When it comes to financing your business, there are many options available. Startups or small businesses may shy away from loans to avoid debt; but what about a line of credit? And how does this funding option compare with factoring? JOBE Services, Inc. shares more information about factoring vs. a line of credit to help you make the best decisions for your Texas business.

What is Factoring?

Factoring is a financing option where a business sells its accounts receivable (invoices) to a third-party company, known as a factor. The factor provides immediate cash to the business in exchange for a fee. The factor then collects payment from the customer directly.

Factoring can be a great option for businesses that need immediate cash flow. It can also be a good option for businesses that have slow-paying customers or that are unable to qualify for traditional financing due to poor or non-existent credit.

What is a Line of Credit?

A line of credit is a financing option where a lender provides a business with access to a predetermined amount of funds. The business can use the funds as needed and only pays interest on the amount used. Once the funds are repaid, the business can use them again.

A line of credit can be a great option for businesses with seasonal cash flow or that need funds for unexpected expenses. It can also be a good option for businesses with a good credit history and can qualify for competitive interest rates.

Comparing Factoring with a Line of Credit

JOBE Services, Inc. provides reliable factoring to help small and medium-sized businesses with cash flow problems. Let’s compare factoring and a line of credit to see which would best suit you.

Cost

• Factoring fees with JOBE Services, Inc. are not hidden. We share our fees up front and they do not change. We also do not lock you into long-term contracts.
• Line of credit interest rates can vary depending on the lender, your creditworthiness and the amount borrowed. Interest rates typically range from 7-25% per year.

Flexibility

• Factoring provides immediate cash flow and does not require collateral. JOBE Services, Inc. offers our factoring services according to your needs, once in a pinch, occasionally as needed or as part of your accounts receivable process.
• A line of credit provides ongoing access to funds that can be used as needed. However, it typically requires collateral, a term contract and a long application process.

Creditworthiness

• Factoring is based on the creditworthiness of your customer, not your business. It is not a loan and does not require a credit check.
• A line of credit is based on your business’ creditworthiness. Small or new businesses may not qualify.

Houston Factoring Company for Cash Flow Solutions

JOBE Services, Inc. has helped Houston-area businesses with their cash flow problems since 1996. We are a trusted name in factoring financial services because we help businesses help themselves. Factoring lets you avoid debt and we do not lock you into long contracts or charge hidden fees. Contact us today to learn more about factoring to improve your company’s cash flow needs.