Yes, you can often get invoice factoring with only 6 months in business, because factors care more about the credit quality of the customers who owe you than about how long your company has existed. If your unpaid invoices are billed to creditworthy commercial or government clients, a factor may advance you roughly 80 to 90 percent of each invoice within a day or two, then collect from your customer on the due date. Where a young company runs into trouble is not the 6-month mark itself but thin invoicing history, consumer (B2C) customers, or invoices tied to work that is not yet complete. If factoring stalls for those reasons, a revenue-based marketplace that approves on your bank deposits and monthly revenue is usually the faster fallback.
Key takeaways
- Time in business is a secondary factor in factoring; the credit quality of your customers matters most, so 6-month-old companies often qualify.
- Factoring requires completed B2B or government invoices; consumer sales and point-of-sale businesses generally cannot factor.
- Typical advance rates run about 80 to 90 percent of each invoice, with a reserve released after your customer pays, minus a fee of roughly 1 to 4 percent (illustrative).
- When factoring doesn't fit, revenue-based funding approves on bank deposits and monthly revenue rather than a single invoice.
- Revenue-based marketplace funders commonly consider a FICO around 500+ and 6 months of bank statements, with amounts starting near $10,000.
- Funding speed is often 24 to 48 hours after approval for revenue-based funding, and 24 to 48 hours per invoice once a factoring facility is set up.
- Approval and terms are never guaranteed and depend on your customers, deposits, and revenue.
Can you actually factor invoices at 6 months?
In most cases, yes. Invoice factoring is one of the few forms of business financing where time in business is a secondary factor. A factor is essentially buying a receivable, so the underwriting question is "how likely is this invoice to get paid, and by whom?" A six-month-old company with clean invoices to a well-known commercial customer can be an easier approval than a five-year-old company that bills shaky clients.
That said, being early-stage changes what a factor looks at. Expect more scrutiny on a few points:
- Who your customers are. B2B and B2G (government) invoices factor well. B2C and cash-at-point-of-sale businesses generally cannot factor at all, because there is no 30-to-90-day receivable to buy.
- Whether the work is done. Factors fund completed deliverables. Invoices for work still in progress, deposits, or future milestones are usually not eligible.
- Your invoicing track record. With only 6 months of history, a factor may start you with lower advance rates or a smaller facility and raise it as your ledger seasons.
- Clean paperwork. Signed contracts, purchase orders, proof of delivery, and no existing lien on your receivables.
What a young company should expect from a factor
Terms vary by industry and by the credit strength of your customers, but the mechanics are consistent. The table below shows a simplified, illustrative example, not a quote.
| Term | Typical range (for example) | What it means for you |
|---|---|---|
| Advance rate | 80% to 90% of invoice | Cash you get up front; the rest is a reserve |
| Factoring fee | 1% to 4% per invoice, roughly | Often tiered by how long the invoice stays open |
| Speed to first funding | A few days to set up, then 24 to 48h per invoice | Setup includes verifying your customers |
| Reserve release | Remaining 10% to 20% minus fee | Paid to you after your customer pays the factor |
| Recourse | Recourse vs. non-recourse | Recourse (cheaper) means you cover unpaid invoices |
Two practical notes for a 6-month-old business. First, most factoring is notification-based: your customer is told to pay the factor, so pick a factor whose collections style you would be comfortable with your clients experiencing. Second, many factoring agreements ask you to factor a minimum volume or your whole ledger, which can feel heavy for a small early book of business. Read the minimums before you sign.
A worked example: factoring one invoice
Say your six-month-old staffing company invoices a corporate client $20,000, net-45. Here is how a single factored invoice might look, using rounded example numbers.
| Step | Amount (for example) |
|---|---|
| Invoice face value | $20,000 |
| Advance at 85% | $17,000 to you in ~1 to 2 days |
| Factoring fee (about 3%) | $600 |
| Reserve held | $3,000 |
| Customer pays factor on day 45 | $20,000 |
| Reserve released to you | $3,000 minus $600 fee = $2,400 |
| Total you receive | $19,400 ($17,000 + $2,400) |
The trade you made: you gave up $600 to turn a 45-day wait into same-week cash. For a young company covering payroll every two weeks, that timing can matter more than the fee. These figures are illustrative only; your actual rate depends on your customers and volume.
When factoring is the wrong tool at 6 months
Factoring only works if you have qualifying receivables. It is a poor fit, or simply impossible, when:
- You sell to consumers or get paid immediately (retail, restaurants, e-commerce, most trades billed at completion for cash).
- Your invoices are small, sporadic, or to one or two customers, so a factor sees concentration risk.
- You need money for something other than a specific unpaid invoice, like inventory, equipment, marketing, or a general cash cushion.
- Your customers are slow, disputed, or not creditworthy enough for the factor to buy the receivable.
In those situations, a young business is often better served by revenue-based funding, which is not tied to any single invoice.
The faster fallback: revenue-based funding through a marketplace
If factoring stalls, or you simply do not have a clean B2B ledger yet, a revenue-based funding marketplace is usually the quickest path for a six-month-old company. Instead of buying an invoice, these funders look at your bank-deposit history and monthly revenue to size an advance repaid from future sales.
Why this fits early-stage owners well:
- Approval leans on deposits, not time in business or credit score. Many funders work with a FICO around 500 and up, because consistent deposits matter more than the number itself.
- Six months of business bank statements is often enough to be considered, whereas many banks want two-plus years.
- Funding is fast, commonly 24 to 48 hours after approval.
- Minimums start around $10,000, so it works for smaller early needs.
- Use it for anything, not just a single receivable.
The tradeoff is honest: revenue-based advances cost more than a bank loan and repay quickly, so they suit a real, revenue-generating need with a clear return, not open-ended borrowing. Approval is never guaranteed, and terms depend on your deposits and revenue. Applying through a marketplace lets one application reach multiple funders, which raises your odds without multiple hard pulls.
How to prepare before you apply
Whether you pursue factoring, revenue-based funding, or both, a little preparation speeds everything up.
- Gather 6 months of business bank statements. This is the single most-requested document for revenue-based approval.
- Clean up your invoicing. For factoring, have signed contracts, proof of delivery, and an aging report ready.
- Know your average monthly revenue and deposit count. Funders look at consistency, not just totals.
- Check for existing liens. A prior UCC filing on your receivables can block factoring; disclose any current advances up front.
- Decide what the money is for. A specific, revenue-producing use gets better outcomes than "general cash."
Comparing both routes side by side is often the smartest move for a young company.
| Invoice factoring | Revenue-based funding | |
|---|---|---|
| Approval based on | Your customers' credit & your invoices | Your bank deposits & monthly revenue |
| Needs B2B invoices? | Yes | No |
| Typical FICO floor | Flexible; customer credit matters most | ~500+ |
| Time in business | Often works at 6 months | Often works at 6 months |
| Speed | Setup, then 24 to 48h per invoice | 24 to 48h after approval |
| Best for | Slow-paying commercial clients | General working capital, no clean ledger |
Frequently asked questions
Is 6 months in business enough to qualify for invoice factoring?
Often yes. Factors weigh the creditworthiness of the customers who owe you more heavily than your company's age, so a six-month-old business with clean B2B or government invoices can qualify. You may start with a smaller facility or lower advance rate that grows as your invoicing history seasons.
What if I don't have B2B invoices to factor?
Then factoring likely isn't the right tool, since there is no commercial receivable to buy. A revenue-based funding marketplace is usually the better fallback because it approves on your bank-deposit history and monthly revenue rather than a specific invoice, and it works for businesses that sell to consumers or get paid at the point of sale.
How much of my invoice will a factor advance?
Commonly around 80 to 90 percent up front, with the remaining reserve released after your customer pays, minus the factoring fee. For example, on a $20,000 invoice at an 85 percent advance you might receive $17,000 within a day or two. Exact rates depend on your industry and your customers' credit.
Does my credit score matter for factoring or revenue-based funding?
For factoring, your customers' credit usually matters most, so your personal score is less of a gate. For revenue-based funding, many marketplace funders work with a FICO around 500 and up because they lean on your deposits and revenue. Neither approach guarantees approval.
How fast can I get funded?
Factoring typically requires a short setup to verify your customers, after which each invoice can fund in about 24 to 48 hours. Revenue-based funding through a marketplace is often 24 to 48 hours after approval. Having six months of bank statements and clean invoicing ready speeds both.
How much can I get through the revenue-based marketplace?
Amounts commonly start around $10,000 and scale with your monthly revenue and deposit consistency. The size you're offered depends on what your bank statements show, so stronger, steadier deposits generally support a larger advance. Amounts are never guaranteed.
Will my customers know I'm factoring their invoices?
Usually, yes. Most factoring is notification-based, meaning your customer is instructed to pay the factor directly. If keeping the arrangement private matters to you, revenue-based funding is an alternative that doesn't involve your customers at all.
Can I use both factoring and revenue-based funding?
Sometimes, but be careful. An existing advance or a lien on your receivables can conflict with a factoring agreement, so disclose any current funding up front. Comparing both options through one marketplace application is often the cleanest way to see which fits your situation without multiple hard credit pulls.
