I sell services to other businesses, such as consulting, marketing, staffing or IT. What are my options?
Upfront retainers, payment terms, SBA and bank lines of credit, accounts receivable financing and invoice factoring, cheapest first.
Businesses that sell services to other businesses — such as consulting, accounting, legal, marketing, engineering, IT, cleaning or staffing agencies — usually have few physical assets or stock to pledge as collateral. Their main cost is payroll, due every week or two, and their main asset is a ledger of unpaid invoices from commercial or government clients taking 30 to 90 days to pay.
- Payment terms and late-payment interest: unlike the UK, the US has no federal law giving a private business an automatic right to interest when another business pays an invoice late; with commercial clients, your payment terms, late fees and collection costs come from what you write into your contract before work starts (within state law limits). When the client is a federal agency, the Prompt Payment Act requires the agency to pay a proper invoice within 30 days (with an accelerated 15-day goal for small businesses) and adds interest automatically when it pays late (4 3/4% a year for July 1 to December 31, 2026).
- Borrowing against unpaid invoices: because your receivables are stronger security than your office equipment, lenders often look at the creditworthiness of your customers. Under an accounts receivable line of credit, the Office of the Comptroller of the Currency (OCC) notes that banks commonly advance 70% to 80% of eligible receivables (generally invoices less than 90 days past due, excluding concentrated or disputed accounts). You can also sell all or selected invoices to a factor (
invoice-factoringorspot-factoring), or apply for an SBA Working Capital or Contract CAPLine of up to $5 million. - Lines of credit and term loans: a revolving bank line of credit or an SBA 7(a) loan can cover working capital, hiring or buying out a partner without tying every draw to a single invoice, though owners of 20% or more usually give a personal guarantee.
19 routes to look at, cheapest first
Compare the first 4 side by side- L0
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.- Own cash and no-cost
Customer prepayments, deposits and pre-orders
Ask customers to pay some or all of the price before you deliver. The cash comes in before your costs go out, so you need to borrow less, but until you deliver you owe customers the goods or their money back.
Days - Own cash and no-cost
Late fees and Prompt Payment Act interest
Getting paid what you are owed, sooner: interest that federal agencies must add when they pay you late, and late fees you write into your contracts with private customers. It costs nothing to claim, but it only works if your paperwork and terms are in order.
DaysNot a raise - Grants, tax credits and prizes
Prize competitions and accelerators
Cash prizes from federal agencies and others for solving a set problem, and accelerator or incubator programs that give coaching, contacts and sometimes money. Prizes take no ownership; many accelerators do, so read the terms.
6 months or more - Supplier and buyer-led finance
Federal contract financing
Payments a federal agency makes to its contractor before delivery, as costs are incurred or milestones are met, plus the right to assign contract payments to a bank as security. No separate charge, but it has to be in the contract, and it is meant to show up in a lower price.
Weeks - Crowdfunding and community finance
Rewards crowdfunding
Raise money online from many backers who get a reward, often the product itself, instead of a share of the business. No repayment or dilution, but you must deliver what you promised, and the money is usually taxable income.
Months
- Own cash and no-cost
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Government-backed and community lending
SBA Microloans
A small business loan of up to $50,000 from a nonprofit community lender that the SBA funds, for working capital, supplies and equipment. The average is about $13,000.
WeeksUp to $50kPersonal guarantee likely - Supplier and buyer-led finance
Supply chain finance (supplier finance programs)
A large customer sets up a program with a bank or finance company so that you can choose to have its approved invoices paid early, for a charge, instead of waiting until the payment date.
Days
- Government-backed and community lending
- L2
Mainstream secured debt
Standard borrowing from banks, credit unions and mainstream lenders, often secured on assets or backed by a personal guarantee.- Government-backed and community lending
SBA 7(a) loans
A business loan of up to $5 million from a bank or other lender, with part of it guaranteed by the SBA, for businesses that cannot get the credit they need on reasonable terms elsewhere.
MonthsUp to $5mPersonal guarantee likely - Government-backed and community lending
SBA Express loans
A loan or line of credit of up to $500,000 from a bank or other lender with SBA Express authority. The lender decides under its own procedures and the SBA guarantees half, so there is less SBA paperwork than a standard 7(a) loan, but the same rate caps and the same rules on who can borrow.
WeeksUp to $500kPersonal guarantee likely - Government-backed and community lending
SBA lines of credit (CAPLines and others)
Bank lines of credit of up to $5 million for working capital, contracts, seasonal peaks or building projects, with the SBA guaranteeing part so lenders will say yes. Rates are capped, but owners usually guarantee the line and the lender watches your receivables and inventory closely.
MonthsUp to $5mPersonal guarantee likely - Bank and mainstream debt
Bank and credit union term loans
A lump sum from a bank or credit union, repaid in fixed installments over an agreed term, usually one to five years. Usually cheaper than online lenders, but slower, and usually secured on assets with a personal guarantee.
WeeksPersonal guarantee likely - Bank and mainstream debt
Business credit cards
Revolving credit for everyday business costs, up to a limit. Free if you clear the balance each month, but expensive if you carry it, and most consumer credit card protections do not apply.
DaysPersonal guarantee likely - Bank and mainstream debt
Business line of credit
A credit limit from a bank, credit union or online lender that you can draw on, repay and draw again, for short-term costs such as inventory, payroll and seasonal gaps.
WeeksPersonal guarantee likely
- Government-backed and community lending
- L3
Specialist secured debt
Borrowing secured on specific assets such as invoices or inventory, with more fees and conditions than mainstream debt.- Asset-based and specialist lending
Accounts receivable financing
A loan or line of credit secured on your unpaid invoices. The invoices stay yours, you usually keep collecting from your customers, and how much you can borrow rises and falls with what they owe you.
Weeks - Asset-based and specialist lending
Asset-based lending
A revolving credit line secured on your receivables and inventory, where how much you can borrow moves with the value of those assets. Flexible for growing or seasonal businesses, but closely monitored and usually dearer than ordinary bank lending.
Weeks - Asset-based and specialist lending
Invoice factoring
A finance company (a factor) buys your unpaid invoices to other businesses at a discount, pays you for them before your customers do, and collects the money from your customers.
Days - Asset-based and specialist lending
Spot factoring (single invoices)
Selling one unpaid invoice, or a few, to a factor for cash now, without signing up to sell it all your invoices. Useful for an occasional large invoice, but each deal is priced on its own.
Days
- Asset-based and specialist lending
- L4
Expensive or fast
Quick to arrange, often unsecured, and usually the most expensive way to borrow.- Alternative and fast debt
Online business loans
Term loans and lines of credit applied for online, often from finance companies rather than banks. Decisions can come within days, but rates run well above bank loans, and payments may be taken weekly or even daily.
DaysPersonal guarantee likely - Alternative and fast debt
Revenue-based finance
A lump sum repaid as a fixed share of your monthly revenue until an agreed total is paid back. Payments fall when sales fall, but the total is fixed, so repaying quickly makes it very expensive.
DaysPersonal guarantee likely
- Alternative and fast debt
Worth knowing
- Ask for an upfront retainer, mobilization deposit or monthly subscription billing before borrowing to cover a slow-paying client.
- Put clear payment due dates, late fees and collection costs into your engagement letters and master service agreements before work starts.
- If a few large corporate or government clients owe most of your receivables, ask any receivables lender or factor about its "concentration limit" — the share of your borrowing base that can come from a single customer.
- Staffing and payroll-heavy service businesses that invoice weekly or monthly should compare the total fee and notice period on an invoice-factoring facility with a bank or SBA Working Capital line of credit using our factoring calculator.
Sources
- OCC Comptroller's Handbook: Accounts Receivable and Inventory Financing (advance rates and eligible receivables) · checked October 20, 2026
- 5 CFR 1315.10: late payment interest penalties · checked October 20, 2026
- 48 CFR 32.009-1 (FAR): accelerated payments to small business contractors · checked October 20, 2026
- Federal Register 2026-13903: Prompt Payment Interest Rate; Contract Disputes Act (4 3/4% for July 1 to December 31, 2026) · checked October 20, 2026
- SBA: SOP 50 10 8.1, Lender and Development Company Loan Programs (effective October 1, 2026): Section B, Chapter 4 (CAPLines) · checked October 20, 2026
Facts about each route are sourced on its own page.