Foreclosure Cleaning Business Advice: How to Get Operating Capital in 24-72 Hours
If you want to start a foreclosure cleaning business, but don’t think it’s possible because you don’t have the startup capital needed, following is a solution you may not know about. It’s one used by many small businesses who have a cash crunch — whether they’re just starting out or are growing too fast. What is it?
Factoring. Never heard of it? Read on.
Foreclosure Cleaning Business: A Surefire Way to Get the Cash You Need to Run Your Business
A factor is a company that gives a business a loan based on their receivables (ie, invoices). This is the way it works.
Say you bid on — and win — a job cleaning foreclosures that’s going to gross you $ 8,963. But, you need to rent a dumpster and a truck, pay four temporary workers, buy industrial cleaning supplies and pay an HVAC professional to re-install a water heater that vandals had damaged when they were ripping out the copper wiring.
And, let’s just say this is going to cost you $ 1,950. You know you can do the job, but you can’t afford to lay out the almost two grand it’s going to cost to get the job done and wait 60-90 days to get paid.
Well, this is when a factor can help. You simply submit the invoice to them and they will fund it (ie, lend you the money upfront), usually within 24-72 hours. Now, it costs you a hefty percent — usually in the neighborhood of 10-20 percent, but you don’t have to wait to get paid from the bank that you did the job for.
Foreclosure Cleaning Business Owners: What You Should Know about Factors
Following are a few upfront facts you should know about working with factors.
Application: You have to fill out an application. This simply involves giving them all of your business information, eg, EIN number, how long you’ve been in business, banking information; type of business; insurance info; etc.
No Credit Check: Working with a factor is not credit based. What this means is your credit is not important because the factor bases their decision to fund you on the institution you’re getting paid from. So, if you’re doing foreclosure cleaning and you’re being paid by a major bank like Chase for example, then they look at Chase’s credit — not yours.
All or Nothing: Some factors require that you factor all of your invoices with them. Don’t sign on with one like this. You want to look for a factor you can use on an a la carte basis — eg, factor only those invoices you want and/or need to factor. If you can afford to wait to get paid for a $ 1,200 job, then wait. Why give away profits when you don’t need to?
Working with a factor is a great way to grow your foreclosure cleaning business. But, take the time to investigate fully before you sign on with one.