AR Loan

There are several types of AR (account receivable) loans available to business owners. Some of these include, factoring loans, merchant advance loans, permanent capital injection loans, operating lines of credit, trade terms with suppliers, even a simple credit card is a way to finance AR. Picking the right AR loan is the trick.

Business owners should consider how long it takes for their AR to turn into cash before choosing one of these options. Most AR loans are revolving in nature and are expected to be paid back in full within 12 months. Some of these sources get paid in full on a 30-90 day basis. The reason it is important for business owners to understand how long it takes for their AR to become cash is because, cash is what will pay off the original AR loan.

I have seen several cases where business owners have received an AR loan that their business was unable to repay. In many cases the business owner is worse off a year later than they would have been without the loan. Don’t let this happen to you. Many lenders are so production focused that they do not consider the financial implications on your business. There is an art to making and receiving loans. Make sure you take your time finding the right AR loan for your business. Let us help you today.

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