How To Fund A Startup With Invoice Finance For Startups
If you are struggling to raise finance to start a new business, invoice finance for startups could be an option for you, even if you have no trading history, have just one single customer, have been turned down for a bank overdraft or loan already, or poor credit history.
Invoice Finance For Startups
Invoice finance can be a perfect way of financing a start-up, not all providers deal with new start businesses, but there are a number that do.
Do You Qualify?
Most probably, yes! You need to be raising credit invoices to other businesses, that's about it. There are a few other criteria around the nature of your trade and your status/history but we can talk you through that, and there are options available if you have a previous adverse credit history. There are also differences in the criteria applied by different funders so we can advise you about who will be able to help.
How Startup Invoice Finance Can Fund A New Company
The way startup invoice finance works is that:
- You receive a percentage e.g. 85% against new sales invoices, raised on credit terms, as you raise them.
- The balance, less a small charge for using the service, is paid when the customer pays.
- If you are raising a number of invoices, you receive that advance against all of those invoices (subject to a few eligibility criteria), so the amount of money financed can grow considerably, and in line with your growing turnover.
- You can also benefit from having an invoice finance company help you with your credit control.
This can give you a working capital injection that you can use to fund your business day-to-day.
Alternatively, if you are worried that your sales may be sporadic, you can choose a selective facility, with no minimums, where you pick and choose which invoices to get funded.
So with a few invoices outstanding that totalled, for example, £5,000 you could receive say £4,250 immediately to use to pay creditors etc. (there are no limitations on what you can use the money for). As you raised more invoices you would receive more funding as your outstanding sales ledger grows.
What Does It Cost?
It can be as little as £3,000 + VAT per annum (see details of how the costs work). However, you can avoid paying the cost for the whole year if you choose a selective facility that allows you to pick and choose the invoices that you get funded.
Contact Sean on 03330 113622 for a discussion, in confidence and without any obligation, or APPLY ONLINE.
Further Resources About Funding Startups
Video explaining our research about alternative sources of finance for new startup businesses:
Case studies, articles and infographics:
- Free Guide - Our Free Business Startup Guide
- Case Study - Payroll For A New Startup (See Case Study 3)
- Article - The Benefits Of Factoring To New Startups
- Article - The Disadvantages Of Bank Overdraft To New Start-ups And The Alternative
- Infographic - Sources Of Finance For New Startups