Other Financing Options


One of the financing options available at Shore Funding Solutions is a line of credit.  This financing alternative operates similarly to a credit card but provides more flexibility and is easier to manage.

Lines of Credit

With a line of credit, you are able to borrow as a cash payment that you can use however you see fit. This kind of financing offers allows the business owner and control cash flow. The merchant can back on the line of credit based on how much you borrow. However, there are fewer fees you have to worry about, which means you could save a lot of money overall.

Generally, a business credit card does not require much in the way of history or a credit rating. A line of credit, however, usually requires at least six months of revenue to obtain. Lenders will look at your company history to determine the maximum amount, which can range from $1,000 to $250,000 for small businesses.  In addition, there is not a strict payment plan.  Unlike a loan, there is a minimum and no deadline for when the balance must be repaid in its entirety.

You are only paying interest for the time you are using the funds.  Suppose a merchant is waiting for a payment from a customer but needs cash right away to cover payroll and other expenses. You can draw against the line of credit and if you are paid a week later, you can pay back the entire amount.  The only interest that will be paid is for the week.  This will keep down interest costs.

As a good payment history is established, the credit line will increase, thus increasing your access to working capital and as an additional benefit, the interest rate will decrease.

Factoring Loans

Factoring is a type of financing that helps improve the cash flow of companies that have accounts receivable outstanding but needs working capital right away. Usually, a factoring company purchases the accounts receivable of the client. This purchase gives the client access to immediate funds which can be used to pay for business expenses.

Most factoring transactions have two parts. The first installment – the factoring advance – covers about 80% of the receivable (this amount varies). The remaining 20%, less the factoring fee, is rebated as soon as your client pays the invoice in full. Here are the steps:

  1. You submit the invoices for purchasing
  2. The factoring company sends you the advance (e.g., 80% of the invoice)
  3. Your client pays 30 to 60 days later-you received the remainder less the factoring fee

To qualify for a factoring loan, you need to submit the invoices or contracts that evidence the accounts receivable.  In addition, the lender will require an aging report that shows length of time that any money is owed and a schedule of accounts.  There may be other documents needed such as balance sheets and profit and loss statements.

This type of loan provides merchants with an ongoing and predictable cash flow. Once the account is approved and set up, future funding is relatively simple. You send the invoices and a schedule of accounts. The factor processes your invoices and you get the advance. Once your clients pay, the factor settles accounts and sends you the rebate.

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