Bank-owned factoring companies, independent factors and fintech factoring platforms all buy your unpaid invoices, but they answer to different rule books and tend to look for different clients. We found no regulator that publishes how each type prices, how fast it funds or what minimums it sets, so this guide sticks to what can be documented, gives you questions for each one, and prices three hypothetical offers on the same invoices for a manufacturer with about $3 million in revenue.
How bank-owned factoring companies, independent factors and fintech platforms differ
All three do the same basic job. The OCC's Accounts Receivable and Inventory Financing booklet (March 2000, still in the Comptroller's Handbook as of October 2026) describes factoring as buying a company's receivables at a discount, with the factor typically setting sub-limits for each customer based on payment status, total exposure and credit strength. A sale of accounts generally falls under Article 9 of the Uniform Commercial Code (UCC 9-109) whoever the buyer is. Once your customer receives a notice that the invoice has been assigned and is to be paid to the factor, it can discharge the debt only by paying the factor (UCC 9-406).
The types differ in who stands behind the money:
- Bank-owned or bank-affiliated factors are a division of a bank, a subsidiary of one, or a sister company under the same holding company.
- Independent factors are finance companies with no bank parent. The OCC booklet, in its 2000 wording, says national banks can be factors but "most factoring is done by nonregulated businesses."
- Online or fintech platforms take applications and invoices through software. A platform may buy invoices with its own capital or arrange funding from a bank or finance company, so the label doesn't tell you who your counterparty is.
In Canada, BDC says factoring is offered by factoring companies and some banks (page published February 13, 2025).
Who regulates each type, and which cost disclosures you'll get
Bank ownership can bring bank supervision, but how much depends on the legal structure. Under the OCC's operating subsidiary rule (12 CFR 5.34, read October 2026), a national bank's operating subsidiary generally conducts its activities under the same authorization, terms and conditions as its parent, and the OCC will direct the bank or the subsidiary to fix a violation or an unsafe practice. The Federal Reserve's Regulation Y lists factoring among the lending activities open to a bank holding company or its subsidiary.
The OCC booklet tells examiners to focus on whether monitoring and controls are adequate for the receivables financing a bank does. Where a bank buys receivables with recourse through vendor-supplied programs, it says recourse is only as good as the seller's financial strength and that the bank must dedicate qualified staff to analyze its clients' credit. That may be one reason a bank-affiliated factor will often study your finances along with your customers'.
California and New York both require a written cost disclosure on factoring offers, with exemptions that matter for bank-affiliated factors:
| California | New York | |
|---|---|---|
| Where to read it | Financial Code 22800 to 22807 and DFPI regulations | Financial Services Law 802 and 23 NYCRR 600 |
| Offer size covered | $500,000 or less | $2,500,000 or less |
| Factoring disclosure includes | Estimated APR | Estimated APR |
| Exemption that matters here | A provider that is a depository institution | A financial institution, including an entity it majority-owns |
| Platforms | A non-bank that arranges a bank's financing through an online platform it administers counts as a provider | A technology services provider to an exempt entity is exempt if it holds no interest in the financing |
California's exemption names the depository institution itself, and a non-bank affiliate may or may not qualify, so ask a bank-affiliated factor which entity makes the offer and whether it claims an exemption.
At the federal level, the CFPB's small business lending data rule (12 CFR part 1002, subpart B, amended by a final rule published May 1, 2026) doesn't count factoring as a covered credit transaction under its official commentary, whichever type of company offers it. The FTC's power to stop unfair or deceptive practices excludes banks, among others (15 U.S.C. 45). When a platform works with a bank, the bank's side of the relationship falls under the banking agencies' 2023 guidance on third-party risk management, and the agencies proposed a revised version on September 11, 2026.
Eligibility, advances, recourse, minimums and speed: what to ask each type
We found no official source that ranks the three types on deal terms, and any one company can break the pattern. Two points are documented. The OCC booklet says factors focus most of their due diligence on the customer rather than the client and generally stick to a few industries where they have expertise and an established network. BDC says factoring rates follow a review of the credit quality of the company and its customers, the invoice amount and the industry's risk profile. Treat the rest of the table as common tendencies to verify.
| What to compare | Bank-owned or bank-affiliated | Independent factor | Online or fintech platform |
|---|---|---|---|
| Eligibility | Often weighs your own financial statements | Often leans on your customers' credit | Often decides from accounting and bank data you connect |
| Advance structure | Often a fee plus interest on funds in use | Often a fee that grows with days outstanding | Often a weekly or daily fee per invoice |
| Recourse | Ask; the OCC's 2000 booklet says bank vendor programs usually carry recourse | Often offers both | Ask; read the buyback clause |
| Minimum volume | Often wants steady, larger volume | Varies widely | Often low or none |
| Contract length | Often a term contract | Varies; term or month to month | Often invoice by invoice |
| Funding speed | Setup often takes longest | Varies | Setup is often quickest |
| Industry focus | Depends on the bank | Often specialized | Often broad |
The OCC booklet describes factoring, in its 2000 wording, as "usually without recourse," so the provider's label won't settle it. Our guide to recourse and non-recourse factoring covers the clause to read.
Ask every provider:
- Entity: Which legal entity buys my invoices, and will I get a disclosure with an estimated APR?
- Eligibility: Do you underwrite my company, my customers or both?
- Advance: What advance rate applies, and when is the reserve released?
- Recourse: When must I buy back an unpaid invoice, and what does non-recourse cover?
- Minimums: Is there a minimum volume or monthly fee, and must I sell every invoice?
- Contract: How long is the term, and what does leaving early cost?
- Speed: How long until first funding, and for later invoices?
- Industry: Do you fund manufacturers, and which invoices do you exclude?
Three offers on the same invoices for a manufacturer near $3 million in revenue
Picture a manufacturer with $3,000,000 in annual sales that bills $250,000 a month and gets paid in 45 days. It collects three quotes on one month of invoices. Every figure below is an assumption chosen to show the method, and none is a market rate for its type.
| Offer A: bank-affiliated | Offer B: independent | Offer C: online platform | |
|---|---|---|---|
| Assumed advance rate | 85% | 80% | 90% |
| Assumed pricing | 0.75% of face value plus 8% a year on cash advanced (360-day year) | 1.5% of face value for 30 days, then 0.5% per 10 days or part, plus a $30 wire fee | 0.5% of face value per week or part |
| Cash on day 1 | $212,500 | $199,970 | $225,000 |
| Total fees at day 45 | $4,000 | $6,280 | $8,750 |
| Reserve paid at day 45 | $33,500 | $43,750 | $16,250 |
| Total cash received | $246,000 | $243,720 | $241,250 |
| Fees as a share of invoices | 1.60% | 2.51% | 3.50% |
| Simple annualized cost | 15.3% | 25.5% | 31.5% |
Offer A's cost is a $1,875 fee plus $2,125 of interest. Offer B charges 2.5% of face value ($6,250) plus the wire, and offer C bills seven weeks. The annualized row divides fees by day-one cash and multiplies by 365 over 45; a state disclosure's estimated APR follows that state's own method and may differ.
In this hypothetical set, offer C delivers the most cash on day one and costs the most. Real quotes could reverse the order, and contract terms can reorder even this list. Suppose the manufacturer only needs to fund two slow-paying customers, about $100,000 of invoices a month. If offer A requires selling every invoice, a year costs 12 times $4,000, or $48,000. Offer B on those two customers costs $2,530 a month, or $30,360 a year, and offer C costs $3,500 a month, or $42,000. The lowest rate turns into the most expensive year unless the extra cash earns its keep.
▦Estimate your invoice factoring paymentsRun the numbers in the invoice factoring estimator →▸Which type of factoring company fits a small manufacturer with $3 million in revenue?
For a small manufacturer with about $3 million in revenue, the best type of invoice factoring company depends on your financial statements, your customers and how much of your ledger you want to sell. BDC says factoring can be especially helpful for manufacturers that invest up front in raw materials and sell to customers that tend to pay slowly. The matches below are tendencies that vary by company.
| Your profile | Type that often fits | Where it often says no |
|---|---|---|
| Profitable, steady volume, willing to sign a term contract | Bank-owned or bank-affiliated | Losses, thin equity or small, irregular volume |
| Strong customers, but a young, recovering or fast-growing company | Independent, ideally one that knows manufacturing | Weak customer credit, disputed invoices or industries outside its niche |
| Occasional need, a handful of invoices, online setup | Online or fintech platform | Invoices it can't verify, or amounts above its limits |
Whichever you choose, expect questions about returns and disputes. The OCC booklet says factors investigate client manufacturers to make sure they can handle chargebacks and disputed accounts.
EQ Funding isn't a factor or a lender. One application is routed to lenders who compete, so you can set invoice factoring offers side by side. Before you sign, read the factoring agreement for the term, minimums and exit fees, and see our manufacturing financing guide if equipment or inventory is the bigger need.