Invoice Factoring vs AR Loan vs Business Line of Credit (California, 2026)

If customers pay you on 30-, 60-, or 90-day terms, there are three common ways to close the gap: sell the invoices (factoring), borrow against them (an accounts receivable loan), or draw on a revolving line (a line of credit). They solve the same problem in different ways.

Invoice Factoring

You sell approved invoices to a factor. The factor advances most of the invoice value up front, collects from your customer, and sends you the balance minus its fee. Approval depends mostly on your customers' credit, which is why factoring works for younger companies and owners with imperfect credit.

Best for: fast-growing B2B companies, businesses with strong customers but thin financial history
Trade-off: customers are usually notified to pay the factor, and cost is tied to how long invoices stay open

Accounts Receivable Loans

An AR loan uses your receivables as collateral, but you keep collecting from customers yourself. Programs we work with run up to $5 million with terms up to 10 years for established companies. The lender looks at your financial statements and the quality of your receivables together.

Best for: established companies with clean books and a consistent receivables base
Trade-off: more documentation and a deeper review than factoring

Business Line of Credit

A line of credit is sized off your overall cash flow and credit, not specific invoices. You draw when needed and pay interest only on what you use. See how a business line of credit works.

Best for: recurring, predictable short-term needs
Trade-off: the limit may not grow as fast as your sales do

How to Choose

Sales growing faster than your financial track record? Factoring usually fits first.
Several years of solid financials and steady receivables? Compare an AR loan.
Need flexibility for payroll, inventory, or seasonal gaps without tying it to invoices? Look at a line of credit or working capital.

Many companies start with factoring and move to an AR loan or line once they have the history lenders want.

Typical Starting Point

Factoring programs we work with require $150,000+ in annual business revenue, with invoices to commercial or government customers. Up to $30 million per month is available, subject to underwriting and eligible invoices. There is no FICO minimum, because the review centers on your customers' ability to pay. A review usually starts with four items: an accounts receivable aging report, a customer list, recent invoices, and a basic company profile. Once set up, funding on approved invoices often arrives in about two business days.

Ready to compare options? Start on our invoice factoring page or request a review.

General information, not a quote or offer. Advance rates, fees, and terms are set by each capital provider and depend on your customers, invoices, and business. Every arrangement is subject to underwriting and approval.

Invoice Factoring vs. an AR Loan vs. a Line of Credit: Which Fits Your Business