Small Business Loans - Conversion of Assets

There are many requirements of banks when lending to small businesses to include immaculate credit, positive cash flow (profitability) and adequate collateral.

However, not all borrowers have to meet those ridged standards. There are some loan products that, depending on the collateral, do not require stellar credit or two to three years of profitability.

There are three major loan products that small businesses can take advantage without meeting all the major lending requirements mentioned above:

Account Receivable Factoring. Called invoice factoring, where a business owner, who has generated customers, completed jobs or orders for these customers and is just waiting to be paid, can factor these receivables or invoices for cash now - giving the business owner working capital to generate more business, complete more jobs, pay suppliers or make payroll. Banks usually lend 80% of approved invoice amounts then recoup their advance (loan) plus a small fee when the customer pays the invoice. Since these lenders are more concerned about the business being paid from the customer, they do not look very hard at the business or business owner but more at the creditworthiness of the business's customer as it is their ability to pay and credit that matter in these lending decision. Lastly, since these lenders (accounts receivable factors) now have a stake in collecting from your business's customers, they will also help to ensure timely collections - further saving the business owner time and expense.
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