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Accounts receivable financing is used by businesses to convert sales on credit terms for immediate cash flow. 1st Commercial Credit adopts a quick and simple approval process and expedites initial funding in 3 to 5 working days.
learn moreA factoring company in Grand Rapids City will provide a cash flow solution for small businesses, startups, and established organizations that sell to creditworthy customers. Invoice factoring services may be the best financial solution for companies that cannot qualify for a business loan or do not wish to add more debt to their balance sheets.
Big and small businesses in Grand Rapids City and the following industries use lending on receivables as a source of capital: Trucking & Freight, Staffing, Construction, Manufacturing, Security Guards, Distribution, Service Providers, and many others.
Some of the potential reasons pushing businesses to choose factoring financing and other loans on invoices forms of funding include needing temporary cash flow for ongoing expenses, inability to qualify for bank loans, or avoiding debt.
Invoice factoring is a form of receivable financing that makes it easy for the following clients to qualify:
1st Commercial Credit is an experienced accounts receivable financing company in Grand Rapids City, offering the best financial solutions and competitive financing rates ranging from 0.69% to 1.59%.
We have a few basic invoice factoring requirements for a business to qualify for funding. These requirements include that your company sells products or services to other companies or the government. Your business should be making sales in extended payment terms (30-90 days). And, most importantly, that your clients are creditworthy.
Not all companies can qualify for conventional bank loans because they do not have the revenue or assets normally required. The staffing business, for example, has cyclical periods based on the season. Another example is a startup company without many years in business and lacking a long history of sales. These situations are often negative in terms of traditional loan criteria, but other financing options are available.
Both asset-based lending and factoring have in common that they use accounts receivable as the primary source of collateral. Both provide working capital during cash flow shortages, but in different ways. They both differentiate in a couple of crucial factors.
Asset-based lending (ABL)
Asset-based lending provides a term loan or a revolving line of credit that a business can access as needed. The company's assets are used as collateral, and the credit limit is based on the value of those assets. Assets include inventory, accounts receivable, machinery, and equipment. You borrow against your assets, and you do not sell them.
The collateral value remains stable, regardless of temporary downturns and fluctuations, guaranteeing the loan availability. ABL is an excellent option for a business with plenty of inventory and accounts receivable but needs access to cash.
Factoring (also called accounts receivable financing)
Suppose your business is likely to gain or lose capital in waves. In that case, factoring may be an excellent option to lend stability. It is one type of asset-based lending. Invoice factoring advances cash on your own money. It is not a loan, and there are no monthly payments.
Working with 1st Commercial Credit liberates you from the collection burden. It allows it to take over the management of your business's outstanding invoices. When your company issues an invoice, 1st Commercial Credit will immediately pay up to 97% (depending on the industry and factoring agreement) of it in advance. The factor will then collect the total amount, and you will get the remaining amount minus a small factoring fee.
Factoring funding decisions are based on the quality of your customer's credit, not your company's. Factoring might be a better financial solution to manufacturing businesses in need of cash flow and who might not want to pledge anything else as collateral but their receivables.
Benefits of both
Asset-based lending and factoring can provide fast access to funds with an easy and obtainable process for the borrower. These finance solutions are helpful for companies of any size across a wide variety of industries.
Factoring is a financial service that helps companies struggling with slow-paying clients, causing them to wait 30-90 days to receive payment. Selling your invoices provides fast cash that can be used to run your business. Companies often use the funds from factoring for payroll financing using receivables and pay suppliers, cover tax expenses, grow client base, build inventory, and expand.
1st Commercial Credit funds your business in Grand Rapids City immediately, so you don't have to wait a long time for payments to come in. Most factoring transactions involve two installment payments. The first one covers anywhere from 70% to 90% of the invoice. This installment is deposited in your account as soon as you provide the client invoice. Once the invoice is paid in full, 1st Commercial Credit deposits the remaining payment in your account.
1st Commercial Credit is a funding company for payroll that will assist you in the plans to grow your staffing agency with unlimited payroll funding. We have funded many staffing agencies for over 18 years. Whether you are a multi-million dollar operation or a startup, you can qualify for 1st Commercial Credit funding programs.
Take advantage of our financing programs and get initial funding in 3 to 5 working days. We can accommodate receivable-based credit lines to new temporary staffing companies with minimal funding needs. Another option is our asset-based lending solutions for large staffing agencies that can go up to $10 million if needed.
The process of selling receivables to 1st Commercial Credit in Grand Rapids City is different from obtaining a bank loan. The company invoices are sold at a discount in exchange for the amount of cash needed. The unpaid invoices will become the property of the factoring company who will collect directly from your customers. The process of collection after a client is invoiced can take anywhere from 30 to 90 days.
The strict requirements to apply for a traditional bank loan are usually paired with a complicated and time-consuming process. Banks demand an almost perfect personal credit and also ask for business collateral. Suppose a company qualifies for all these requirements. In that case, the final approval and access to cash can still take a few weeks or even several months.
In summary, here are the main 5 difference when comparing a bank loan to factoring invoices:
When growing your business is a priority, having access to the right equipment is necessary to achieve your plans. Financing may be the solution if buying new equipment or upgrading existing equipment presents a challenge to your cash flow, or you don’t want to deplete your cash reserves. Equipment leasing and financing are two options to get the equipment needed while growing your business. Before picking one of the two, it is crucial to understand the different uses of both financing options and how they will fulfill your business needs and goals.
Equipment financing is a type of business loan used just for purchasing equipment. This type of alternative financing offers businesses many growth advantages if business owners use it correctly. The financed equipment will be used as collateral for the loan, and some lenders do not require a down payment. This financing structure means you don’t have to put any of your personal or business assets on the line to secure financing. Qualifying is also considerably more accessible than other business loans as many lenders accept A, B, C, and D credit scores.
On the other hand, with equipment leasing, business owners can “rent” or lease the equipment for a determined time and make affordable monthly payments. In addition to giving you the utmost flexibility, equipment financing and leasing also offer a fast and straightforward process. Funds can be received in 24 hours or less, allowing you to move quickly on an equipment purchase or lease.
Growing a business in Grand Rapids City can be slow, but equipment financing can help pick up the pace. If you’re unsure whether equipment financing or leasing is right for you, consider doing some extensive research or contact us directly so we can explain and answer all of your questions about the topic. The most important thing is to compare different equipment financing options from various lenders before committing to a loan or lease to ensure you’re getting the best terms for your business.
Grand Rapids is a growing city named the best city in America for craft beer and is part of the Top 10 in the fastest-growing economies and third in the nation for first-time homebuyers. Grand Rapids has a diverse economy, not dependent only on one industry. Grand Rapids is also recognized as the top mid-sized city in the U.S. for economic growth potential. The economy of the city benefits from the region's manufacturing, life sciences, and information technology sectors.
The city's roots are in office furniture. Steelcase, Herman Miller, and Haworth are all within thirty minutes of downtown Grand Rapids. Known as a major furniture manufacturing center, Grand Rapids is home to five of the world's leading office furniture companies and has earned the nickname "Furniture City." The city and its communities are economically diverse, based on healthcare, automotive, information technology, aviation, and consumer goods.
Spectrum Health is West Michigan's largest employer and is headquartered in Grand Rapids. It had 25,600 staff and 1,700 physicians in 2017. Spectrum Health has world-class facilities that focus on the health sciences.
Grand Rapids is also known for its aviation and automobile manufacturing industries. GE Aviation Systems has a location in the city. Grand Rapids is home to many successful companies, including Bissell, Alticor/Amway, SpartanNash, Foremost Insurance, Meijer, Smiths Industries, Wolverine World Wide, etc.
Grand Rapids City, Michigan, is located about 30 miles east of Lake Michigan. It is currently the economic and cultural hub of West Michigan and the fastest growing city in the state.
The city has a population of over 201,013, while the greater metro area has more than 1,077,370.
Grand Rapids is famously known as the childhood home of U.S. President Gerald Ford. He and his wife, Betty, are buried on the museum's grounds named after him in the city. The city's main airport and one freeway are also named after him.
1st Commercial Credit is a receivable factoring company in Michigan offering funding programs in:
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