5 Best Accounts Receivable Financing Companies in 2022
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
Accounts receivable (A/R) financing provides funding to help a small business address its cash flow or provide short-term working capital. A/R financing is based on the value of outstanding receivables that lenders choose to collateralize, providing businesses the funds they need. We’ve selected five of the best companies in A/R financing based on the amounts businesses can borrow, interest rate, and speed in receiving funds.
- First Commercial Credit: Best for businesses looking to get the highest percentage of their receivables financed
- FundThrough: Best overall terms for A/R financing for small businesses
- Crestmark: Best funder for startup businesses
- P2Binvestor: Best for larger invoices
- Lendio: Best for comparison shopping
First Commercial Credit: Best for Highest Percentage of Invoices Financed
First Commercial Credit
What We Like
- Competitive rates
- High advance percentage available
- Will work with newer businesses
What's Missing
- Potential for hidden fees that aren’t publicly stated
- Funding speed not as fast as competitors
Costs & Terms
- Funding amount: $10,000 to $10 million
- Advance rate: Up to 97%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: 0.69% to 1.59% per 30 days
- Expected APR: 8% to 20%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None listed
- Additional fees: None listed on website
- Funding speed: 15 minutes to apply—funding in three to five days
Features & Requirements
- Personal guarantee: Required from all business owners
- Minimum credit score: Will accept low credit score, no stated minimum
- Time in business: At least three months
- Annual revenue: None stated but revenues need to support financing request
- Invoice financing agreement: Recourse
- Customer interaction: Required
- Assignment of invoices: Required
Why we like First Commercial Credit: Qualified businesses can finance as much as 97% of their invoices through First Commercial Credit, which is the highest percentage for A/R financing companies surveyed that offer larger advances. First Commercial Credit’s rates and terms for financing are competitive. Those who work with First Commercial Credit should review their contract for any restrictions or hidden fees.
FundThrough: Best for Smaller Businesses
FundThrough
What We Like
- Great for smaller financing needs
- High advance percentages
- Ability to link to QuickBooks
What's Missing
- Express product is capped at only $15,000 in invoices
- Lack of clear minimum revenue guidelines may impact ability to get funded
Costs & Terms
- Funding amount: $500 to $15,000 (Express program)
- Advance rate: Up to 100%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: Starting at 0.5% per week
- Expected APR: 26%
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None
- Additional fees: Wire transfer
- Funding speed: 10 minutes to apply—decision and funding within 24 hours
Features & Requirements
- Personal guarantee: Typically not required
- Minimum credit score: No minimum
- Time in business: Three months
- Annual revenue: Depends on business type, eligibility varies
- Invoice financing agreement: Recourse
- Customer interaction: Not required
Why we like FundThrough: FundThrough offers an Express Invoice Financing program that’s geared for businesses that need small invoices financed quickly. Eligibility for the Express Invoicing Program may vary based on business type, but FundThrough does offer customized solutions as well as a more robust invoice factoring option that businesses can take advantage of. The maximum of receivable financing at FundThrough is low. However, for small businesses in a cash flow crunch, FundThrough can provide needed relief.
Crestmark: Best Option for Startups
Crestmark
What We Like
- Customized rate solutions for each borrower may be advantageous for some businesses
- Will provide financing to startups
What's Missing
- Potential for hidden fees that aren’t publicly stated
- Funding speed not as fast as competitors
Costs & Terms
- Funding amount: Up to $10 million
- Advance rate: Up to 90%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: Customized to borrower
- Origination or maintenance fees: None
- Prepayment penalties or termination fees: None listed
- Additional fees: Will be disclosed on the A/R financing agreement
- Funding speed: 15 minutes to apply—approval in seven to 10 days
Features & Requirements
- Personal guarantee: May be required
- Minimum credit score: No minimum
- Time in business: No minimum
- Annual revenue: No minimum
- Invoice financing agreement: Recourse and non-recourse
- Customer interaction: Depends on arrangement
- Assignment of invoices: Required
Why we like Crestmark: Crestmark is arguably the most traditional of the financing companies we looked at, offering customized pricing for each borrower and each situation. While that slows down the approval process, it could offer some businesses a more advantageous rate. Crestmark will also offer funding to smaller businesses and startups.
P2Binvestor: Best for Larger Invoices
P2Binvestor
What We Like
- Very competitive discount rate
- No credit requirements
- Simple online platform
What's Missing
- Lower advance rate
- Slower funding and approval times
- Annual fee
Costs & Terms
- Funding amount: $500,000 to $10 million
- Advance rate: Up to 80%
- Repayment terms & schedule: Advances are repaid as customers pay their invoices
- Discount rate: 0.67% to 1.67% per 30 days
- Expected APR: 8% to 20%
- Origination or maintenance fees: 1.5% origination fee, 1.5% annual fee
- Prepayment penalties or termination fees: None listed
- Additional fees: None
- Funding speed: 20 minutes to apply—funding within two weeks
Features & Requirements
- Personal guarantee: Required
- Minimum credit score: No minimum
- Time in business: One year
- Annual revenue: At least $500,000
- Invoice financing agreement: Recourse
- Customer interaction: Depends on arrangement
- Assignment of invoices: Required
Why we like P2Binvestor: P2Binvestor is best suited for businesses that are designed to scale or are larger, given the higher minimum revenue and advance requirements. However, should you qualify, P2Binvestor’s discount rate is among the best of the companies we surveyed. One other advantage to P2Binvestor is the lack of a credit score requirement.
Lendio: Best for Comparison Shopping
Lendio
What We Like
- Ability to comparison shop
- High advance percentages
- Competitive rates
What's Missing
- Higher revenue requirements
- Need to be in business for two years
Costs & Terms
- Funding amount: $5,000 to $5 million
- Advance rate: Up to 90%
- Repayment terms & schedule: Up to one year to repay advance
- Expected APR: 6% and higher
- Origination or maintenance fees: None listed
- Prepayment penalties or termination fees: None
- Additional fees: None listed
- Funding speed: 15 minutes to apply—decision and funding within 24 hours
Features & Requirements
- Personal guarantee: May be required
- Minimum credit score: 680
- Time in business: Two years
- Annual revenue: $1 million and higher
- Invoice financing agreement: Recourse
- Customer interaction: Not required
- Other requirements: At least $100,000 in A/R at any given time
Why we like Lendio: Lendio is an online broker that partners with over 75 different lenders. Its A/R financing product is a line of credit (LOC) that will advance $5,000 or more per use, with up to one year to repay the advance. The A/R LOC at Lendio is best suited to businesses that are well-established, have at least $1 million in annual revenue, and whose owners have good credit. However, the effective APR with Lendio’s A/R line is very competitive, starting at 6%.
Who A/R Financing Is Best For
Accounts receivable financing is an effective means of getting funding for several types of businesses, such as:
- Business owners with low credit scores: Accounts receivable financing companies rely on the creditworthiness of a borrower’s customers and offer lower credit score requirements than some other lending options.
- Small businesses that invoice customers: Businesses must invoice customers to qualify, and A/R financing can shorten their collection period and provide access to working capital.
- Companies with slow-paying customers: If customers are taking too long to pay, A/R financing can be an inexpensive, short-term funding solution.
- Independent contractors who bill clients for large projects: Long projects require contractors to cover expenses until the project is complete or a customer pays the invoice. A/R financing allows your business faster access to the amounts you have invoiced.
How We Evaluated A/R Financing Companies
Once a business determines that A/R financing is the best option, it’s important to select a provider that offers the right amount of funding, along with rates and terms that can help the business flourish. We considered a broad range of A/R financing companies to identify the five best providers.
In establishing our review criteria, we considered the pain points that small business owners express. These include how much business owners can borrow, how quickly they can access the needed funds, the expected rate the business would be charged for financing, and the required qualifications for receivables financing.
Bottom Line
All of the accounts receivable financing companies reviewed are good options for filling short-term cash flow gaps. Each of our recommendations fits a range of business types, from smaller businesses to those scaling for growth.
