Frequently when setting up a receivable factoring facility there is an existing bank loan in place which will require cooperation from both lenders. The bank, or senior lender, has filed a financing statement (UCC-1) that secures your business assets as collateral. A UCC filing on accounts receivable prohibits any subsequent lender from using the same A/R as collateral. Actually the bank loan agreements will hold the borrower in loan default if they dilute the asset by re-financing. Depending on what collateral was used when the bank loan was initially secured, some or all of the accounts receivable may be released.
Usually this would mean some sort of real estate equity is involved. But certain conditions may allow for the bank to release a portion of their security position. A significant pay down of the outstanding note and aggressive payoff schedule of the remaining balance could allow for the factoring company to get involved by providing additional operating capital. Keep in mind this scenario is optimum when the borrower has been flawless with their monthly payments and communications.
The bank with the conventional loan and the factoring company enter into a discussion about who-owns-what as collateral. The resulting document between them is called the Intercreditor Agreement.