qualify for factoring services? Can a newly started company get
First, factoring is
available only to B2B companies. In other words,
if your company sells to the general public, you are not
going to be able to secure factoring.
with any financing service, it's always better to have
a track record. However, because decisions on
factoring eligibility take into account the
credit-worthiness of a business' clients, it is
possible for a new business to qualify for factoring.
Most likely a newly started company would need
to provide bank statements for the past three months. The spot
factor would probably ask them for signed contracts
from future projects that they have signed up for that
they are planning starting work on or have already
have started work, but may not have invoices for.
Now, the factoring company won't fund any invoices
where work isn't complete, but the company requesting
funding could be working on one project at this time,
another one they’ve just started, another where
they’ve completed two weeks' worth of work and just
billed out for it, any another project that is going
to be billed next week.
The spot factor can fund the one that's been
completed and the one that’s being billed out.
This gives the company money to put into the other
project or pay their payroll and make their
contracts work, basically.