Many businesses are seeking loans right now to help deal with the challenges of COVID-19 and the quarantine. If you’re looking for financial solutions, a bank may be a great option, but it isn’t your only option. Factoring may be a more flexible and sensical option for your business right now, depending on your specific needs.
How is Factoring Different?
While a traditional business loan gives you a set amount of money to be repaid over time at a specific rate, factoring is a much more variable financial tool. With factoring, you send your invoices to your factoring company and not your clients. The factoring company pays you for the invoice right away and worries about getting the money from your client.
At J D Factoring, we offer non-recourse factoring, which has an extra step. Depending on the circumstances, if your client fails to pay your invoice, we don’t ask you to return the money that we already gave you for that invoice. This gives you some risk protection from your clients’ own financial woes. During COVID-19, when many companies will face challenges, this risk protection is absolutely critical.
Less History Required
When you apply for traditional financing options through a bank, you may find yourself turned away because you are too new and do not qualify for financing. That’s understandable from a bank’s perspective, but factoring companies have significantly more flexibility in this regard. We can often take on new businesses that wouldn't otherwise qualify for a traditional bank loan.
More Than Credit
We take much more than credit into account. While credit is a factor for your application, we don’t make our decision primarily based on your credit. This process is especially beneficial for businesses that have begun recovering from a spell of financial hardship, or who have recently faced difficulties.
Banks are Busy
Thanks to restrictions on businesses during COVID-19, many companies have had to reach out to banks for business loans and other financial support. As a result, banks are busier than usual. Plus, most major banks are focusing on their current clients right now, which may mean that you need to wait much longer to even find out if you qualify for a business loan.
That wait can be an even larger problem in these financially uncertain times, especially if your cash flow is strained. You may be missing out on business opportunities, or even on the opportunity to fulfil essential goods and services that people need during COVID-19. In that case, you may want to reach out to the team at J D Factors. We can process your application faster than most banks can right now.
We Help Banks, Too!
That said, J D Factors can also help banks through this challenging time. If you’re facing huge delays, like taking three or more weeks for a process than normally takes one week, consider referring clients that are unlikely to be approved for a loan at your institution to us. This referral will reduce your internal workload, increase customer satisfaction with your institution, plus we pay a commission on clients you refer to us!
