If you are running a small business, and are in dire need of a business loan immediately, then one easy solution is there for you. This needs no waiting time and do not need much of paperwork. This is a simple concept of B2B loan processing where one factoring company helps another. If you have invoices due, then you may get a loan from a factoring company based on the invoice outstanding through a time period of 30 days, 60 days or 90 days. This is called business loan – invoice factoring.
The simple rules of invoice factoring
When you show your outstanding invoice to the factoring company, you would get the loan on 2 instalments. On would be the main chunk containing 80% of the invoice amount, and the next one would be 20% of the remaining from which the factoring fees would be deducted. That is simple concept, which minimises the risk of loan taking.
That is because you eventually get paid from you payees, and that payment can be used to return back the loan.
Why is this a quicker and feasible loan option?
The main reason you can get somewhat guaranteed loan through the business loan- invoice factoring method is that your customers are like to pay you against the invoice. This is the main reason the loan can be processed quick. And it all depends on the history of your old payment receipt, and how good your relation is with your customers. It all hangs on trust, and this kind of B2B loan facility is available for all businesses.
In fact, this is a very good solution when you need a quick short-term loan, which you know you can pay back in a short term only, and won’t have to count paying much interest too.