Junior Debt · Sub Debt · Stretch Financing
The Junior Capital Partner That Helps You Keep the Client
We partner with factoring firms to preserve your senior position while giving your clients a responsible path to additional working capital. When a client needs more than the factoring line can provide, we fill the gap behind you so you stay protected, stay in control of the relationship, and stay in the deal.
When a client needs more than the factoring line can provide
Factoring is a powerful solution when the receivables fit. But strong clients regularly need more than a factoring facility was built to deliver, because of concentration limits, advance-rate gaps, over-advance needs, or a stretch beyond the borrowing base. When that happens, the client often goes looking for capital elsewhere, and if that capital is not structured correctly, your senior position, lien priority, economics, and client relationship can all be put at risk.
We exist to fill that gap behind you, so you stay protected, stay in control of the relationship, and stay in the deal.
The problem we solve
Factoring firms regularly see strong client opportunities that fall just outside standard facility parameters. Without a trusted junior debt (subordinated debt) partner, the borrower may seek outside capital that is not aligned with your structure, your collateral position, or your relationship.
Concentration limit issues
A client with real revenue gets capped because too much of the receivables base sits with one or two customers.
Advance-rate gaps
The eligible receivables support the business, but the advance rate leaves the client short of what operations actually require.
Working capital beyond the senior facility
The client needs additional liquidity that the factoring line was never designed to carry on its own.
Seasonal or temporary pressure
A short-term liquidity squeeze that a thoughtful junior layer can bridge without disturbing the facility.
Growth that needs a stretch layer
An opportunity that is fundable in principle but requires capital beyond the borrowing base to capture.
Close, but outside the credit box
Deals that are nearly there, but not quite inside the senior lender’s standard parameters.
How the partnership works
You keep the relationship. We structure the layer behind you, with full deference to your senior position.
You bring us the opportunity
Send us the deal before you pass on it. It may involve a concentration limit, an advance-rate gap, a stretch beyond the borrowing base, or a client who needs more capital than the facility can responsibly provide.
We evaluate the junior layer
We review whether we can structure a responsible subordinated debt, junior debt, or Stretch Financing solution with full deference to your senior position, lien priority, and facility terms.
You keep the client relationship
You remain the factor. You keep the relationship, the primary position, and the economics of your facility. We only seek to fill the gap behind you.
We give you a fast answer
Timing matters. We will tell you quickly whether we can help, so a slow process does not cost you the deal.
Why factoring firms partner with us
We are not your competition
We do not approach your client directly or try to disintermediate your relationship. The referral relationship is protected.
We structure around your senior position
Our goal is never to disrupt your collateral position or facility structure. We look for ways to provide junior debt responsibly, with respect for the senior lender’s terms and risk profile, and we welcome intercreditor agreements.
We help you say yes more often
When a deal is almost fundable but needs an additional layer of capital, we may help bridge the gap so you can retain the client instead of walking away.
We support deals outside standard parameters
Concentration limits, advance-rate gaps, and stretch needs are exactly the situations where a thoughtful junior debt and sub debt partner can add value.
We guard against harmful stacking
Left to find capital alone, a client can end up stacked with conflicting merchant cash advances or daily-payment products that strain cash flow and threaten your facility. We offer a more responsible alternative.
We aim to be a standing partner
This is not a one-off transaction. We want to be your go-to partner whenever a client needs additional capital behind your senior facility.
Experience matters when multiple capital providers are involved
Over the last decade, we’ve built our business around one simple principle: additional capital should strengthen the client’s financing structure, not disrupt it.
We’ve completed more than 700 transactions alongside senior lenders and factoring companies as a junior debt and Stretch Financing partner, helping clients access the capital they need while ensuring the factor remains in control of the relationship and protected in its collateral position.
Solutions we help your clients explore
We evaluate the actual need before we structure anything. Where a deal calls for it, we can blend these alongside your senior facility.
Junior debt is financing that sits behind a senior facility in repayment priority, giving a borrower added capital without disturbing the senior lender’s first position.
Subordinated debt, often called sub debt, is debt whose claim on collateral and repayment ranks below the senior facility, so the senior lender stays protected.
Stretch Financing is capital structured to bridge the gap between what a senior facility covers and what the client actually needs, layered behind the senior position.
Supplemental working capital
Liquidity for payroll, growth, and operations when availability on the factoring line runs short. See working capital.
Stretch Financing
Capital Source’s Stretch Finance program is built for the gap between what the senior facility covers and what the client needs. Explore Stretch Financing.
Inventory financing
Funding tied to the goods your client has to buy before the receivable exists. See inventory financing.
Equipment financing
Capital for the machinery and vehicles that drive revenue, structured to preserve operating cash. See equipment financing.
Purchase order financing
Support to fulfill confirmed orders the client could not otherwise take on. See purchase order financing.
Asset-based and bridge capital
Structures built around collateral or a near-term transition when timing matters. Explore asset-based lending.
Where the referral fits and what you can count on
We may be a fit when your client falls into one of these situations, and here is what every referral partner can expect from us.
Ideal referral scenarios
- Needs more working capital than the factoring facility allows
- Has eligible collateral but needs a stretch beyond your advance rate
- Is constrained by customer concentration limits
- Needs a bridge while waiting on receivables, inventory conversion, purchase orders, or growth-related cash flow
- Runs a viable business that falls outside your internal credit box
- Would otherwise be forced to seek unstructured or misaligned outside capital
Our commitment to referral partners
- We protect your client relationship
- We respect your senior position
- We do not compete for your facility
- We communicate quickly and transparently
- We only pursue structures that make sense for all parties
- We help you keep deals you might otherwise lose
Send us the deal before you pass on it
There is no obligation. We will review quickly and let you know whether we can structure a responsible junior debt solution behind your facility, so you stay valuable, the relationship stays intact, and your client avoids harmful stacking.
We help you close the deals you would otherwise walk away from.
Factoring partner FAQs
Will Capital Source interfere with my factoring facility?
No. We structure behind you with full deference to your senior position, lien priority, and facility terms, and we welcome intercreditor agreements. Our goal is to complement your facility and protect the senior position, not to disrupt your collateral or create confusion around payment rights.
Will you approach or take my client?
No. We do not approach your client directly or try to disintermediate your relationship. You remain the factor and keep the relationship, the primary position, and the economics of your facility. The referral relationship is protected.
What can you provide beyond the factoring line?
We can explore responsible junior debt or subordinated (sub debt) capital, Stretch Financing, supplemental working capital, inventory financing, equipment financing, purchase order financing, and bridge capital, structured to sit behind your senior facility rather than compete with it.
What kinds of situations are a good fit?
Concentration limit issues, advance-rate gaps, over-advance or stretch needs, seasonal liquidity pressure, growth that requires an additional layer of capital, and deals that are close but fall just outside your credit box.
How fast will I hear back?
Quickly. We know timing can make or break a deal, so we aim to tell you fast whether we can help, rather than letting a slow process cost you the client.
Partner with Capital Source
Tell us about the client and where the need extends beyond the factoring line. A representative will review quickly and reach out to coordinate a responsible structure that protects your position.
Prefer to talk it through first? Talk to Our Deal Desk. Looking for funding for your own business instead? Apply here.