Is invoice factoring a loan?

Not exactly — you're selling your invoices at a discount rather than borrowing against them, so it doesn't add debt the same way a loan does. It's financing against money you're already owed.

How much of my invoice do I get up front?

Commonly a large share of the invoice value as an advance, with the remainder (minus the factoring fee) paid when your customer settles. Exact advance rates vary by factor.

Does my credit matter for factoring?

Less than usual. The factor is mainly underwriting your customers' ability to pay the invoices, so factoring can work for businesses with thinner credit.

What's the difference between recourse and non-recourse factoring?

With recourse factoring you're liable if your customer doesn't pay; with non-recourse the factor absorbs certain non-payment risk for a higher fee.

WithFunded › Invoice Factoring

Invoice Factoring: turn unpaid invoices into cash now

Invoice factoring advances you most of the value of your outstanding invoices right away, instead of waiting 30, 60, or 90 days for customers to pay. It's financing against money you're already owed.

A WithFunded guide · Rates as of June 2026 · Updated quarterly

Quick facts

Best for: B2B businesses with slow-paying customers
How it's priced: A factoring fee on invoice value, not an APR
Advance rate: Commonly a large share of invoice value up front
Funding speed: Days
Qualifies on: Your customers' creditworthiness, more than yours
Two types: Recourse vs. non-recourse

How invoice factoring works

You sell an unpaid invoice to a factoring company. They advance you most of its value up front, collect from your customer when the invoice comes due, then pay you the remainder minus their fee. Because the factor is really underwriting your customers' ability to pay, factoring can work even when your own credit is thin — which sets it apart from most other products.

What factoring costs

Factoring is priced as a fee on invoice value, not an APR. The structure: an advance up front, then the balance minus the fee when your customer pays.

Invoice	Advance up front	Factor fee	You receive in total
$50,000	85% = $42,500	3%	$48,500
$100,000	85% = $85,000	3%	$97,000

Illustrative advance rate and fee; actual rates and fees are set by the factor and depend on volume, your customers, and terms. WithFunded calculation.

Recourse vs. non-recourse

Recourse

You're responsible if your customer doesn't pay. Cheaper, and more common.

Non-recourse

The factor absorbs certain non-payment risk. Costs more for that protection.

Frequently asked questions

Is invoice factoring a loan?: Not exactly — you're selling your invoices at a discount rather than borrowing against them, so it doesn't add debt the same way a loan does. It's financing against money you're already owed.
How much of my invoice do I get up front?: Commonly a large share of the invoice value as an advance, with the remainder (minus the factoring fee) paid when your customer settles. Exact advance rates vary by factor.
Does my credit matter for factoring?: Less than usual. The factor is mainly underwriting your customers' ability to pay the invoices, so factoring can work for businesses with thinner credit.
What's the difference between recourse and non-recourse factoring?: With recourse factoring you're liable if your customer doesn't pay; with non-recourse the factor absorbs certain non-payment risk for a higher fee.

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Advance-rate and fee figures are illustrative WithFunded calculations to explain the structure; they are not quotes. Actual terms are set by the factoring company.

Disclaimer. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Everything on this page is a representative example only — not an offer or a commitment to lend, and not financial advice. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.