Questions and answers

Match the funding to how your business gets paid. If you invoice other businesses on terms, invoice finance usually fits. If customers pay by card, look at a merchant cash advance. If you need a fixed sum for a one-off, a business loan fits. A broker matches the product to your cash cycle rather than to whatever you have heard of.

A business loan gives you a fixed lump sum that you repay over a set term. Invoice finance advances cash you are already owed against your unpaid invoices, and the facility grows as your sales grow. A loan suits a one-off need. Invoice finance funds an ongoing working-capital gap.

Invoice finance usually carries two charges. A service fee for running the facility, typically 0.1% to 3% of turnover, and a discount margin on the cash you draw, commonly 1.75% to 3.5% above Bank of England base rate. Confidential invoice discounting sits at the lower end of the service fee range because you keep credit control; factoring sits higher because the lender collects for you. What you pay depends on your turnover, sector, customers and how much of the facility you use.

Often yes. Lenders weigh more than a credit score, including your sales ledger, your customers and your trading history. Invoice finance in particular leans on the strength of who owes you money, not only your own credit. A broker knows which lenders are comfortable with a given profile, which avoids wasted applications and needless declines.

Not necessarily. With confidential invoice discounting, you keep running your own credit control and your customers need not know a funder is involved. With factoring, the funder collects payment and so is visible to your customers. Which suits you depends on how hands-on you want to be with collections.

It varies by product and lender. An invoice finance facility can often be set up within days, and once it is live, funders commonly advance against a new invoice within about 24 hours. A straightforward loan can move quickly too. The main variable is how fast the paperwork and due diligence are completed.

A secured loan is backed by an asset such as property or equipment, which usually means larger amounts and lower rates, but the asset is at risk if you cannot repay. An unsecured loan needs no specific asset as security, so it is quicker to arrange but often smaller and priced higher, and it is typically backed by a personal guarantee.

Asset finance spreads the cost of equipment, vehicles or machinery over time instead of paying up front. It can fund most business-critical kit, from a single machine to a whole fleet, and it can also release cash from assets you already own through refinance. The asset itself usually provides the security.