How Much Does It Cost
In order to understand the cost of Accounts Receivable Financing, a prospective borrower should better understand his or her own company. If a company is not currently able to obtain a traditional bank loan, the company is really shopping for capital.
Providers of capital evaluate risk differently from lenders and typical capital investors demand an equity interest in the business. Pre-Banc is really a provider of capital, but does not require that the prospective borrower give up any equity.
What this all means is that the prospective borrower must think in terms of the dollar cost of the loan relative to the potential profit which can be generated from the borrowed funds.
All too often, prospective borrowers think of the interest as a percentage of sales when in reality, interest costs might only be one or two percent of sales. Interest expense for undercapitalized companies is a cost of doing business just like inventory, labor or rent.
Since most suppliers offer cash discounts, Pre-Banc's finance charge can be significantly offset by the savings earned from the timely purchases of services and materials. Check out our FAQ >>
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