Can Factoring Replace a Line of Credit?

As a new or growing business owner, you may run into immediate and dire situations where you either need a line of credit or cannot get one due to lender preferences, qualifications, or regulations. These are not unique problems. They are quite common for many companies – especially those within the small to mid-sized range – who need the financing the most to compel growth.

Fortunately for those companies, factoring (often referred to as invoice financing) provides an even better solution and outcome for your business than do traditional lines of credit.

Why Should Your Business Use Factoring Rather than a Line of Credit?

  • The qualification process is much easier. The invoices you allow for factoring are used as the collateral for the transaction. The creditworthiness is based upon your clients and not on you or your business.
  • Factoring is a process most commonly used by startups and companies who have not spent years building up a line of credit or a track record with a bank. Many business websites have said that factoring is, in fact, something a startup needs to consider as a stepping stone to success.
  • Factoring is often used by companies that at one time or another have fallen upon financial stress either internally or as a result of a difficult climate for business. It can be a “turnaround” for your business when you still need more immediate access to cash flow.
  • Factoring is a flexible form of financing. It grows and contracts as you decide alongside your business and not against it. The maximum line is dependent upon the value of your invoices. As sales increase, your financial support increases also.

Factoring can be a worthy and brilliant replacement for a line of credit if you cannot wait for long payers, need the cash flow within 30-60 days, and you sell to creditworthy clients. It is a form of financing by which you get to make the decisions again, as you had always dreamed when your business was a mere thought or idea. It puts the power back into the hands of the business owner rather than the banker. Make a good decision today and consider factoring as a direct road to growth.


There are a lot of alternative finance companies out there that do the same as we do. They share the what and how.  Our clients and partners work with us for our why and our who.   We’re dedicated and focused on our clients.

To discuss the funding options available to your business. Please do not hesitate to contact us on 0161 280 4220 or lynnew@regencyfactors.com

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