Factoring in Ontario: What Every Business Owner Should Know

Factoring is a prevalent and easy way of increasing a business’s working capital. Recently, it has become an essential topic attracting hype to the public, thanks to its benefits.

Interrelated with the continued expansion and growth, factoring is gaining momentum, and you should use it. In this post, we share everything a business owner needs to know about factoring in Ontario.

Pros and Cons of Factoring in Ontario

Like any other type of financing option, you must diligently weigh and consider the positive and the negative before deciding to go this route. Let’s look at the things you need to consider before finding a factoring company.


Fast Working Capital, Ideal for Fast-Growing Business

Although different factors take different duration to process the application, you will receive the cash to fund your projects in less than ten days. You can get it quicker, with 24-72 hours. It’s an important thing to ponder, primarily if you are operating a quickly growing business and need instant cash.

No Relaying on Credit Score, Ideal for New Business and Turnarounds

For companies without a long-term history of financial stability and who might not qualify for business loans, factoring in Ontario offers the easiest way to have sufficient working capital. Unlike larger financial institutions such as banks, many lenders who provide factoring won’t ask for credit history. This can be a great plus for those new businesses that face high demand but require financing instantly to meet those demands. That’s a tremendous positive impact for new business and turnarounds, as you are striving to solidify your working model such that you can collect enough data to prove your financial stability.


It’s Expensive

There are numerous things you must consider before choosing factoring in Ontario as your preferred option.

Factoring can be costly. Generally, the interest rate is 2% to 5% for the first month. Nevertheless, after 30 days, you may be charged a 0.06 -0.125% fee for every additional day. A trick to avoid high charges: choose a reliable factor by diligently selecting the loaning facility and learning their terms. Search the web for insights and testimonials or ask for references. You can also check their social media score to understand the company’s image and reputation.

How can a Business Benefit from Factoring in Ontario?

There are numerous reasons why businesses opt to use factoring: it’s quick and easy. Because factoring does not require you to meet the strict list of terms and conditions, it’s an excellent option for businesses instantly requiring capital. Furthermore, mid-sized and small businesses are the ones to benefit from factoring in Ontario in numerous ways. While this is one of the most accessible financing alternatives for expansion and growth, it will also assist you in improving the existing clients’ services.

That’s why factoring in Ontario is gaining tremendous popularity as the best finance alternative. When conventional loans will not do the magic, it’s time to consider other options such as factoring that fits your needs.

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