Qualifying for factoring is based on your customers’ credit score
One of the main differences between factoring and applying for a business loan with the bank is how the bank determines your creditworthiness. When you apply for a business loan, your bank will base its decision on how creditworthy you and your business are. When qualifying for factoring, the decision is based only on the creditworthiness of the customers you are invoicing. For that reason, factoring is especially helpful for a business that’s already stretched its available credit, or to a newer business that has yet to build its credit history.