When your business is struggling with the cash flow it needs to grow, or even simply to survive during trying times, it may be tempting to use your house to help you finance your business. A secured business loan might aid in providing your business with the cash injection it needs, but it comes with a high price of potentially losing your home if you can’t repay the loan.
It’s important to understand exactly what you’re getting into if you do apply for a secured business loan, and you should also know there’s another option. With invoice financing, you can use your sales invoices as security to get access to immediate cash flow, instead of using your home to fund your business.
Why take the chance of losing your home when you can simply release cash from your invoices, getting prompt access to money that you’ve already earned? Let’s take a closer look at the difference between a secured business loan and using accounts receivable as collateral to finance your business.
What Is a Secured Business Loan?
When you take out a secured business loan, you have to offer some form of assets as collateral. Assets commonly used for a secured business loan are a commercial property, residential property, vehicles, and equipment. In some cases, banks tend to also take a blanket security over all the assets of the company.
Secured loans make the transaction less risky for the lending institution, as they can take the asset to recoup any losses when you are unable to make your loan repayments. Business owners who use their home as collateral can run the risk of losing their home if they default. If the bank or lending institution has a blanket security over all the assets of the company, you could also run the risk of losing your business as well.
Key Factors invoice financing does not require property security, or a blanket security over all the company’s assets. It is a great option for those business owners who are seeking a more flexible business finance option.
What Is Invoice Financing and How Does It Work?
Invoice financing is a way to create cash flow based on your outstanding invoices. In other words, it gives you access to the money you’ve already earned for the sale of goods delivered and services rendered before your customers pay their invoices. It bridges the slow payments gap and allows you to pay your bills, cover ATO obligations, buy more inventory, and pay wages on time.
With Key Factors, the invoice financing process is simple:
- Invoice your clients as normal and send us a copy
- In as quick as 4 hours, we can advance you with up to 80% of the invoice value
- We will then credit your account with the remaining 20%, less any accrued fees, when your customer pays us
For more than 30 years, Key Factors has been helping small and medium businesses improve their cash flow with invoice financing. We make the process simple and transparent with no lock-in contracts, no quarterly audits, and no minimum factoring volume.
Key Factors Invoice Financing Security Requirements
Key Factors takes your accounts receivables as collateral, so you don’t have to put your house or other properties at risk.
Business owners using commercial or residential property to fund their business should look into invoice financing to free up their assets.
Your invoice financing facility can also be set up in conjunction with your current financial arrangements, as security is only taken over the receivables and not over all the company’s assets.
Benefits of Invoice Financing Compared to Secured Business Loans
It’s important to explore your business financing options, particularly as there are some distinct benefits when comparing invoicing financing with a secured business loan.
The Key Factors invoice financing difference:
- No property security.
- You can get an approval with Key Factors in as quick as 48 hours, compared to banks or other lenders where you could be waiting weeks for a response.
- There are no monthly interest repayments or admin fees, and you will only pay for what you use.
- We are transparent about fees from the very start, so you’ll know how much each transaction will cost.
- There are no minimum monthly factoring requirements, so you’ll have the flexibility to send us as much or as little invoices for funding as you need.
- There is no lock-in contract and no minimum term, unlike secured business loans.
- Funding for invoices in as quickly as 4 hours.
- Our friendly local team is only a phone call away.
Key Factors have been offering customised invoice financing solutions to Australian businesses since 1989. We are the country’s leading independently owned invoice financing company. We credit that to our dedication to delivering a seamless customer experience, our commitment to a transparent process, and our wonderful staff, who truly care about helping small businesses succeed.
If you are a business owner that simply wants to explore your options and has a monthly turnover ranging from $50,000 to $4,000,0000, invoice financing may be an ideal solution for your business. Contact us today by calling 1300-884-100 or fill out an enquiry form and an invoice financing expert will be in touch to discuss how you can improve your business cash flow without using your home as collateral.