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Business Finance Expert Series: "Comparing Factoring to Other

Article:

There are a number of financial options in the market and you

need to analyze each in detail to determine which suits you the

best. A business can be financed with help from private

investors, lenders and financial institutions depending on your needs and

priorities.

Varied Commercial Financial Options

Credit Lines: In this the lender is actually a bank. The bank

gives c

redit lines to ( h

ttp://www.hjventures.com/factoring/credit-analysis.html )

fill the temporary shortages of business like inventories,

receivables etc. These shortages are mostly due to the time

difference between the payouts and the collections. Unlike

factoring, financing through credit line requires a good

credibility record along with the collateral. Banks also require

business owners to maintain the obligatory balance of funds in

their accounts.

Short-term Loans: As the name suggests these are the loans that

are sought for term of a year or less and are generally secured.

They are taken to meet expenses like insurance or to cash over

the discounts offered by the supplier and are mostly paid back

in lump sum at the maturity.

Asset-Based Loans: Similar to factoring, asset-based loans are

raised on current assets like inventory or accounts receivables ( http://www.hjventures.com/factoring/accounts-receivables.html

) . However its ambit goes wider to include varied current

assets while in factoring it is limited to account receivables.

The lender has a security in the assets of a company and are

mostly sought to meet the working capital needs.

Contract Financing: In this kind of financing funds are advanced

in accordance with the work performed till date. Criteria on

which finance are provided under contract financing is the

credibility of business to complete a contract and its ability

to perform. Under this contracts are used as collateral to get

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short-term loans.

When it is difficult to obtain finance through banks factoring

is a promising option. The method also relieves small companies

of the expenses involved with collection of receivables. It is

not a one-time transaction and is generally provided on a

contractual basis.

Learn more about factoring / business finance:

http://www.hjventures.com/factoring/factoring-glossary.html

About the author:

Howard Schwartz is a partner in several business strategy

groups, including HJ Ventures International, Inc. Howard has

worked with hundreds of entrepreneurs worldwide with a focus on

writing Business Plans for companies interested in raising

capital from Venture Funds and Angel Investors. Howard's

business plans have secured several million dollars in funding.

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