25. July 2012 10:49
As the economy has continued to adjust, companies are seeking ways to save money. One method they've chosen involves delaying payments to their (often smaller) suppliers for as long as they can. Sometimes it’s by asking for extended dating. Other times it’s by involuntarily stretching their payments. This delay of payment can create major problems for these smaller companies because they rely on payment to finance their upcoming work. If this situation describes your company, you need short term working capital to keep your business on track.
When this happens, the majority of your capital is essentially in limbo. You've already provided the goods or services to your client, but they're delaying payment – sometimes for months. This puts you in a tough position. Big banks aren't likely to want to get involved in loans as small as what you need, and term loans aren't the best solution for this type of situation anyway. What you need is a mechanism to smooth out the peaks and valleys of your cash needs. What you want is a line of credit, but one that's based on your outstanding unpaid invoices to your clients.
Invoice factoring is the solution for this exact situation. Invoice factoring allows your company to borrow against your clients' unpaid invoices. It provides immediate access to the money you're going to receive in the future. Because of the nature of this borrowing, it also means that you don't have to be worried about your credit. This short term working capital is secured against your client's credit rather than your own, which takes a lot of the burden off of you.
In this market, small business owners and suppliers are feeling the squeeze. Crestmark can help you get the funding you need by facilitating borrowing against your future receipts, essentially negating the payment gap and providing those funds long before your client pays.
19. July 2012 12:03
The staffing industry has some of the most unique working capital needs of any industry. The reason is simple: it provides a very unique product, and truly obtains very little trade credit support. This creates financial situations that rarely arise in other industries. Working with a finance company that knows how your business operates and specializes in staffing financing is important to get the best funding for your company.
The first challenge faced by staffing companies is high payroll that can vary drastically. Because you provide staffing solutions for so many companies, your workforce has to be larger than a similarly sized company in another industry. A larger payroll makes working capital needs more intense because you're required to pay each week yet your customers may take several weeks to pay you. There is no product buffer in staffing; you need to make sure everyone gets paid every week, and sometimes that means payroll funding or staffing financing is a necessity
In addition, the industry is inherently variable. The staffing industry has to adjust based upon the needs of the industries it serves. For instance, in the medical field, payroll needs and margins can vary dramatically between doctors, nurses and aides. During high growth periods the need for cash intensifies but when sales volume decreases you may become more liquid. You can help bridge the gaps in your finances left during sudden fluctuations by seeking out staffing financing tailored to your unique working capital needs.
Crestmark is proud to provide the kind of specialized financing and knowledge that staffing companies need. We maintain an entire division devoted to serving staffing companies, providing the kind of lending solutions and payroll funding that suit the industry's unique business climate.
11. July 2012 05:45
There are two basic types of credit that are available from most lenders. The first is a basic term loan, where you receive a set amount of money at a certain time and repay it incrementally over a longer period of time. The second option is a business line of credit. Here you have a maximum amount, beyond which you may not borrow. But up to that maximum you are permitted to borrow as much or as little as you need. Depending on what type of business line of credit you have, the upper limit may be able to be adjusted.
The main difference between the two is their flexibility. Term loans are a one-time thing; you can't simply request more money without negotiating a separate loan and all the associated paperwork. But with a business line of credit, raising the credit limit can be much simpler.
These differences mean that they're best suited to disparate applications. If you're making a one-time purchase or a one-time investment, then go with a term loan. You'll be able to pay for the entire purchase at once, and you'll know exactly how much you'll owe on it over the coming months. But be certain that you're really going to need it just once. Don't get caught with a loan that's smaller than what you actually need because the amount you get isn't negotiable after you've signed the agreement.
A line of credit offers more flexibility. It's great for creating a bridge between your current financial resources and what's necessary to finance a new project. You can pay it back on your own schedule and you can easily expand the amount you're borrowing to fit potentially unforeseen costs.
2. July 2012 09:28
Getting capital is often one of the biggest struggles that small business owners face. A lot of lenders hesitate to invest in a business that hasn't achieved critical mass and banks might resist lending to small undercapitalized companies.
The U.S. Small Business Administration (“SBA”) was created to represent business owners and help provide the kind of resources needed. As part of that, the SBA partners with regional lenders to create SBA-guaranteed small business capital loans that are available throughout the country. When you apply for small business loan programs through the SBA, you get more than just the basic required allotment of small business capital. They sometimes come with some kind of coaching, instruction, or assistance, which can be vital to help a new business get the most out of the loan.
In order to apply for small business loan programs through the SBA, you have to meet certain criteria. There are a number of different loan programs that exist. They range from those available on a broader scale to more specific loans for rural businesses or other specialized applications. The requirements for each are different, and the ways in which loaned money can be used will vary as well.