Invoice factoring FAQ: straight answers, from the credit side.
The questions business owners ask me most, answered in a few lines each, with a link to the full guide when there's more to say. The figures come from 1st Commercial Credit's own pages, read on the date shown, and every term is confirmed in writing before you sign.
Daniel Chirino · Business Development Officer, 1st Commercial Credit
Updated: October 29, 2026
The basics
What is invoice factoring?
It's the sale of your unpaid invoices to a factoring company, at a discount, in exchange for cash now. The factor advances most of each invoice, collects from your customer and sends you the rest minus its fee. See how invoice factoring works.
Is factoring a loan?
No. It's a sale of invoices: there are no monthly payments, and approval depends mainly on your customers' credit. A bank line of credit or asset-based lending, by contrast, are loans. See factoring vs a bank line of credit.
How fast do I get the money?
The first funding takes 3 to 10 business days after you sign, and you can speed it up by sending invoices with the signed agreement. After that, funds arrive within 24 hours of verifying each invoice.
How much of each invoice do I get upfront?
Depending on the industry, 1st Commercial Credit's FAQ puts the advance typically between 75% and 98% of the invoice. The rest is released when your customer pays, minus the fee.
Do I have to factor all my invoices?
No. 1st Commercial Credit offers selective factoring: you choose which customers and which invoices, as long as it isn't a one-time deal.
Cost
How much does factoring cost?
A fee on each invoice, as a percentage: either one flat fee, or a fee charged every so many days until your customer pays. 1st Commercial Credit publishes rates from 0.69% to 1.59%, depending on your volume, how fast your customers pay and their credit, and says its average client pays about 2.25%, depending on how many days the invoices take to be paid. See what factoring really costs.
Who pays the fee?
You do. Your customer pays the full invoice to the factor, and the fee comes out of the balance released to you.
Are there setup fees?
1st Commercial Credit says it charges no upfront setup fees, facility fees or audit fees. With any factor, ask for every fee in writing before you sign.
How can I estimate what I'd pay?
Put the numbers from your offer into the factoring calculator: the invoice, the advance, the fee, how it's charged and the days your customer takes to pay.
Your customers
Will my customers know I'm factoring?
Yes. They receive a notice of assignment that tells them to pay the factor. If a customer asks, you can say you chose a company to manage and finance your receivables.
Will the factor bother my customers?
1st Commercial Credit's FAQ says it isn't a collection agency and won't harass your customers for payment: keeping your customers' goodwill matters to it as much as to you.
What if a customer pays me by mistake?
Send the check to the factor right away, and never deposit a check for a factored invoice in your own account. It's common around the first funding; the factor will remind your customer where to pay.
Qualifying
Do I need good credit to qualify?
Not necessarily. The review focuses on your customers' credit, since they're the ones who pay the invoices.
Can a new company use factoring?
Yes, if it sells on credit terms to creditworthy customers. 1st Commercial Credit says factoring can fund a startup from day one in that case.
Which industries use factoring?
Trucking, staffing, construction, oil and gas, manufacturing, healthcare, government contracting, business services, and IT and telecom, among others. See all industries.
What documents do I need?
A short application, your recent sales history, your company documents, a list of your customers and a sample invoice. See the documents checklist.
Loans, liens and taxes
I already have a bank loan. Can I still factor?
Often. 1st Commercial Credit asks the lender to subordinate its lien; some agree and some don't. If there are enough receivables, the first funding can pay the loan off, and behind a term loan there's second position factoring.
I have an SBA loan. Does that rule out factoring?
No. Second position factoring works behind bank and SBA term loans. See factoring vs an SBA loan.
I have a merchant cash advance. Can factoring help?
If your invoices are enough to pay it off, factoring can replace the daily debits with funding that follows your invoices. See factoring vs an MCA.
I owe back taxes. Can I still factor?
It's handled case by case. Tell the factor upfront: it may negotiate a lien subordination with the tax agency or use the first funding to pay it off.
Will factoring hurt my credit score?
1st Commercial Credit's FAQ says no, because factoring isn't a loan. How it shows up in your books is a question for your accountant.
What's the difference between recourse and non-recourse factoring?
With recourse, if your customer doesn't pay, you buy the invoice back. With non-recourse, the factor takes the loss if your customer becomes insolvent, but not if it disputes the invoice. See recourse vs non-recourse.
Sources: 1st Commercial Credit's invoice factoring FAQ, its invoice factoring page and its article "Why MCAs Stay and Why Factoring Matters", read October 29, 2026. Terms are confirmed in writing before you sign.
Didn't see your question?
Ask me. Tell me who your customers are and how long they take to pay, and I'll answer with your numbers, not a script.
Also read: questions to ask before you sign · factoring glossary · all guides