Factoring is the alternative form of financing where businesses sell their invoices for cash advances. And for start-up tech companies in a growing economy it is a great tool to minimize the cost of borrowing money and to maintain full ownership of the business.

Traditionally, high tech start-ups have needed considerable cash flow to break through the barriers of entry in their respective markets and to be able to manufacture enough product/offer enough service to meet the demand for their goods. Yet, interestingly, it is venture capitalists that start-ups turn to even though they demand extraordinary high returns and often require restricting terms that include shares or ownership in the company.

Put simply, factors buy invoices or accounts receivables, for cash. The factoring company purchases the invoice for a predetermined rate, typically 1.5% to 4%, then gives a cash advance of 70% to 90%, and when payment is received pays the company with the remaining balance.

Factoring is slowly becoming the popular choice among growing companies as it requires less commitment than most other forms of lending and can be handled faster and with less hassle. A company that uses factoring can decide how little or how much they want to factor, i.e. there is no limiting line of credit. There are no taxing commitments such as giving up control or ownership of the company. Accounts are approved with out business plans, are based on the credit worthiness of the businesses clients and once approved funding can be received within 24 hours.

Factoring is perfect for companies with high-growth opportunities that can not get bank financing and are considering venture capitalists. Before you give away ownership of your company of 30% or more of your profit, speak with a factoring specialist and learn about factoring. We think you’ll be pleasantly surprised… Call 800-901-2418 to speak with someone today!