Alternatives to Bank Loans

In a recent article in The New York Times entitled “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”, author Ian Mount points out that alternatives to bank loans are on the rise in today’s rocky small business economy. He gives several examples of non-traditional financing options, of which this blog will discuss three: asset-based lending (factoring), lease-back lending, and cash advances.

Asset-Based Lending: Also known as factoring, this options refers to the process by which businesses sell their receivables to a factoring company. They then get 80-90% of the cash back immediately and the rest after customer repayment, less a percentage fee. This option is best for business-to-business companies that cannot wait for payment, and the cost is usually 4-5% monthly with an effective annual interest rate is typically between 18-30%.

Lease-Back: This refers to when a company sells its property, plant, and/or equipment, and simultaneously leases it back for cash. It is best for companies with valuable plant or equipment that are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of equipment.

Cash-Advances: Cash advances take place when a company receives an advance sum from a lender and pay them back with percentages of their monthly card receipts until the loan plus a predetermined rate is repaid. This financing method is best for retailers and restaurants with limited financing options, and the cost is usually 20% and up.

All three are viable financing options for companies rejected by banks, or looking for fast cash alternatives. See the original article “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”.

How to Reduce Small Business Costs

According to a recent post on’s Small Business Information page, reducing costs in small business doesn’t have to be a headache. The article points out 10 simple steps small businesses can use to make smart choices about where their funds go and ultimately improve the bottom line.

1. Use Technology

Use teleconference and online payment tools to reduce travel and paper costs

2. Ditch Your Landline

Cell phones, VoIP, or virtual phone lines can be a better less expensive option

3. Go Paperless

The cost of ink, mailing, and postage adds up

4. Start Marketing Your Business Online

Use low cost, fast-paced, high-result Internet marketing

5. Reduce Credit Card Debt

This will help with long term business management

6. Create and Stick to a Business Budget

Keep yourself on track by outlining costs beforehand

7. Explore Alternative Places for Business

If possible, exploring a coworking or home based business can be beneficial

8. Cut Back on Software

Some software goes unused, so don’t bother with anything you don’t need

9. Buy Refurbished Equipment

Refurbished equipment can be just as good as new, at a fraction of the price

10. Look Into Bartering

Exchanging your goods or services for others means no cash changes hands

Exploring these options can mean all the difference to a small business. Make smart decisions in the outset, and your business will benefit in the long run.

Check out the original article  How to Reduce Small Business Costs.

$30M Investment Helps Kabbage Keep Growing

Kabbage, an online financial service, plans to expand internationally with its recently raised $30 million dollars from providing working capital in less than seven minutes. Company CEO Rob Frohwein cites the lack of available capital for small companies the reason behind his company’s recent growth. Kabbage, one of the first companies to advance loans to “mom-and-pop” merchants, is the provider for online sellers to purchase inventory and resell them on eBay, Amazon, etc. The company makes their funds by taking a fairly small percentage of the advanced capital. Due to their success, the company is attracting investor attention from key investors of blockbusters Google, Facebook, and PayPal. Since last summer, Kabbage has managed to more than double their value with the new capital, in which they aim to devote in supply development, sales, marketing, and expansion into the United Kingdom. Not only is the company planning to diversify geologically, but also beyond the online merchant market. With the apparent financial growth, Kabbage expects to add jobs and square-feet to its office in Midtown Atlanta office. See the full story $30M Investment Helps Kabbage Keep Growing.

Small Business “Pre-Nups”

They say people can be married to their business — well, it follows that people can also go through messy business divorces. In a recent article in Crain’s Cleveland Business, U of M entrepreneurship professor James Price discusses how he often advises small business co-founders to sign a prenuptial-like contract in order to avoid conflict if one or more founder should jump ship.

Much like young love, entrepreneurial partners are often enamored with the start-up at first and might think that nothing could go wrong. Price advises that business partners instead think rationally and come up with an agreement that will force them to reason through what should happen in case of a break-up.

The fickle nature of business, with its soaring highs and Mariana Trench lows, can put stress on the best of partners. Sometimes “love” is not enough, and that is where a start-up pre-nup comes into play. Price claims that these contracts are a “clear-eyed way of building flexibility” so that both business and personal relationships can remain intact regardless of how it all plays out. See the full article at Why I Always Tell Co-Founders to Sign a ‘Pre-nup’.

Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020

Burlington, Massachusetts based Nuance Communications, Inc. will add approximately $200 million to acquisition war chest as a portion of a $350 million bond offering. Although the Senior Note is unsecured, it is fully and unconditionally guaranteed on a Nuance’s domestic subsidiaries. Nuance plans to repurchase the notes from holders upon a change of controls at 101% of the principal amount as well as any accrued and unpaid interest, nearly $354.2 million dollars with which they will use to repay debts and acquisitions. See the full story Nuance Announces Proposed $350 Million Offering of 5.375% Senior Notes due 2020.

Marketing Directly to Consumers of Private Duty Health Home Care

October 12, 2012
A recent article in the Private Duty Today newsletter addresses an issue that home healthcare providers often face: how to effectively market their services without breaking the bank.  After conducting market research, the author of the article put together a breakdown of the most effective marketing methods for this important field. The top four of the top results are displayed below, along with the percentage of responders who found the technique highly effective:

  1. Website (62.5%)
    You must have a functioning website that ranks high on search engines.
  2. Health Fairs (45.2%)
    Take advantage of opportunities for networking with other health care providers and getting that referral when the time comes.
  3. Sponsorship of Community Events (34.3%)
    A banner ad isn’t enough; you have to be actively involved with the event you sponsor (such as an Alzheimer’s Association or Parksinson’s disease fundraiser)
  4. Writing for Local Magazines and Newspapers (25.8%)
    A great way to build your brand is to write a column or an “Ask the Experts” in the local newspaper dealing with aging issues .

See the original article, Marketing Directly to Consumers of Private Duty Health Home Care.

Four Ways to Deal with Non-Paying Customers

The TemPay Staffing Times recently published an article that highlights a major problem facing modern staffing agencies: cash flow interruptions due to non-paying customers.  In a seasonal and fluctuating industry like temporary staffing, timely payments are extremely important as they are used to cover payroll and other expenses.

Dealing with problematic customers requires a delicate balance between firmness and lenience. The article outlines four ways to deal with these types of customers:

1. Keep on top of trends such as payment histories, so it’s easier to examine problems when they arise rather than figuring it out retrospectively.

2. Before getting frustrated with the customer, make sure that a change in your own protocol isn’t the cause of the problem.

3. Maintain composure while talking with delinquent customers, and focus on indentifying the problem and coming up with solutions.

4. Consider making customers who are routinely behind deliver payment directly to your offices.

If you attempt these steps and the customer still won’t pay, it may be time to cut off services. But, the article points out, if you have made an honest effort to help then the fault lies with the customer, not you. Click here for the original story, Not Getting Paid? 4 Ways to Deal with It.