Commercial Factor Q&A: Chris Curtin Provides Unique Perspective on Startup Financing

For startup businesses looking for financing, invoice financing can be a potential solution. Chris Curtin of Bankers Factoring, a startup founder himself, delves into the challenges of funding in this sector.

One of the toughest challenges of starting any company is getting the right financing. Without any real credit history, startup firms can be met with lenders who are not always eager to hand over cash to help support an unproven commodity, even if the business could turn into a very profitable one eventually. So, what type of financing options are available to these types of firms, particularly those in the business-to-business community?

To get some answers, Commercial Factor spoke with Chris Curtin, the former president and minority owner of Paragon Financial Group (now part of eCapital). Curtin’s newest business, Bankers Factoring, is an employee-owned accounts receivable factoring company he founded in September 2021, making him ideally equipped to speak on the subject of startup financing in today’s market.    

One of Bankers Factoring’s specialties is providing invoice financing to B2B startups. What opportunities did the company see in the market that pushed it to pursue this sector?

Chris Curtin: We think that part of the great reset caused by COVID-19 is the many people wanting to scratch their entrepreneurial itch. Those with successful careers in staffing, telecom infrastructure, IT or the oil patch are ready for the freedom of doing their own thing.

Why do these types of companies sometimes struggle to get funding?

Curtin: Two things stand out as we talk to startups. They face extended payment terms from their large customers of up to net 60 to 90 days and limited startup funds vs. what they budgeted to get to a breakeven point.

How does financing these types of companies differ than financing those in other sectors? What are some of the unique elements in structuring, portfolio management, etc.?

Curtin: Since their only track record is direct industry experience as an employee, they many times need more hand-holding and monitoring. Same day funding is critical for some so they can meet their relentless weekly payrolls. In addition, 100% account debtor concentration can be the norm, so it makes the verification process ultra-critical.

What do these types of companies usually use invoice financing for?

Curtin: Payroll or more inventory depending on their industry type. They need the 85% to 90% advance rate to get through their early burn rate stage.

Why is a non-recourse factoring program a good option for this type of company?

Curtin: Credit is typically not in the skillset of budding entrepreneurs. You see great sales, recruiters or operations people start companies but seldom anyone from the credit department. As we share with almost every potential client, in life there is only one thing worse than no sales and that is making the sale and not getting paid.

How do you assess risk with a company like this that is just starting out?

Curtin: We look at how they’ve handled adversity in the past. Will they work with Bankers Factoring if things go sideways? The character of the ownership matters when taking the risk on a startup.

Bankers Factoring is a new and employee-owned company itself. How does that help when working with companies in the startup sector?

Curtin: We know their pain and all the decisions that need to be made about payroll services, software, office space, and other tools for our people. We too have budgeted a certain amount of money to get to profitability.

What kind of demand are you seeing for invoice financing from the startup sector this year and how do you expect it to develop into 2023?

Curtin: We have seen a pickup in telecom and food industries. These are both areas that are relatively downturn proof and have their own defendable niches.