Contract financing allows businesses to get paid upfront for work they haven’t yet completed. This gives businesses capital to begin work for their customers without having to exhaust their own funds. There are various ways to qualify for this type of financing. There are financing companies that specialize in this type of funding and will often use a customer’s credit for qualification, as well as other factors. There are other ways for a business to qualify for this type of financing as well. A finance company may also use time in business or monthly billing as a way of qualifying a business for a loan.
Contract financing loans usually offer businesses up to five million in funding. They usually carry a factor fee of 1.25%-2.50%. These companies usually advance eighty to ninety percent of the funds upfront and have advanced terms that range from thirty to ninety days.
Contract financing companies may use the customers’ credit to qualify a funding business. The finance company needs to ensure the creditworthiness of the customer to ensure that the customer can pay its bills during the advance period.
Time in Business
Financing companies also look at time in business as a qualifying factor. The longer you’ve been in business the better you look to a financing company because it shows that you can fulfill your contractual obligations. However, longevity can often be offset if your company has had lawsuits and other struggles despite its long history.
Monthly billing is another factor that a financing company will consider. Your requested loan amount should be equal to or close to your monthly sales or revenues. If it’s not, you run the risk of being declined for the loan amount you’re requesting. Your loan request should be equal to the amount of the loan you’re requesting.
Contract financing companies look for companies that have been in business long enough to prove their credibility. They also look for customers with good credit as proof that the customer can pay the bills. Lastly, a business’s monthly revenues should be equal to the amount of funding they’re requesting. These are the primary focal areas that a contract financing company will focus on.
To get the contract financing you need, contact the team at 360 Commercial Capital today.