Getting the money you need for your business can be difficult, especially when you’re just starting out. Fortunately, there are several types of financing that you can use outside of traditional bank loans. Accounts receivable financing might be just what you’re looking for. There are multiple reasons why this could be the right choice for you.

1. There’s No Need For Additional Collateral

For small business owners, it’s not always easy to find the necessary collateral for a loan. There’s also a chance that you have already leveraged the collateral you had available. When you are using accounts receivable, you don’t need anything else. Your outstanding invoices serve as the collateral. This makes this type of financing easier to qualify for and can make the process simpler as well.

2. It Does Not Increase Your Debt

If you are in need of cash but have already accrued a large amount of debt, you may not want more. Interest can add up over time, and a high debt-to-income ratio can damage your credit. With accounts receivable financing, you are selling your invoices, so there is no debt involved.

3. You Don’t Need Great Credit

When applying for a loan, your credit can be a big obstacle if you have a low score or little history. When you use accounts receivable, your credit does not matter as much. Instead, the financial institution will be more concerned with the credit of the customers whose invoices they are purchasing.

4. You Can Get Your Money More Quickly

In some cases, you may need cash as soon as possible. This can be difficult with a traditional loan. Even if you qualify for the loan, the application and approval process can be lengthy. There is often a lot of paperwork involved which means the time between when you apply for the loan and when you receive the money can be up to several months. When selling accounts receivable, you may be able to get your money in less than a week.

While the first option you think of when you need additional money for your business is probably a loan from a bank, this is not the only choice available to you. For those who own a small business or have had trouble with credit in the past, a nontraditional route may be the best option. Because there are several benefits to this kind of financing, accounts receivable financing is one alternative to consider.