Most professional services firms cover the gap between payroll and client payments with a business line of credit, pay for hiring ahead of a new contract with a line or an SBA or bank loan, and use revenue-based financing for short, specific needs that cannot wait for a bank. Agencies, consultants, accounting and law firms, IT shops and staffing companies share the same cash problem, which is that staff are paid every week or two while clients pay their invoices on net-30 to net-90 terms. Because those clients pay by ACH transfer, wire or check, funders size their offers from the deposits in your business bank account. Invoice factoring is another way to turn unpaid invoices into cash, and although we do not arrange it, we cover below where it fits.
Our professional services funding page has a shorter overview.
Why services firms run short of cash while they grow
A services firm sells its people's time, and that time is paid for long before the client pays for it. In a Bureau of Labor Statistics study of pay period length, 42.2% of private establishments in professional and business services paid their staff every two weeks in February 2023, 29.4% paid twice a month and 16.0% paid weekly, while only 12.4% paid monthly. A client on net-60 terms pays for a month of work about 60 days after it is invoiced, so a firm that bills at the end of each month can run six biweekly payrolls on a new engagement before the first payment arrives.
Payroll is also the largest cost most of these firms carry. In the Census Bureau's Statistics of U.S. Businesses for 2022, the 872,305 firms in professional, scientific and technical services employed about 10.2 million people and paid $1.07 trillion in payroll against $2.72 trillion in receipts. Payroll alone took about 39 cents of every dollar those firms brought in, before rent, software or outside contractors, and the share runs higher in some trades than in others.
| Industry | Payroll as a share of receipts, 2022 |
|---|---|
| Legal services | 37% |
| Accounting, tax preparation, bookkeeping and payroll services | 43% |
| Computer systems design and related services | 40% |
| Management, scientific and technical consulting | 41% |
| Advertising, public relations and related services | 32% |
| Temporary help services | 54% |
A staffing company sits at the top of that range because the workers it places are on its own payroll. The squeeze is common among small employers of every kind, too. In the Federal Reserve's 2025 Report on Employer Firms, from its Small Business Credit Survey, 56% of firms named paying operating expenses such as payroll and rent as a financial challenge, and 51% named uneven cash flow, which the survey defines to include collecting on receivables.
Growth makes the gap wider before it closes. Take an example firm that wins a contract worth $45,000 a month, hires three people for it at a combined $12,000 per biweekly payroll, invoices at the end of each month and gets paid on net-60 terms. By day 90, when the first $45,000 arrives, it has run six payrolls and is $72,000 out of pocket. The contract earns $45,000 a month against about $26,000 in payroll for the new team, yet the running cash total on it does not turn positive until the fifth month. All of these figures are illustrative.
The main ways to finance a professional services firm
Line of credit
A line of credit is the closest fit for the payroll gap, because the need comes back with every billing cycle and changes size with your receivables. Through our network, lines go up to $250,000. You draw what you need for a payroll or a contractor bill, repay what you drew on a weekly or monthly schedule as clients settle, and the repaid amount opens up again without a new application. In the example above, a line of about $75,000 would cover the gap, with draws on payroll days and repayments as each invoice is paid. Our line of credit page covers limits and repayment, and our guide to how a business line of credit works goes into more detail.
SBA and bank loans
Services firms with a few years of clean financials tend to get a serious look from banks, and in the Fed survey 55% of applicants in professional services and real estate were fully approved, against 49% in retail and in leisure and hospitality. Bank and SBA financing takes weeks and asks for tax returns, a personal financial statement and a schedule of existing debts, and in exchange it offers the longest terms. The SBA's 7(a) program lends up to $5 million for working capital, equipment and real estate, and its Working Capital Pilot offers monitored lines of credit up to $5 million that the SBA says suit industries such as professional services, for firms that want to fulfill large contracts or borrow against receivables. The SBA's Contract CAPLine finances the costs of one or more specific contracts, including overhead allocated to them. Hiring a team for a two-year engagement or opening a second office fits this kind of money well. Our SBA and bank loans page lists what lenders ask for.
Revenue-based financing
With revenue-based financing, often called a merchant cash advance, a funder buys a share of your future receipts at a discount, pays you a lump sum now, and collects a larger fixed total through daily or weekly debits from your business account. Advances arranged through us range from $5,000 to $2,000,000, typically fund in one to two business days and usually need no collateral. As an example, a factor rate of 1.30 on a $50,000 advance means $65,000 paid back in total. An advance fits a short need with a clear payoff, such as a payroll that falls due while a large client is a few weeks late, and fits poorly with a hiring plan that will take most of a year to pay for itself. Our revenue-based financing page covers amounts and timing, and our guide to factor rates shows how to work out the cost.
Equipment financing
IT firms, design studios and engineering practices also buy hardware such as servers, workstations and survey instruments. Equipment financing pays for a specific item and uses it as security, and offers usually come back within one to two business days. In the Fed survey, 68% of applicants for auto or equipment loans were fully approved, the highest share of any product listed. Our equipment financing page lists what it covers.
Invoice factoring, which we do not arrange
A factoring company buys your outstanding invoices, advances you part of their face value up front, collects from your client, and sends you the remainder minus its fee once the client pays. In most factoring arrangements the client is told to pay the factor, so it changes how your clients deal with you as well as how you are paid. We do not offer factoring, so if it suits your firm you would go to a factoring company directly.
Why bank deposits drive revenue-based offers for service firms
Shops and restaurants are paid at the register, much of it by card, so their sales show up as a steady stream of small daily settlements. A services firm is paid in fewer, larger amounts by ACH transfer, wire or check, often a handful of client payments a month. Nacha, the organization that sets the ACH Network's rules, reported 7.3 billion business-to-business ACH payments in 2024, an increase of 11.6% from the year before. A funder looking at a consultancy or an agency has no card processing statements to read, so it sizes the offer from the deposits in your business bank account.
Revenue-based funders read your last four months of statements. They look at total monthly deposits, how much those deposits swing from month to month, how low the balance runs between client payments, and what other debits already come out of the account. A month with two large client payments followed by a month with one is normal for a services firm, and an underwriter who can see the contracts and the receivables aging can tell a timing gap from a drop in business. If one client provides most of your deposits, a funder will also want to know how long that contract runs.
Payment frequency matters more when deposits are lumpy. A daily debit keeps coming out on the days between client payments, when the balance is at its lowest, while a weekly payment gives the account more room to wait for the next wire. When you compare offers, set the payment against your lowest-balance weeks as well as looking at the total payback.
What funders look at in a professional services file
Every funder sets its own thresholds, and they vary widely. In the Fed survey, 47% of business line of credit applicants were fully approved, compared with 33% of merchant cash advance applicants and 32% of SBA loan applicants, and firms open 21 years or more were fully approved 64% of the time against 48% for firms five years old or younger. Most funders prequalify from bank statements and a soft credit pull, so getting matched through us does not need a hard pull, and if a funder runs one in final underwriting, you will know first. Credit matters more to some funders than to others, so a low score narrows the list rather than ending the search. Beyond the bank statements, have ready whatever shows where the next deposits will come from, such as signed contracts or statements of work, a receivables aging, and a list of your largest clients with their payment terms.
What professional services firms use financing for
In the Fed survey, 56% of applicants sought financing to meet operating expenses, 46% to expand or pursue a new opportunity, and 40% to have credit available for future use. In a services firm, they look like this.
| Need | What tends to fit | Why |
|---|---|---|
| Payroll while a large client pays on net-60 terms | A line of credit | The gap comes back with every billing cycle, and the line is repaid as the invoices clear. |
| Hiring a team ahead of a new contract | A line of credit, or an SBA or bank loan for a long engagement | The new people are paid for months before the contract's first payment arrives. |
| Payroll for a staffing firm's large new placement | A line of credit, or factoring through a factoring company | Placed workers are paid every week or two, well before the client's invoice comes due. |
| A second office or a build-out | An SBA or bank loan | The space earns for years, so a longer term keeps the payment in line with what it brings in. |
| Servers, workstations or specialist equipment | Equipment financing | The hardware has a clear price and a known useful life, and it secures the financing. |
| A payroll that falls due while a client is late | A short revenue-based advance | The money arrives in days, and the need ends when the late invoice is paid. |
Mistakes that make a cash gap more expensive
The most common mistake is waiting until payroll week to arrange anything. A line of credit can come together within days, but an SBA or bank loan takes weeks, and a firm that starts looking three days before payroll is left with only the fastest products, which are priced for speed. The time to arrange a line is when you sign a large client or a new contract, before the first payroll for it goes out. A related mistake is paying for a long hiring plan with a short advance, because the advance is repaid out of current deposits long before the contract has paid for the hires.
Stacking costs firms the most once it starts. Each extra advance taken while the first is still being repaid adds another debit to the same account, and offers for a second position are usually priced higher because that funder stands behind the first. Consolidation can replace several advances with one weekly or monthly payment on a longer term, though the total cost may not go down. Offers on the same file can also differ in total payback, payment frequency and early payoff terms, so compare them before you sign.
How to apply for professional services financing
- Fill out the short application with your monthly revenue, time in business and what the money is for. There is nothing to pay to apply or to see offers, and no obligation to accept one.
- Add your last four months of business bank statements, either by uploading them or by connecting your bank read-only. For an SBA or bank loan, have tax returns, a personal financial statement and a list of current debts ready too.
- We send your file to the funders in our network, bring their offers back side by side, and go through the total payback, payment and early payoff terms with you before anything is signed.
- Most applicants are funded within one to two business days of choosing an offer, and some the same day. SBA and bank loans take several weeks.
Our page on funding for agencies, consultants and other services firms sums up what tends to fit. To talk it through first, call us at (818) 351-0225.
Questions professional services firms ask about financing
Can consultants get small business loans?
Consultants with a business bank account and steady client deposits can apply for lines of credit and revenue-based financing, and with a year or more of history and tax returns, for SBA and bank loans too.
How does staffing company funding work?
Most funding for staffing firms covers the gap between paying placed workers every week or two and collecting the client's invoice, either through a line of credit that is drawn for payroll and repaid as invoices clear, an SBA Working Capital Pilot line borrowed against receivables, or invoice factoring through a factoring company, which we do not arrange.
Can a professional services firm get a line of credit?
Many can, and a line suits the gap between payroll and client payments well. Lines through our network go up to $250,000, offers often come back within a day, and you repay what you have drawn on a weekly or monthly schedule.
Is invoice factoring the same as revenue-based financing?
They work differently, because factoring sells specific unpaid invoices to a company that collects from your client, while revenue-based financing sells a share of your future receipts and is repaid by debits from your own account, so your clients keep paying you as usual.
Can a service business get working capital with bad credit?
Often it can, with fewer options. Revenue-based funders build most of their decision from your bank deposits and a soft credit pull, so a low score narrows the list of funders rather than ending the search.
