Why Business Loans Are a Bad Payroll Funding Option
When cash flow slows or becomes stagnant and you need to make payroll, you may think that taking out a business loan is the best solution. However, using business loans to finance payroll is probably one of the worst solutions.
Extensive Documentation and Slow Processing
The application for business loans is quite extensive and it can take months for banks to approve loans. By the time you realize you need assistance making payroll, taking out a business loan may no longer be a viable option.
In addition, there is no guarantee that the bank will even approve the entire loan amount that you have requested for. You may need $20,000 but you may only qualify for $15,000 based on the bank’s assessment of your creditworthiness. Now, you have taken on extra debt but still have to cover the remaining balance of your payroll obligation.
You Need Invoice Factoring Services
So when business loans fail to fund your payroll, what would be a better option?
The answer: Invoice factoring
By partnering with a factoring company, such as Accel Business Funding, to factor your outstanding invoices, you will be able to make monthly payroll.
Invoice factoring involves selling your outstanding invoices to a factoring company, which will then give you immediate advance payment on those invoices. As long as your clients are creditworthy, Accel Business Funding’s invoice factoring services can improve your cash flow, allowing you to make payroll without the financial burden of business loans.
Accel Business Funding Is A Friend of Staffing Companies
We are not a bank and invoice factoring is not a loan. Accel Business Funding has years of experience helping clients in different industries. As long as you have outstanding invoices, we can help you meet your funding needs quickly so that you make payroll on time.