When you apply for a loan for your business at the bank, they analyze your past performance to make a credit decision.
First they consider the Owner’s Credit score and report. If the Score is below their established threshold, this will usually disqualify you. Then they will ask how long you have been in business? If for less than 2 years, they will consider you a Start-Up, and you will be disqualified. If your business has experienced losses at any time over the last 3 years, again you will be disqualified. All these factors, and others the banks use, are considerations which are looking to the past in order to attempt to predict your future performance.
With factoring you can overcome these constraints, as we look more to the credit quality of your customers to make a decision. This is opposite to the banks’ strategy, as it is forward looking.