Accounts receivable financing can be a valuable tool for a growing business. Banks love financing accounts receivable because it is a high quality asset.
Banks will typically advance a loan equal to approximately 80% of your borrowing base. A borrowing base is eligible receivables, with downward adjustments made for high concentration or late receivables.
Banks are implicitly securing against your cash too, as it is kept in their bank and is under their control. Through the “offset” provision, a bank can use your cash balance to make themselves whole if receivables are not being collected.
Top technology company receivable lenders are Silicon Valley Bank, Comerica Bank, Square One Bank, and CitiNational Bank.