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Through business factoring, your business can get immediate capital in exchange for your accounts receivable.

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What is a business factoring loan?

Factoring helps small businesses get working capital by selling accounts receivable, or invoices, to a commercial financial company known as a "factor." The goal is for your business to receive cash more quickly than waiting for customer payments.

Factoring is very common in certain industries, such as the clothing industry, where long receivables are part of the business cycle.

How does factoring differ from a business loan?

Factoring is not a business loan – it's the sale of an asset (the invoice). Essentially, the factor is purchasing the right to collect on an invoice when it's paid, minus a discount of 2 to 6%. The factor will pay around 75% of the invoice up front, followed by the remainder once they've collected on the invoice.

So, how exactly does factoring work?

Because factors are counting on your customers paying their invoices, they are more concerned with your customers' financial status. Factoring companies will collect directly from your customers and may require you to validate your customers' payment history. If your business has creditworthy customers, factoring could help your business get working capital up front.

The key benefit of factoring is receiving quick boost in working capital, as many factoring companies will pay for your invoices within 24 hours. Since factoring is not a loan, you do not assume debt for the money you receive.

What are other small business funding options?

Factoring is generally a short-term solution, however. Giving up a percentage of your profits is not always the best way to sustain or grow your business. Unlike a line of credit, business factoring provides you working capital at one time, not ongoing access to the funding you need.

Kabbage Funding™ provides lines of credit that you can draw from in any amount, whenever you need it. The security of working capital at your disposal can provide a more long-term solution as your business continues to grow.

Why Kabbage

Flexible Funds
You decide when to use your funds and how much to take. As long as you have available funds, you can withdraw every time you need capital.
Transparent Terms
Kabbage Funding™ loans have simple, monthly payments with no origination fees or prepayment penalties. You can review your payment schedule before taking a loan so there won't be any surprises.
Simple Process
Securely link your business information online to get an automatic financial review. This lets us evaluate your business right away without requiring you to track down financial statements.
Convenient Access
Withdraw from your line by logging into your computer, using our mobile app or swiping your Kabbage Card. You'll have the security of a line of credit you can use whenever you need it, wherever you are.
Trusted by Thousands
Kabbage customers have securely connected more than 1 million data sources. We’re A+ rated by the Better Business Bureau and certified for our commitment to customer privacy.
Personal Service
From applying to managing your account and making the most of your capital, our in-house team of experts is here to help when you need it.