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Merchant Invoice Financing Bank Statement Loan
Invoice financing (or factoring) allows businesses to turn outstanding invoices into immediate cash, usually within 24–48 hours.
Can You Please Cover How it Works: From what I heard, lenders advance roughly 80%–90% of the invoice value immediately and the remainder (minus fees) when the customer pays.
I Heard It Is Best For: B2B companies with slow-paying clients (net-30/60/90 terms) needing immediate working capital for payroll or growth.
I am a residential NMLS licensed mortgage broker and am expanding my business model to originate business and commercial loans since I have extensive real estate and business investment experience. My client, great credit, great consistent deposit, is in need of a $100,000 bridge loan, to finish the work order of the contract he has. The client and myself are based in Fort Lauderdale, Florida, and I am confident I can help him if I get the right guidance on the step by step process to take in getting invoice funding or factoring. Can you please advise me on who to contact and the going rate and terms I can get for this client? Do consult with a business finance broker or a direct business factoring direct lender? Credit score is 780 FICO, and need the short term loan for six months to one year without a pre-payment penalty? How much commission am I expected to make (rough range)? If I am consulting with a business invoice financing broker, how do I get paid? Does the business broker split the commission with me and if so what is the fair terms of the commission split. What would the interest rate be? What would the cost, fees, and terms be? How about if I dealt with a commercial or business investment or factoring direct lender? How do I go about going this route? What will the rate and terms be as well as the fees and costs and my commission? Do I get paid on the front end or back end? Does my commission get disclosed or not? What is the going rate and terms and steps in going about taking the application, getting a term sheet, closed, and funded. Can you please refer to reputable wholesale invoice financing brokers and lenders and contact information and requirements to become one of their business and commercial loan officers? Thank you in advance.
stripe.com
Invoice financing for small businesses | Stripe
Here’s what small businesses should know about the costs, benefits, and potential risks of invoice financing.
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3 Replies
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Great questions. Gustan Cho texted me about Invoice Financing and Factoring. Tom is writing something up for your loan officer.
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My advice in learning qualified and reputable business invoice financing brokers and direct lenders is through Scottsman Guide- Commercial Loan Edition. It is free and if you are new to the business and want to excel in both residential and commercial and business financing, subscribe to Scottsman Guide.
https://www.scotsmanguide.com/subscribe-investors/
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Based on your description, invoice factoring is typically available only when your client has a valid B2B invoice or a receivable from a creditworthy customer. If your client requires $100,000 prior to invoice issuance to complete a work order, most factoring companies will request that you return it after the work is finished, accepted, and invoiced. In such cases, your client may need to consider a business bridge loan, purchase order financing, contract financing, a working capital line, an equipment loan, or a merchant or business cash-flow loan rather than traditional invoice factoring.
Bottom-Line Recommendation
For your initial transactions, I recommend working with both:
A reputable commercial finance broker or factoring broker
This approach offers guidance, helps identify lenders, supports deal structuring, and provides a commission split as you gain experience in commercial finance. Two or three direct factoring lenders
This strategy enables you to establish relationships with lenders, compare financing offers, and ultimately retain a greater portion of your compensation as you become more familiar with the process.
For your Fort Lauderdale client seeking $100,000 for a six- to twelve-month term, I recommend presenting the solution as follows rather than simply labeling it as “invoice factoring”:
“B2B contract/work-order financing with possible invoice factoring takeout once invoices are issued.
Framing the request in this manner provides the lender with additional structuring options.
How Invoice Factoring Works.
Invoice factoring is not a conventional loan. Instead, the business sells an invoice or receivable to a factoring company at a discount. The factoring company advances a portion of the invoice amount upfront and remits the remainder, less fees, after the customer pays.
Typical Structure:
Advance: often 70% to 90% of the invoice value.
Reserve: the remaining 10% to 30% is held back.
Fee: commonly 1% to 5% of the invoice amount, often charged every 30 days or per factoring period.
Repayment source: the customer who owes the invoice pays the factor directly.
Best fit: B2B businesses with slow-paying customers on net-30, net-60, or net-90 terms.
Industry sources indicate that advance rates typically range from 70% to 90%, while factoring fees are typically 1% to 5% of the invoice value. The specific terms depend on risk assessment, customer creditworthiness, invoice size, and the duration the invoice remains unpaid.
Important Difference: Invoice Factoring Versus Bridge Loan
This distinction represents the primary consideration for your client.
If your client has completed work and issued invoices, factoring may be a strong fit.
If your client needs money to finish the work before sending an invoice, factoring probably won’t work unless the lender also offers contract financing, purchase order financing, asset-based lending, or short-term working capital.
A True Factor Wants To Know:
Who owes the money?
Has the work been completed?
Has the customer accepted the work?
Is there a clean invoice?
Is the account debtor strong and verifiable?
Are there liens, disputes, offsets, retainage, or prior UCC filings?
While your client’s 780 FICO score is advantageous, in invoice factoring, the credit strength of the customer typically carries greater significance than the business owner’s credit score.
What Terms May Be Realistic For A $100,000 Need
For clean B2B invoices, a realistic market expectation may look like this:
Advance Rate: 80% to 90%
Factoring fee: roughly 1% to 5% per 30 days
Funding speed: sometimes 24 to 48 hours after approval and verification
Term: usually tied to invoice payment terms, not a fixed 6- to 12-month amortized loan
Prepayment penalty: This generally does not apply as it does with mortgages; however, some contracts may include monthly minimums, termination fees, unused line fees, or long-term agreements.
For example, if the client needs $100,000 cash upfront, and the factor advances 85%, the client may need about $117,650 in eligible invoices to net roughly $100,000 before any setup costs or reserves.
If the fee is 3% for 30 days on a $117,650 invoice, the factoring cost could be about $3,529 for the first 30 days. If the invoice takes 90 days to pay and fees keep accruing, the cost can become expenFor this reason, factoring may appear straightforward, but the annualized cost can be substantial. Recent market reviews indicate that fees of 2% to 3% per invoice can result in a high annual rate if customers delay payment.time to pay.
What Your Client May Actually Need
Since your client requires a $100,000 bridge loan to complete a work order, I recommend collecting the following documents before contacting lenders:
Gather these before you contact lenders:
Business legal name, EIN, ownership, and entity documents
Driver’s license for all 20%+ owners
Six to twelve months of business bank statements
Current AR aging report
AP aging report
Signed contract or work order
Copies of invoices, if already issued
Customer name, contact, payment history, and credit quality
Proof of completed work or percentage completed
Tax returns or P&L, if available
Existing debt schedule
UCC search or list of existing liens
Explanation of use of funds
Requested amount, expected payoff source, and timeline
If Work Is Not Complete Yet
Ask lenders for one of these:
Contract financing
Purchase order financing
Mobilization funding
Short-term business bridge loan
Asset-based working capital line
Invoice factoring after invoice issuance
Hybrid structure: bridge now, factoring takeout later
Broker Versus Direct Lender: Which Route Is Better?
Best First Move: Use A Commercial Finance Broker
Since you’re new to business and commercial loan origination, I recommend starting with an experienced commercial finance broker for your first few deals.
The broker can help you avoid mistakes with:
Term sheet language UCC filings
Factoring agreements
Notice of assignment
Recourse versus non-recourse factoring
Minimum volume requirements
Early termination fees
Broker compensation agreements
Florida commercial financing disclosure rules
The trade-off is that you’ll probably have to split the compensation.
Direct Lender Route
Once you know the process, direct relationships are better long-term because you can:
Control the relationship
Get faster answers
Negotiate your own referral agreement
Earn direct broker/referral compensation
Build a commercial lending division under your brand
For your first deal, I’d send the file to one broker and two direct lenders. Don’t send it to a large number of lenders at once. Commercial lenders talk to each other, and too many submissions can make a good borrower seem desperate.
Expected Broker Commission
Commission varies widely by product, lender, deal size, risk, and whether it is a one-time referral or an ongoing factoring line.
For a $100,000 transaction, rough market expectations may be:
One-time referral fee: $500 to $2,500
Broker points: 1% to 3% of the funded amount, sometimes more on riskier working capital deals
Factoring residual: a percentage of factoring revenue for as long as the client factors invoices
Split with another broker: commonly 50/50, 60/40, or 70/30, depending on who owns the client, packages the file, negotiates, and manages the lender relationship
Some direct factoring companies publicly promote referral or broker programs.
Riviera, for example, advertises referral payments up to $1,500 for new funded clients, while other broker programs discuss ongoing or lifetime commission structures.
Fair Split If You Use A Business Finance Broker
If you bring the client and the commercial broker places the deal, a fair starting split is often: 50/50 of net broker compensation if the broker packages, shops, negotiates, and closes the deal.
60/40 in your favor if you bring a complete file, control the client, and the broker places it only.
70/30 in the broker’s favor if you simply refer the name and the broker does all client-facing work.
Get the split in writing before introducing the client.
Use wording like:
Any broker, referral, placement, renewal, residual, or back-end compensation earned on this client, related entities, renewals, increases, refinances, factoring lines, or future facilities shall be split ___% to Gustan Cho Associates and ___% to broker/lender, unless otherwise agreed in writing.”
Do You Get Paid Front-End Or Back-End?
Most reputable commercial finance compensation is paid after funding, not upfront.
In Florida, be very careful with advance fees. Florida’s Commercial Financing Disclosure Law defines an advance fee as consideration collected by a broker before closing, and the law prohibits brokers from assessing, collecting, or soliciting advance fees for broker services, with limited exceptions for actual third-party application-related costs paid to an independent party.
For this deal, I wouldn’t charge the borrower an upfront broker fee unless your attorney confirms it’s allowed.
The safer approach is:
Get paid by the lender or broker after funding.
Have a signed referral/broker agreement.
Disclose compensation when required by law, contract, or lender policy.
Do not collect junk fees upfront.
Does Your Commission Need To Be Disclosed?
For business-purpose commercial financing, disclosure rules differ from residential mortgage lending. However, Florida now has commercial financing disclosure requirements for certain commercial financing transactions, including commercial loans and accounts receivable purchase transactions, generally valued at less than $500,000, with several exemptions. Required provider disclosures include total financing amount, deductions, total cost, payment method/frequency, and prepayment rights or penalties.
Whether your specific commission must be separately disclosed depends on:
Whether you are acting as a broker under the law
Whether the lender includes broker compensation in the written disclosure
Whether the compensation is paid by borrower, lender, or factor
Whether the transaction is exempt
Whether your referral agreement requires disclosure
Whether the lender’s compliance policy requires borrower acknowledgment.
Best practices.
Always maintain transparency regarding your compensation. In commercial lending, compensation is typically paid by the lender or factor, but it is essential to have a written agreement and adhere to all lender and state disclosure requirements.
Reputable Factoring Lenders And Broker Programs To Contact
Here are some reputable companies to start with. Contact them as a referral partner or broker and ask about their broker agreement, commission schedule, industries they fund, minimum invoice size, advance rate, recourse rules, and if they fund contracts or work orders before invoices are issued.
Riviera Finance
Riviera Finance has been in factoring for decades and has a financial broker program. Their site says they support referral partners and serve businesses across many industries, as long as the businesses invoice customers. Riviera lists 800-872-7484 as a main contact number.
Good fit for: general B2B factoring, established invoices, businesses needing hands-on service.
altLINE by The Southern Bank Company
altLINE has a broker referral program and advertises invoice factoring, accounts receivable financing, same-day funding, no minimum credit score, and rates “from 0.50%,” subject to qualification. Their broker page lists 205-883-2411 for the broker program area and 205-607-0811 elsewhere on the site.
Good fit for: business owners with strong receivables, bank-affiliated factoring relationships, and small to mid-sized businesses.
FundThrough
FundThrough offers invoice factoring and a partner/referral program, including co-branded referral options. FundThrough says its funding fee is generally about 2.5% per 30 days, with no annual fees and no obligation to advance invoices.
Good fit for: tech-enabled invoice funding, businesses using modern accounting/invoicing workflows, and selective invoice funding. eCapital
eCapital has a commercial finance broker partnership program, and brokers can earn commissions for successful client referrals, paid promptly upon funding. Good fit for: broader commercial finance, invoice factoring, freight, staffing, asset-based working capital.
Triumph
Triumph has a referral partner program and states that referral partners can earn money when referred clients sign up. Triumph is especially known in freight/trucking-related factoring and payment solutions.
Good fit for: trucking, freight, logistics, transportation-related receivables.
Scale Funding
Scale Funding advertises an invoice factoring broker referral program with commissions for the lifetime of funded deals.
Good fit for: broker/residual compensation model, B2B receivable-based financing.
Questions To Ask Every Factoring Lender Before Sending The File
Ask these before submitting your client:
Do you fund Florida businesses?
Do you require completed work and issued invoices?
Will you fund against a signed contract or work order before invoicing?
What industries do you avoid?
What is your minimum monthly factoring volume?
What is your advance rate?
What is your factoring fee per 30 days?
Is pricing flat, tiered, or on a daily accrual basis?
Is it recourse or non-recourse?
Are there setup fees, due diligence fees, wire fees, lockbox fees, ACH fees, UCC filing fees, monthly minimums, or termination fees?
Do you require a personal guaranty?
Do you file a blanket UCC or only against receivables?
Do you notify the customer/account debtor?
How do you verify invoices?
How quickly can you issue a term sheet?
How quickly can you fund after approval?
What is your broker/referral compensation?
Is compensation one-time, residual, or both?
Is broker compensation disclosed to the borrower?
Do you provide Florida commercial financing disclosures?
Step-By-Step Process For This Client
Step 1: Determine Whether This Is Factorable
Ask:
Has the work already been completed?
Has an invoice already been issued?
Who is the customer that owes the money?
Is the customer a strong company, government agency, contractor, hospital, insurer, or large business?
Are there disputes, retainage, setoffs, or completion conditions?
If there is no invoice yet, shop it as contract financing or working capital, not pure factoring.
Step 2: Build A Clean Executive Summary
Create a one-page deal summary:
Borrower/business name
Location: Fort Lauderdale, Florida
Business type and years in business
Owner credit: 780 FICO
Requested funding: $100,000
Use of funds: finish work order/contract
Exit strategy: customer payment, invoice factoring, contract receivable, or business cash flow
Needed term: six to twelve months
Prepayment penalty: borrower requests none
Monthly deposits: summarize average deposits
Customer/account debtor: identify who will pay
Collateral: invoices, receivables, contract rights, equipment, or other assets
Step 3: Collect Documents
Don’t send an incomplete package. Lenders work faster when your file is organized.
Step 4: Send To A Small Group Of Lenders
I would send to:
One experienced commercial finance broker
Riviera Finance
altLINE
FundThrough or eCapital
If the client is in trucking, freight, logistics, staffing, construction, medical receivables, or government contracts, choose lenders that specialize in that industry.
Step 5: Compare Term Sheets
Don’t just compare the “rate.” Look at:
Net cash to borrower
Total dollar cost
Advance rate
Reserve release timing
Prepayment flexibility
Monthly minimums
Contract length
Termination feed
Personal guaranty
UCC scope
Customer notification
Default triggers
Broker compensation
Step 6: Close And Fund
Typical closing items may include:
Factoring agreement
Notice of assignment
UCC filing authorization
Business authorization/resolution
Customer verification
Bank/lockbox setup
Payoff letters for existing liens, if any
Florida commercial financing disclosuHere is a concise way to explain the process:ean way to explain it
Because you need $100,000 to complete a work order, we first need to determine whether this is invoice factoring, contract financing, or a short-term working capital bridge. If the work is already completed and your customer owes you on an invoice, factoring may be fast and clean. If the invoice has not been issued yet, we may need a bridge facility that gets repaid once the contract is completed and the invoice is paid. Your strong credit and consistent deposits help, but the lender will focus heavily on the contract, the customer paying the invoice, and the business cash flow.”
My Practical Advice To You
For your initial commercial transaction, avoid trying to master all aspects at once when engaging with a real client. Prioritize maintaining and protecting your client relationship.
The safest route is:
Package the file professionally.
Get a signed broker/referral agreement first.
Send it to one experienced commercial finance broker and two direct factoring lenders.
Do not collect advance fees from the borrower.
Make sure Florida commercial financing disclosures are handled by the provider.
Ask for your compensation agreement in writing before the client introduction.
For a $100,000 transaction, a typical commission for a one-time funding ranges from approximately $1,000 to $3,000. If the client continues to factor invoices, your earnings may increase over time. The greater opportunity lies in developing a commercial finance referral platform for your mortgage clients, real estate investors, business owners, contractors, and self-employed borrowers.
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