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FACTORING |
LOAN FINANCING |
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Based only on the quality of your accounts receivable |
Based on traditional measures of financial strength and stability of you and your business |
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Does not create debt |
Appears on the books as debt and interest expense |
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Provides continuing cash flow without continuing terms |
Provides continued financing with the requirement of periodic payments or interim payoffs |
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Allows new sales to continuously obtain more cash |
Allows additional funding through renewal of loans and maturity dates and the need for additional loan applications |
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Has no ceiling where the factor must stop providing cash - as sales and receivables increase, the more cash you can draw |
Sets a limit to their level of financing because banks concentrate on the business debt/equity ratio to provide funds |
| A single transaction with no further influence from or interaction with the funding source |
Venture capitalists receive an interest in the business and generally have a say in how the business is run |
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Periodic delays and negotiations are eliminated, allowing the business owner time to do what he or she does best – run the business |
Must wait for a loan board to grant or deny the loan. Loan boards’ decisions are influenced by many considerations, and the outcome is often unpredictable |