You’ve probably heard the term “no-doc” business loan thrown around a lot these days. And even if you don’t know what a no-doc loan is exactly, you probably understand that it’s less complicated than a traditional loan. But does factoring fall within this category? Keep reading to find out.
What Is Factoring?
Factoring refers to a transaction where businesses sell their unpaid invoices to a third party known as a factor. The factor pays the business upfront and then proceeds to collect the invoices in exchange for a small fee.
One of the main benefits of factoring is the ease of application. Traditional loans often take weeks or even months to process, which can be detrimental to a business in need of cash flow.
With factoring, businesses can have money in their account without having to wait 30 to 90 days for ther customers to pay them. This quick turnaround makes it an ideal financing option for businesses that need immediate cash to cover expenses or to take advantage of opportunities.
What Is a No-Doc Loan?
A no-doc or no documentation loan is a type of loan that requires little to no documentation to be approved. This type of loan is often used by borrowers who cannot or do not wish to provide typical documents required for a traditional loan, such as income verification or tax returns.
As is the case for most loans, no-doc loans have pros and cons. On the one hand, approval times are fast, which is a great advantage for most businesses.
However, these loans usually have short repayment terms and come with high interest rates.
Is Factoring a No-Doc Loan?
The short answer is no, factoring is not a no-doc loan because it’s not a loan to begin with. Factoring your unpaid invoices means selling them to a factor, so there’s no lending involved.
The good news is that receivables factoring offers all the benefits of no-doc loans without the hassles that come with that type of financing.
For example, factoring is fast and requires minimal paperwork compared to banks and other credit institutions. And since receivables factoring is not a loan, there are no repayment terms and you don’t have to worry about high interest rates.
All in all, factoring is the perfect alternative for businesses looking for a simple, flexible, and scalable way to accelerate their revenue cycle.
ACS Factors: We Turn Your Invoices Into Cash
We are a Factoring company located in Upland, California, with many clients nationwide in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.