Does a business need good credit to be approved for factoring?

No. You don’t need good credit to qualify for invoice factoring. Unlike traditional financing like loans or lines of credit, factoring is a funding method based on your customers’ ability to pay, not your personal or business credit score. That means even if you have bad or limited credit, you can still factor invoices and get fast access to working capital.

Factoring companies evaluate the credit history of your customers, since they’re the ones responsible for paying the invoices. If your customers have a reliable payment track record, you may be approved, even as a startup or newer business. This makes invoice factoring a flexible and accessible funding solution for small businesses that need cash flow to cover expenses, make payroll, or take on new contracts, without taking on debt or increasing credit utilization.

Factoring is often used in industries like trucking, staffing, and manufacturing, where waiting 30 to 60 days for payment can create cash flow gaps. Instead of relying on traditional lenders, invoice factoring lets you unlock funds from unpaid invoices quickly, typically within 24 to 48 hours after approval. It's a practical option for growing companies that need steady cash flow but may not qualify for conventional business loans.