There’s no secret banks are putting the squeeze on small business lending and credit lines. In fact 55% of small to midsize businesses surveyed by the National Small Business Association reported difficulty in obtaining credit last year.
So where can business owners turn for working capital as banks say no to business financing? Here is a great source to consider during the small business loan credit crunch:
As banks say no, businesses are turning to factoring companies to raise needed cash and working capital. Rather than lending money based on the strength of a business, a factor purchases an outstanding invoice or accounts receivable at a discount.
Once goods or services have been delivered to a customer a business may wait 30 to 60 days for payment. A factoring company solves this problem by providing an immediate cash advance on the invoice (generally 70 to 80%). When the invoice is paid the factoring company retains their discount fee and releases the remaining reserve to the business. The ability to obtain cash without debt is just one of the many Benefits to Factoring Invoices and Accounts Receivable.
When times are tough businesses often turn to credit cards, home equity, or loans from family and friends. It’s good to know that accounts receivable factoring can provide alternative financing solutions to businesses in need of working capital during the credit crunch.
Scott DiBerardinis, Business Development Manager of Durham Commercial Capital. Visit our website at www.durhamcommercialcapital.com