Freight Factoring For Bad Credit

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Many single owner-operators and other small or start-up trucking companies struggle to get funding because they have little or no business credit.

Criteria for traditional bank loans include long and stable credit history and assets that can be pledged as collateral — two things that many freight companies lack.

Fortunately, freight factoring for bad credit provides cash flow solutions without the hoops and hurdles presented by conventional lenders.

There are a number of ways that freight factoring can benefit companies with bad credit:

Factoring for owner-operators

Factoring for start-up freight brokers

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Approval Doesn’t Depend on your Credit Score

Freight factoring is not a loan, so you can qualify even if your credit rating is insufficient to obtain a traditional business loan. 

Transportation factoring companies collect payment directly from your customers and thus base their funding decisions on your customers’ creditworthiness. Your freight factor will evaluate each of your customers and approve them for a credit line based on your billing amounts and their reliability in making payments.

You can request credit increases as you build your sales and your customers build a solid payment history.

Personal Bad Credit Doesn’t Matter

During the underwriting process, freight factoring companies will focus on your business’ financial history to set up your account. As long as your trucking company is incorporated, it is a separate entity that poor personal credit does not impact. 

Companies that provide freight factoring for bad credit are able to work with a number of difficult financial situations within a business, but for best results, your business should be free from any liens or judgments that would prevent the factor from receiving payments.

Freight Factoring can Reform your Bad Credit

The greatest advantage of freight factoring is that the rejuvenation of your cash flow can help you rehabilitate your credit rating!

Most bad credit situations are caused by a lack of working capital, so by factoring your freight bills and applying the cash you receive to the existing debt you can remove it from your balance sheet and improve your credit score. Turn your business around with freight factoring!

Non-Recourse Options Available

If slow-paying customers have compromised your financial position, you may be able to start a non-recourse freight factoring program. Non-recourse freight factors offer your company a full up-front advance of your freight bills. For a slightly higher factoring fee, your freight factor will assume all the credit risk of non-payment by your customers so you can avoid troublesome repurchases that could threaten your cash flow down the line.

Instead of drowning in your company’s poor credit history, keep moving ahead with freight factoring for bad credit.

Freight factoring companies are eager to help your company get the fast cash it needs, regardless of your past credit history.

Freight factoring for bad credit is a great way for any trucking company to boost its working capital to haul bigger and better loads. Cover fuel, maintenance, and driver pay with the fast funding you receive from freight factoring.

What are the advantages of invoice factoring?

Invoice factoring offers several advantages for businesses in need of quick cash. One of the primary benefits is avoiding the need to rely on traditional banks for funding. This is particularly advantageous for low-credit businesses since banks often impose higher interest rates or may even reject their loan applications.

By engaging in invoice factoring, companies can rapidly raise the cash they require without the challenges associated with securing a bank loan. Additionally, the onus of ensuring timely payment from clients does not fall on the business anymore. This responsibility is transferred to the factoring company, as they have purchased the invoices and obtained the rights to communicate directly with the clients. This alleviates the need for businesses to engage in protracted negotiations with clients about payment terms.

Furthermore, invoice factoring enables companies to optimize their cash flow and effectively manage their working capital. Rather than waiting for extended periods to receive payment from clients, businesses can access a significant portion of the invoice value upfront from the factoring company. This influx of capital can be utilized immediately for various purposes such as covering operating costs, investing in new business opportunities, or managing unexpected financial obligations.

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