Do you have any financing currently in place

If you have an existing loan or line of credit you need to find out up front if the bank has a UCC-1 against your receivables. A factor must have 1st position on your receivables to be able to enter into a financing relationship with your company. I would suggest if you have a current loan or line of credit to double check and make sure of this. I have had many businesses tell me that the bank did not have their receivables as collateral and we would go through the application process. They would return the contract and the factor would begin due diligence and the lien search would return a current UCC-1 on the receivables. Many times the customer does not realize the bank placed a blanket lien on their company covering all assets, including receivables.

If this is the case, you may still qualify for factoring. If your loan or line of credit is small enough, the factor may be able to pay off your loan or line of credit out of your 1st advance and the bank has no choice but to subordinate (release) the receivables. If not, they may have enough collateral that they will allow the factor to have 1st position and allow you to get the needed capital for your company. So if you have current financing, check on this issue. You may find out the bank will step up to the plate and allow you access to more funds when they realize you are about to leave. This has happened before. Also be aware that our factors can help negotiate a subordination so discuss this with us if you need more clarification on this topic.

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