Many small businesses rely on factoring as a source of short-term financing because:
A)loans provided by factors do not require collateral.
B)small firms often find it difficult to qualify for bank loans.
C)interest paid to a factor qualifies for a tax credit.
D)factoring provides a much cheaper source of funds than bank loans.

Question

Quizplus · Accepted Answer

Small businesses often have difficulty qualifying for traditional bank loans due to factors such as lack of collateral or established credit history. Factoring companies provide an alternative source of short-term financing by purchasing the business's accounts receivable at a discount, providing immediate cash flow.

Many Small Businesses Rely on Factoring as a Source of Short-Term