When you take out a loan, you have the bonus of putting it on your balance sheet. But in some cases, you may not have the assets necessary to secure a loan in the first place. That can include sufficient cash, A/R, inventory, machinery or equipment to collateralize debt.
Instead of trying to come up with enough assets to secure a loan, you can just sell invoices to get the money that you’re already owed for a modest fee. And because factoring isn’t a loan, you don’t have to worry about interest rates either.