The struggling economy has had a major impact on many businesses. Some have been forced to close their doors, but those that are still open may be feeling the pinch as well.
If your business is one of them, you might not want to give up just yet. There is help out there for those who need it, and Disbursement Funding could be the answer you’ve been looking for. This article discusses how disbursement funding can help your struggling business stay afloat.
What Is Disbursement Funding?
Disbursement funding is an alternative source of financing for small and medium-sized businesses (SMBs) that allows companies who would otherwise be unable or unwilling to borrow from traditional commercial lenders such as banks to secure capital to expand their operations. Disbursement funding is not a loan, and it’s actually an advance payment on your invoices. Providior is among the specialist funding solutions provider to professional service organizations with a good record of offering pragmatic funding solutions to SMBs that need timely funding for their business growth.
Get Funded in Advance
When you sell goods or services to another company that does business with the financial provider offering disbursement funding, instead of getting paid right away, you’ll be given the money before it’s due to pay for materials, payroll and other expenses. Some companies only offer disbursement advances until receivables are collected – typically no more than 90 days after the fact – but others will allow this process to take up to 180 days. The length of time between when your products or services are sold and when your client eventually receives them makes all the difference in how much interest you’ll pay to use this type of funding.
Quick and Easy Access to Capital
Disbursement funding can help your struggling business stay afloat by offering a quick, easy way to access the capital you need without having to go through extensive underwriting or credit checks. If every other business financing option has been exhausted and you have good relationships with your customers, this might be just what you’re looking for. This is a great way to stay afloat and improve your credit afterwards.
Flexibility to Spend Only What is Needed
Disbursement funding is also the perfect funding option if you’re not looking to make a huge purchase but simply need access to some extra capital on an as-needed basis. Since you’ll only be getting paid for what you sell, there are no limits on how much money you can receive. All you have to do is submit invoices for products or services sold, and the money will be sent to your bank account within 24 hours.
How Disbursement Funding Works
Disbursement funding works by offering a cash advance against invoices that have yet to be collected from existing customers. The amount of money that can be borrowed is determined by the average daily balance of outstanding invoices over the past 90 days (the “average daily collection”). The advance is paid as a percentage of those outstanding invoices as a lump sum on day 1 of the loan term. This amount varies based on factors such as average industry days to collect and the strength of your credit profile.
There are no fixed monthly payments, and you only pay interest on the amount borrowed (i.e., not the full advance). The length of time that disbursement funding covers varies depending on the agreement made with your lender but is typically between 30 and 90 days, after which all outstanding invoices must be paid to stop any more of your accounts receivables from being sold.
Disbursement funding is the perfect option for a business that needs fast cash to help cover large expenses or that simply can’t get approved for a traditional loan. The fact that you only pay interest on the amount you borrow also makes this type of financing an attractive choice, even if you’re in good financial shape and could otherwise qualify for a bank loan.