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.
16. May 2012 05:35
Trucking is a unique industry because your product is moving the products of others. You move the country, ensuring that everything from food to clothing to furniture to mail reaches its destination on time. Because you fill such a unique and vital position within the economy, your business structure and revenue stream is sharply different from other companies. Freight bill financing is a unique concept, designed for trucking companies and used by many of the biggest transportation companies in the nation.
What Is Freight Bill Financing?
Although similar to accounts receivable financing or factoring, freight bill factoring is custom tailored for transportation. Once your freight bill is ready, you are eligible for financing based off of it. A non-traditional lender and transportation specialist like Crestmark will purchase the bill from you, paying you a portion of it immediately. Once the account clears with your client, you get the rest minus an administrative fee. Freight bill factoring can be traditional or discount depending on your needs.
Why It Works
You know how volatile the transportation industry can be. There's often a lag time between invoice and receipt of payment. In addition, shifting conditions like gas prices and unavoidable delays from weather can lead to a dramatically variable revenue stream. Financing can help smooth out the operation, ensuring that you have the cash you need when you need it.
10. May 2012 06:14
Having access to a business line of credit provides a lot of freedom for your company. You have the leeway to make decisions without worrying about securing new funding for them, allowing you to move faster than your competitors. You also have a number of opportunities to make changes within your company, temporarily absorbing costs during the shakeup. Here are three ways that you can make good use of the opportunities a business line of credit provides.
Purchase Inventory At A Discount
When an opportunity arises to save your business money in the long term, you can use your credit to make it work in the short term. This can include everything from taking advantage of a short-term promotion to negotiating a longer term deal that allows you substantial savings for purchasing in volume.
As your business changes and adapts throughout the year it is not uncommon to find yourself coming up short for payroll. Your line of credit can help you ensure that everyone in your office gets paid while you wait for things to settle down.
Consolidate And Expand
Reorganization can be a costly process in time, money, and productivity. But in the long term, it almost always yields better rewards. Supplement it with funds from your line of credit and you'll be able to weather the short term chaos in favor of longer term benefits. The same is true with expansion. You might find yourself financially strapped in the short term as your merger takes effect. A credit line will help you meet your expenses while things level out.
8. May 2012 04:57
There are a number of reasons why a company may not want to take a term loan. They may want to pledge personal collateral, find it difficult to obtain this more traditional form of financing, they may simply not want to accept the terms that are available, or they may simply prefer these non-traditional financing options as a way to meet their financing needs. Whatever your situation, if you're looking outside the term loan box, you should look at these potential solutions.
Accounts Receivable Financing
A/R financing is a flexible line of credit solution available to most businesses. This type of financing leverages the money you are due to receive from invoices you have sent to your customers. A/R financing helps bridge the gap between your cost of sales and when you get paid for your goods or services.
Asset Based Lending
This line of credit is secured by an asset that your business currently holds. Asset based lending is a line of credit, meaning that you can use as much or as little of your potential credit as you select up to the value of the collateral pledged. You can change it monthly, weekly, or even daily depending on your needs.
In this type of financing, a third party factor actually purchases your unpaid invoices. You receive a portion of the value upfront, with the rest of it being delivered, less an administrative fee, when your client makes good on the debt. Factoring may be traditional, where the factor fully purchases the invoice and assumes both the credit risk and responsibility for collection of the receivable. Or on a recourse basis where the receivable is sold back to the seller after a certain period of time elapses. Unlike other types of financing there are less restrictive covenants inherent in factoring transactions.
18. April 2012 12:22
Invoice factoring allows businesses to collect cash from invoices faster. In some cases, companies may even be able to recover funds from a transaction even if the buyer becomes unable to pay. The premise behind invoice factoring is that accounts receivable can actually be sold. The company that purchases your accounts receivable is known as a factor, hence the term invoice factoring.
There are two types of invoice factoring, The first, non-recourse, involves the complete sale of the invoices. In this situation, the company assumes all responsibilities related to the invoice. You receive cash immediately in exchange for this sale. One of the advantages of this option is that the factor may actually take on the risk of non-payment, meaning that you receive cash even if your client can never meet the bill.
Recourse factoring is the other type of invoice factoring. Also known as discount factoring, it provides much of the same financing options as non-recourse, typically at less of a cost. Both types of factoring require an exchange of information and discussion before approval. You will need to provide information about your top customers to the factor and provide a figure for how much funding you need from each.
One of the biggest benefits that applies to both non-recourse and recourse factoring is that they are flexible. You can finance as much or as little of your accounts receivable as permitted based on client credit and as needed for your business in its current state. This inherent adjustability is rare in term loans and more rigid financial instruments.
Crestmark is proud to provide invoice factoring for a variety of industries. If you would like to learn more about how this non-traditional financing technique can help you make payroll, fund an expansion, or just keep your business running smoothly day to day, our staff will be happy to talk with you.