoring loan, you’ll want to start by invoicing your customers for owed funds for services rendered. The terms of the payments due should be no more than 90 days to be considered for an invoice factoring loan.
As soon as the customer is invoiced, you can sell the invoice to an invoice factoring company; no credit check is required.
When you select the invoice factoring company of your choice, you agree with them. They will review your accounts receivable and the invoices you are looking to sell, and they may wish to review other financials or business documents. Then you will sign a contract, and the agreement will commence.
Once the agreement is signed, the invoice factoring company will give you an advance rate, which is the percentage fee they will take off the top of each invoice that’s paid, based on the total amount of the invoices. The invoice factoring company will then notify your customers that they are an intermediary for collecting outstanding funds and will serve as the main point of contact.
The invoice factoring lender will then advance you cash, generally some percentage of the invoice totals. They will not give you the full amount upfront, as they are taking on inherent risk, and will hold the balance until your customers submit their payments.
Invoice Factoring Lending Options for No Credit
When it comes time to consider invoice factoring lending options with no credit check, there are many options. You’ll want to consider variables like fees, invoice factoring interest rates, turnaround and funding time, and advance rate.
Most notably, if you’re seeking invoice factoring financing with no credit check, you’ll want to research to ensure that the invoice factoring company you apply for financing with does not do credit checks.
Some of the best factoring lending options for no credit include:
- Tafs: With advance rates up to 100% and lower interest rates as low as 2.49%, this invoice factoring lender is a good option. Tafs does not do credit checks and approves funding as quickly as same-day or 24 hours. This invoice factor also has a strong industry reputation.
- TCI Business Capital: This invoice factoring company offers flexible and short-term financing options, which is a good option for businesses looking to scale. It is a favorable invoice factoring option with an advance rate of up to 90% and a three-day turnaround for approval and funds. Plus, TCI does not do a credit check.
- Universal Funding: With rates as low as 0.55%, funding within 24 hours, and transparency in their fee structure, Universal is a good option for invoice factoring. They fund various businesses across different industries, from manufacturing to staffing, apparel, transportation, business services, etc.
Invoice factoring can be a great option for your business if you need a cash advance and have active invoices that haven’t been paid. Invoice factoring is especially helpful for businesses that are young or have a short credit history, or else have a lower credit score. Many factors do not have the same threshold as more traditional lenders do regarding credit requirements, making it easier for borrowers to qualify. Still, businesses should review their options, including the interest rates and fees invoice factoring companies may charge. Resources like BusinessLoans.com can help you weigh your options.
Yes. You can get an invoice factoring loan without having good or established credit.
No. You can get an invoice factoring loan with no credit check.