Origination Points

For the most part, factoring companies do not charge loan origination points. Other types of commercial loans, such as revolving lines of credit and real estate mortgages charge a percentage of the loan amount, called origination fee, when closing the loan. Typically invoice factoring being an variable ongoing funding mechanism does not charge for origination largely due to there not being a solid loan amount. Unlike accounts receivables factoring companies, asset based lenders do charge origination points because the transaction does stipulate an available credit limit. When the limit is reached, the borrower must reapply for a higher limit, and in some cases pay a second origination fee. Invoice factoring companies avoid this fee. A factoring company is paid on the advances of purchased invoices.