Comparing Financing Options for Mid-Size Businesses

1. Traditional Bank Loans

Size / Stage

• Best suited for companies with an established track record: stable revenue, predictable cash flow, and solid financials.
• Ideal when you don’t have extreme cash flow gaps or inventory/asset collateral constraints.

Structure

• Interest rates offered are often lower than alternative financing because the risk is lower.
• Typically check credit history, debt-to-capital ratios, cash flow projections, collateral, and often impose tighter covenants.
• The approval process can be longer, and you may need extensive documentation.

Best Scenario

• Company is looking to fund a new project, expansion, equipment purchase, or facility lease and you have confidence in future cash flows.
• You have strong financials and prefer lower financing costs.
• You’re just looking for additional financing, not a true relationship building towards flexible capital for future needs.

2. Asset-Based Lending (ABL)

Size / Stage

• Suited for companies that may be too large/complex for very small business loans but still require flexible financing.
  – Typically, it is best suited for mid-market businesses with significant collateral.
• Businesses in growth mode or transition.
  – Companies undergoing restructuring, going through an acquisition, orheavy expansion.

Structure

• Loan or revolving credit secured by business assets rather than just future cash flows.
• Rates vary depending on the asset type used as collateral.
  – Accounts receivable might yield higher advance rates and lower interest rates than inventory.
• Fewer covenants and more flexibility than a traditional bank loan.

Best Scenario

• Your company has significant assets, and you’d like a credit line that grows with you.
• You’re in a growth phase or have cash flow fluctuations and need a financing structure tied to your asset base rather than just your profits.
• You want more flexibility and possibly faster access than a traditional bank loan.
  
  
  

3. Factoring / Accounts Receivable Financing

Size / Stage

• Often used by small-to-mid-size businesses that have substantial receivables and need cash flow quickly.
• Especially useful for businesses with slow-paying customers or long payment terms (30/60/90 days) who need liquidity now.
• Best suited for companies that don’t yet qualify for traditional banking loans or ABL financing.

Structure

• Factoring is not a true loan: you sell your invoices/receivables to a third party at a discount.
• Fees are often a percentage of the invoice value or discount rate.
• Faster approval, less reliance on your own credit than on your customers’ credit.

Best Scenario

• Your business has a pipeline of receivables, and you’re waiting for payments to come in, but you need the cash now.
• You need access to capital that grows as your sales grow.
• Your business is strong, but you need to cover seasonal ups and downs.
  
  
  
  

4. Small Business Loans

Size / Stage

• Suited for smaller companies looking for conventional financing for specific purposes.
• Better suited for early stage companies to start their financing journey rather than more complex structures like ABL or factoring.

Structure

• Rates and terms will vary widely based on lender, business credit profile, purpose of the loan, etc.
• Often used for more defined, one-off’ needs rather than fully revolving financing tied to the asset base.
• It is important to compare fees, terms, and business fit carefully.

Best Scenario

• You are a growing business with reasonably strong fundamentals and looking to take a defined step.
• In search of a simpler financing structure with fewer moving parts.

Where Accord Financial Can Help

Accord Financial provides a full range of flexible financing services tailored to companies in transition or growth mode. Whether you need to optimize cash flow, undertake a buy-out/acquisition, or manage receivables turnover — we meet clients where they are and help unlock potential.

If you’re a mid-size business exploring your financing options, we can help you evaluate which path makes sense and structure a solution that aligns with your stage, size, and strategy.

Reach out today to learn more about which financial path is best for your business:
Contact | Accord Financial