Paragon Financial Group Business Financing Review
Paragon Financial Group is a factoring company that advances unpaid invoices and customer orders for business owners who need funding. If you want to access cash that’s tied up in unpaid orders, Paragon could help you secure financing you need, especially if you have trouble qualifying elsewhere.
Paragon is based in Fort Lauderdale, Fla., and has offices in Orlando, Tampa and Miami, as well as in Atlanta, Ga. The company has been providing alternative business funding since 1994.
Below, we’ll break down what the company has to offer to help you decide if Paragon is the right financing solution for your small business.
- What Paragon Financial Group offers
- Who is eligible for financing from Paragon Financial Group?
- Pros and cons of Paragon Financial Group
- The fine print
- Is Paragon Financial factoring worth it?
What Paragon Financial Group offers
Paragon provides two types of financing solutions: invoice factoring and purchase order financing. Rather than issuing you a traditional business loan, Paragon would advance up to 90% of your unpaid invoices or orders. When a customer pays their bill, you would receive the remaining percentage, minus Paragon’s fee for the advance.
Here’s a quick look at what’s available.
|Amount||Term||Fees||Time to funding|
|Invoice factoring||80% to 90% of unpaid invoices||Based on customer terms||0.90% - 2.50% for the first 30 days||5 to 7 business days|
|Purchase order financing||80% to 90% of unpaid orders||Based on customer terms||0.90% - 2.50% for the first 30 days||5 to 7 business days|
After Paragon advances you a portion of your unpaid invoices, accounts receivable or customer orders, bill payments would go directly to Paragon. Then, Paragon would collect a fee and give you the remaining portion.
Paragon collects 0.90% - 2.50% of bills paid within 30 days, the amount of which is determined by factor including the amount of invoices and how long customers have to repay. If an invoice or purchase order is paid after 30 days, your fee would increase depending on how many days the bill has been outstanding. Paragon’s terms are also flexible and depend on your selling terms with your customers.
After signing a contract with Paragon, it could take five to seven business days to set up your account. Once that’s done, you would receive your funding the same day.
Who is eligible for financing from Paragon Financial Group?
Paragon works with a number of companies, including startups, from a wide range of industries. Businesses in the service industry, manufacturing, staffing, importing or exporting could be eligible for funding from Paragon.
To qualify, you must meet the following criteria:
|Revenue||Minimum credit score||Time in business|
|$50,000 in monthly revenue||550 personal credit score||No minimum|
Compared to other online business lenders, Paragon’s requirements are lenient. It’s not uncommon for factoring companies to rely on a business’s volume of invoices and creditworthiness of customers, because your customers would be making payments.
You would choose which invoices to factor, and you may want to consider selecting invoices sent to your most reliable and creditworthy customers. You would need to provide their names, addresses and phone numbers to Paragon, as well as how much of each invoice you’d like to factor.
In addition to customer information, you’ll need to submit several documents with your application:
- Three months’ worth of bank statements
- Sample invoice
- Most recent accounts receivable and accounts payable reports
- Articles of incorporation or DBA filing
Paragon requires business owners to provide a personal guarantee when receiving financing. Business lenders typically request a personal guarantee to secure funding, as it puts business owners on the hook to repay debt if the business defaults. A personal guarantee reduces risk for the lender, but would put your personal finances on the line.
If you already have an existing bank loan or line of credit with another lender or bank, your business could still be eligible for Paragon financing. Let Paragon know about any existing debt and the company could help you manage your financing.
Pros and cons of Paragon Financial Group
While determining if Paragon could provide funding for your business, consider these positive and negative aspects of the company.
|Factoring would free up cash before invoices are paid.||Slow time to funding, compared to other alternative lenders.|
|Customers are responsible for paying Paragon.||Financing could become expensive if customers don’t quickly pay invoices.|
|Lenient borrower requirements.||Only one type of financing available; traditional loans or credit lines not offered.|
The fine print
Factoring differs from lending. Rather than borrowing money and repaying debt, factoring requires you to sell your invoices or accounts receivable to a factoring company such as Paragon. The company would buy your unpaid invoices at a discount — 80% to 90% in Paragon’s case — and send you immediate cash after you’ve set up an account. The company would then collect those invoices and deduct its own fee before giving you the remaining amount. Factoring allows you to leverage assets you already have without adding debt to your company’s balance sheet.
Factoring could impact your customers. Once you’ve chosen which invoices to factor, Paragon would notify your customers to pay Paragon directly. The arrangement could affect your relationship with customers, as they may think your business is in financial trouble. There’s also a risk that customers may not feel comfortable making payments to an outside company.
Paragon provides non-recourse factoring: Non-recourse factoring protects you from having to pay an invoice if your customer cannot because of bankruptcy. Paragon takes on the risk rather than passing it on to borrowers. However, as we mentioned earlier, you would need to sign a personal guarantee, which would give Paragon the ability to hold you accountable for unpaid invoices if the company chooses to do so.
Is Paragon Financial factoring worth it?
Financing from Paragon Financial Group is designed for business owners who have unpaid invoices or purchase orders that they could leverage for capital. Paragon’s eligibility requirements are lenient, making the company an attractive option for business owners who don’t qualify for traditional funding, like startups.
Factoring invoices and purchase orders would give you quicker access to money that you would receive anyway, keeping you out of debt. However, you may risk damaging your relationships with customers who may not want to make payments to an outside company.
But if you feel confident in your customer relationships, and trust them to pay bills on time, Paragon could provide a solution to your funding needs. Shop around before making a commitment to ensure Paragon offers the right financing for your situation.