Lending to small businesses could freeze this December, when the Small Business Administration expects to run out of economic stimulus funds that enabled it to raise its guarantee on its main loan program to 90 percent. That higher guarantee, combined with the temporary elimination of some loan fees for borrowers and lenders, has led to a 54 percent increase in the average weekly volume of 7(a) business loans since March 16, when the incentives went into effect.

Many of lenders may not continue making SBA loans if the agency doesn’t find a way to keep the higher loan guarantee and fee eliminations in place and it’s not going to do small businesses much good if there’s business out there and they can’t get capital.

Even with the gains since March, the SBA’s year-to-date lending numbers remain far below last year’s pace. Through August 28^th, the number of 7(a) loans were down 41 percent so far this year and 504 loans were down 33 percent.

Some lenders say the hassles involved in making the loans aren’t worth the small amount of money they would make off them not and many banks are making conventional loans to small businesses.

So where do small businesses go for working capital in today’s tight credit markets? Factors Southwest!

If you want to learn more about Factors Southwest and how we can HELP with your cash flow issues, check us out at www.factors-southwest.com or contact Robyn Barrett (robyn@factors-southwest.com )

Companies that use factoring like it because they get money quickly rather than waiting the usual 30 or 60 days for payment. After sending an invoice to a factoring firm, a business can have money in its hands within 24 to 48 hours.

Some businesses use factoring to get started. Whereas banks focus on a business’s creditworthiness in considering whether to make a loan, factors look at the financial soundness of a business’s customers. As a result, firms with scant credit history may be able to sell their invoices.

If you would like to learn more about factoring, please contact Robyn Barrett (robyn@factors-southwest.com) or go to www.factors-southwest.com today!!!

If your bank is still saying “NO”…

Maybe it is time to look at alternative forms of financing to make sure your company is one of the survivors of this credit disaster and not a victim. Factoring can help ensure you will be a survivor.

Factoring has been practiced for centuries. The Romans sold promissory notes at a discount as did the Phoenicians. The word "factor" comes from Latin, the language of Rome. It means "to do" or "to make." The Pilgrim's journeys to America were financed by advances from a Factor who provided the funds to pay for the journey. The Pilgrims repaid the money with earnings from America. Factoring to this day is an extremely common business practice in Europe whereas many American business men have never heard of it.

So if it is good enough for the Romans, Pilgrims and modern day Europe it is probably good enough for your company. Factoring gives you the ability to leverage your accounts receivable by getting an advance of cash based on a percentage of the receivables balance. Factoring can speed up your cash flow by giving you immediate funds for invoices versus waiting 30-60 or 90 days to be paid by your customer. When you provide a Factoring company with copies of your invoices, the Factoring Company uses your invoices to make a loan to your company. It is a simple process!

Credit is not an issue when providing Factoring (e.g., Accounts Receivable loans) because the Factoring Company looks at the credit history of your customers not yours! This is good news for small to medium size business that have been in business for less than two years or established companies with cash flow issues as a result of slower paying customers – a common problem these days.

If you would like to learn more about factoring, please contact Robyn Barrett (robyn@factors-southwest.com) or go to www.factors-southwest.com today!!!

To be successful in any business you have to have sales. Growth of your business is vital and a steady stream of cash flow is a must for meeting the daily operating costs of your business. While most businesses rely on a line of credit to close the gap between cash outflow and cash inflow, it is very difficult or almost next to impossible to secure loans from banks and other financial institutions in today’s financial environment. So businesses have to look for other options to save themselves from closing down due to lack of capital. Factoring is one of the options that offer the much-needed working capital to fuel your business for growth.

Factoring is a very simple and fast process and is available to all types of small business. Most factoring companies charge competitive processing fee for their factoring programs and since a factor bases the credit decision on whom you are selling to and not your company, it is a great way to finance growth.  A factor will typically advance about 70% to 90% of the total face value of your invoices. This means you get cash immediately to pay for operating expenses and payroll. When the invoice is paid in full the remaining amount not advanced (i.e., 30% to 10%) is given back to you less the accrued factoring fees.

Factoring is one of the best methods that can be used by a business to improve their cash flow. So if your company has receivables and a good sales margin, it can definitely look to factoring as an option for steady and dependable cash flow.  To find out more about factoring contact Robyn Barrett at Factors Southwest (robyn@factors-southwest.com) www.factors-southwest.com 

In the United States, factoring dates back to colonial times. Historically factoring has been around for more than 4000 years, or basically since the beginning of trade and commerce. Accounts receivable factoring is also one of the most misunderstood financial tools available to small businesses today.

In today’s dire credit environment factoring is becoming a popular method of financing by helping to improve the cash flow for businesses. Simply put, factoring is the same as a bank line of credit except the factor is basing the credit decision on the credit worthiness of the business’s customers, not the business.   Factoring or invoice factoring is among one of the most efficient forms of financing today -- particularly now that we are facing such tough economic times.

Factoring can be traced back to a Mesopotamian king Hammurabi. What's more, historical documentation about the use of factoring proves that it took place in our American colonies before the American Revolution. This was at a time when raw materials like furs, cotton, timber and tobacco were shipped to Europe. Merchant bankers in London and other parts of Europe advanced funds to the colonists for these raw materials.  This way the colonists were able to continue to harvest their new land, free from the burden of waiting to be paid later by their European customers. This practice of receivables factoring was very helpful to the colonists, as they could go ahead and begin their harvesting without waiting for the money the Europeans owed them.

In the past, factoring agreements were on an all or nothing basis where one either factored all of a company's invoices or not. But in recent years, factoring has become more flexible and now businesses can factor as few or as many invoices as needed.

What if you own your own small business and you wish you could get some additional working capital to move your business to the next level?  Factoring can provide the working capital to help you grow the company. Whether it's a one-time need or an ongoing necessity, working capital or the lack of it, is the most obvious difference between the success and failure of a small business today.

Is factoring is right for you and your company? Ask yourself if your small business could use factoring to speed up cash flow. If you need to increase working capital so the business can grow, then chances are you could use factoring.

If you would like to find out more about factoring and if it is right for your company contact Robyn Barrett at robyn@factors-southwest.com or visit www.factors-southwest.com .

Do you own a growing business that needs financing? If you are like most business owners, whenever your business needs money you head over to the bank. Unfortunately, as most small business owners soon find out, most banks do not lend money to businesses unless they have significant collateral and a history of successful operations. This presents quite a challenge for business owners.

When banks are not an option, small business owners turn to what is known as invoice funding or factoring. Although factoring may be a new concept to you, it is actually quite widely used and should be considered mainstream. Most major companies (including public companies) have used factoring at one time or another during their growth history.

Factoring can be used by businesses that are already in operation, and whose main requirement is working capital. Although startups can benefit from factoring, the companies will need to be in operation for a little while and have a growing list of clients.

Invoice factoring (also known as accounts receivable factoring) is ideal for business owners who cannot afford to wait 30 to 90 days to get paid by their clients. It allows a business to receive an immediate cash advance on invoices from commercial customers. The financing company advances on the invoices for a fee, waits for the customer to pay and then remits the un-advanced funds to the business.

The main advantage of factoring your invoices is that the financing company makes its decision using the credit of the payer, rather than yours. That means that if you own a small company that is doing business with a large credit worthy company, you are almost certain to have the transaction approved. Another advantage of factoring is that it does not have set limits like lines of credit. The level of financing is limited only by the amount you sell to credit worthy clients. General factors can work with most industries. To find out more go to www.factors-southwest.com

Despite TARP’s stated purpose to increase liquidity in the credit markets, the largest recipients of bailout money are actually lending less today than before they received government assistance, according to an article published on January 26 in The Wall Street Journal. A Journal analysis found that ten of the 13 large banks that have received funds so far saw their outstanding loan balances decrease $46 billion, or 1.4%, in the fourth quarter.

The reluctance of banks to lend the money they have received under the government bailout package has prompted resounding criticism of the TARP program and led many to question its efficacy.  It also poses a question for all small and medium sized businesses:  If the banks aren’t lending, who is? The answer is finance companies, such as Factors Southwest (www.factors-southwest.com), that have strong balance sheets and capital to lend.

When factoring invoices, there are typically two types of accounts receivable factoring offered by factors - recourse and non-recourse factoring. Factoring with recourse means the client assigns the invoice and payment to the factor and the client is still responsible to the factor if the invoice is not paid. Thus, credit risk remains with the client.

Factoring without recourse means the client actually sells the invoice to the factor and the factor bears all the risk for collection of the invoice. Both options have pros and cons that need to be weighed in your decision as you decide which type of factoring arrangement to go with.

Factoring with recourse is generally more common as it is less expensive than non-recourse factoring.  The main reason – RISK! Factoring with recourse is a less expensive form of factoring because the factor bears less risk.  If your business rarely writes off bad receivables, factoring with recourse may be the best option because you can be confident that you will collect on the invoice and save money on factoring fees. 

Factoring without recourse is a good option when the collectability of your invoices is uncertain or you just don't want to share in the risk of collection.  Non-recourse factoring is common in certain industries, such as transportation, but is generally less common throughout most industries.  Moreover, non-recourse factoring will incur higher fees and more aggressive collection tactics by the factor.

Regardless of the option you choose for factoring, be sure to weigh the pros and cons of each type of factoring.  And remember, the more risk you are willing to take generally decreases the amount of factoring fees you will pay. If you would like to know more contact Factors Southwest (www.factors-southwest.com).