While freight broker invoice factoring isn’t the only funding option, it is one of the best solutions for many companies. Some alternative financing methods include:
Bank Loans – Traditional bank loans often come with limitations. Banks typically assess credit profiles and fixed assets, resulting in a line of credit that may not fully meet the funding needs of brokers and restrict their operations. Factoring focuses on invoice turnover and offers a more viable solution to generate capital for business growth.
Merchant Cash Advances – Merchant cash advances (MCA) loans provide quick access to funds without extensive qualification processes, but these loans often come with very high-interest rates and lender fees, and failing to repay the advances on time can lead to rapid bad debt accumulation. Factoring is generally safer as it relies on eligible invoices from reliable shippers.
Other Options – Crowdfunding and angel investors can be challenging to access and often require brokers to give up equity in their business. Private equity funding is the most expensive option and comes with stringent requirements.