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RE: Main Street Lending — Invoice Factoring · Loan Summary

Loan Summary

Invoice Factoring.

Turn unpaid invoices into cash today.

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— At a glance

At a glance

Tied to receivables, $10,000 to $5,000,000+ per month
Loan size
Ongoing facility, invoice by invoice
Term
Best for
B2B businesses with creditworthy customers and long payment cycles
Repayment
Customer pays Main Street directly; remainder less fee released to you
— What it is

What it is

Invoice factoring is the sale of your unpaid invoices to Main Street at a discount. We advance a percentage of each invoice up front (often 80 to 95 percent), take responsibility for collecting from your customer, and pay you the remaining balance, less the factor fee, when the invoice is collected. The facility is ours, the relationship is direct.

Invoice factoring is a way for B2B businesses to convert outstanding receivables into cash without waiting 30, 60, or 90 days for customers to pay. We advance most of the invoice value up front, collect the payment from the customer, and remit the remainder to you minus a discount fee. It is widely used in trucking, staffing, manufacturing, and professional services.

— Pros and cons

Pros and cons

Pros

  • Tied to your customers' credit, less dependent on your own credit
  • Scales with your sales rather than capping at a fixed limit
  • Frees you from collections work on factored invoices
  • Strong fit for fast-growing B2B businesses

Cons

  • Customers will be aware that a factor is involved
  • Cost is a percentage of invoice value, which adds up at scale
  • Some agreements require minimum monthly volume
  • Not a fit for B2C businesses or for short-pay customers
— Documents we'll ask for

Documents we'll ask for

  • Sample invoice and customer contract
  • Aging report (accounts receivable summary)
  • Three months of business bank statements
  • Articles of organization or incorporation
  • Customer list with credit limits if available
— Common questions

Common questions

Do I have to factor every invoice?

Not always. Some facilities are spot factoring, where you choose which invoices to submit. Others are whole-ledger, requiring all invoices for designated customers to flow through. We structure the facility around your business.

What is the difference between recourse and non-recourse factoring?

Recourse factoring means you ultimately bear the loss if your customer does not pay. Non-recourse shifts the credit risk on approved customers to us, usually for a higher fee. Most small business factoring is recourse with credit checks on each customer.

Will my customers know I am factoring?

Generally yes. The customer is asked to send payment to our lockbox or bank account. We handle this professionally as a normal accounts receivable practice.

How does the advance process work?

After the initial setup, advances on verified invoices move promptly after submission. We verify the invoice with your customer, confirm the receivable is in good standing, and wire the advance to your account.

— Related products

Line of credit

A revolving credit line from Main Street you can draw from, repay, and reuse as you go.

Term loan

A traditional installment loan from Main Street with a clear amortization schedule and predictable monthly payments.

SBA

SBA-guaranteed loans from Main Street, with longer terms and lower payments for qualifying borrowers.

Signed by Main Street Lending LLC

Est. 2019 · The lender on your block

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