Is a Loan from a Big Bank the Best Financing Option for a Small Business?

Did anyone see the article on CNBC.com called: Small Businesses, Big Banks: Good Fit?

The article basically talked about how small business owners are still facing strict lending restrictions from larger banks like Bank of America, so they’re turning to smaller banks for their small business lending needs. Specifically, the article talked about a couple of small business owners that experienced a season of poor sales (as a result of weather), and how their banking partners terminated their loans as a result. This type of situation happens often enough, and small, local banks have been sweeping into to save the day–in some cases.

Overall, all banks want assurance that borrowers have the means to repay their loans, as well as a secondary source of repayment, such as collateral.If a small business owner can’t show a profitable operating history and/or strong financials, he/she will find it extremely difficult to be approved for a traditional line of credit with any bank.

One alternative financing option that was not discussed in the article, but that would be extremely beneficial for these small business owners is for them to use is accounts receivable factoring. Instead of basing advances on the company’s past performance, a factoring firm is more concerned with the future–As in the company’s accounts receivables. Moreover, because factoring is not a loan, the balance sheet stays clean, and the credit line grows as the company grows.

Click here for more information on the differences between a bank loan and factoring.

Small Business Bank Lending is Down

The invoice factoring specialists from PRN Funding came across an interesting article on CNBC’s web site, entitled: Small Biz Lending Shrinks as Owners Grow Cautious. In a nutshell, there are a number of reports recently conducted involving small business lending, and they all point to one thing–Small businesses are still uncomfortable with adding debt to their balance sheets and/or hiring new personnel.

We have summarized some of the key takeaways from the article with the cash flow professionals and small business owners that consistently read The Factoring Blog:

  • PayNet (a research firm that tracks loans to small companies) released a report on Friday showing that lending fell 2% in April, which was after a 3% dip in March.
  • Thomson Reuters/PayNet Small Business Lending Index fell to 94.1 in April. It was at 110.5 in December.
  • ADP (payroll processing company) said the pace of hiring by the smallest businesses, those with fewer than 50 employees, slowed in May.
  • Both ADP’s report and PayNet’s report had similar  findings, in that both reports showed that small business owners are increasingly reluctant to hire or expand in this uncertain economy. (The monthly survey of small business owners by the National Federation of Independent Business also echoed this finding.)
  • Dun & Bradstreet Credibility Corp. (a credit reporting service for businesses), also had some interesting findings after it surveyed 6000 companies during Q1. Mainly that , 64% of businesses with revenue under $5 million said that lack of financing has made it difficult for them to grow. Furthermore, 55% said that it was also restricting their hiring plans.
  • Dun & Bradstreet also reported that banks are becoming more stringent in their lending requirements for small businesses.

Note from the invoice funding specialists at PRN Funding:

Even though small business loans seems to be trending down, there are still a number of great alternative financing methods available to small business owners. Accounts receivable invoice factoring is a great way for business owners to increase their cash flow without creating additional debt.

Invoice Factoring Case Study: Outsourced Medical Billing Company

The outsourced medical billing factoring specialists at PRN Funding wanted to share one of our more recent invoice funding case studies with the medical billing company owners that read The Factoring Blog:

David had aspirations of entrepreneurship ever since he graduated college. Due to the ever-increasing demand for health care, he spotted an opportunity to start his own medical billing company. As word quickly spread about the company’s unparalleled customer service, David’s start-up medical billing company began getting more calls and business soared. As a result, David needed to hire more medical billing specialists to handle the new demand. Because his customers took about 45 days to pay him for his medical billing services, David realized that he would not have enough readily available cash on hand to pay his employees on time. As a result, David began researching financing options. Unfortunately, because David’s company was relatively new, the bank he initially approached turned him down.

Medical Billing Factoring

David didn’t know what to do. He called his friend Steve, who is a broker for alternative financing companies. Steve informed David about accounts receivable factoring, which would help him stabilize his cash flow through the company’s growth period. Steve referred David to PRN Funding, LLC, who has a dedicated medical billing factoring program.

CMS Approves New Rates for HCBS Waivers in Pennsylvania

Last week, CMS approved new rates that were proposed by the Office of Long-Term Living (OLTL) for those home care agencies that provide services under HCBS waivers, including Act 150, Attendant Care, Aging, CommCare, OBRA and Independence.

A couple of different regions were affected by the new rates:

Allegheny, Beaver and Westmoreland Counties
Decrease in reimbursement for PAS (personal assistance services) from $21 to $17.16.

Philadelphia County
Increase in reimbursement for PAS from $15.76 to $19.12.

Montgomery County
Decrease in reimbursement for PAS from $24 to $19.12.

There are a couple more counties throughout the state of Pennsylvania that will see slight decreases or increases.

The Pennsylvania Homecare Association has been following the new rate change closely and advising its members on how best to handle the changeover. Click here for more information on the New Rates for HCBS Waivers.

Home Healthcare Factoring: The Right Funding Solution for Your Home Health Care Agency

Instead of waiting weeks or months to receive payments from Medicaid, Medicare, insurance companies and/or private consumers, would your home health care agency rather have your cash immediately? Did a bank recently turn down your business loan application? Are your home health care receivables available to be collateralized?

If you answered ‘yes’ to one or all of the questions above, then home health care agency invoice financing is by far the best funding option for your business. Allow me to elaborate…

Home health care invoice funding is the conversion of accounts receivable into cash by selling outstanding invoices to a factoring firm. Home healthcare agency financing is a viable financial solution that gives companies immediate cash to manage operations more efficiently. Home health care care agency owners can then use liquid capital to make payroll, pay taxes and meet other recurring financial obligations.

Click here for some additional key concepts about home healthcare agency invoice funding.

Health Care Staffing Factoring Helps Business Owners Expand Agencies

Health care staffing factoring is beneficial for growing agencies struggling to make payroll while their clients (medical providers) take weeks or months to pay for their services. Oftentimes, these agencies can’t qualify for traditional financing because banks look at a company’s past-aka: a profitable operating history-in order to extend credit. However, medical staffing funding companies are more concerned with the agency’s future-aka: its growing accounts receivable-in order to extend credit. Let’s take a look at how one healthcare staffing agency used invoice factoring to improve its cash flow.

Slow Payments Hinder an Agency’s Growth
A new healthcare staffing agency was successfully staffing LPNs and CNAs at a handful of local hospitals. Since the company’s inception six months ago, it had gained an outstanding reputation for placing the most qualified and hard-working nurses. Even though the healthcare staffing agency was a popular choice, the owner kept turning down new clients because he was struggling to make payroll and pay taxes. Simply put, payments coming in were much slower than the agency owner had originally anticipated, and his cash flow was out of sorts.

Click here to find out how the health care staffing agency owner used invoice funding to help stabilize his cash flow.

Medical Dictation and Transcription Goes Mobile with New Application

Webahn, Inc. recently announced the release of Accent HD, which is a new app for iPad that helps doctors dictate, review reports, print, and manage files in multiple formats such as PDF, RTF, and Text.

“Our goal is to provide flexible technology that moves with health care providers,” Vinu Nair, Webahn CEO said in the official press release, “Our solutions help doctors improve productivity and spend more time with patients.”

In essence, Accent HD is an app that offers a simple but intuitive interface for dictation that uploads via WiFi to OvernightScribe. Files are then transcribed, and posted in the clinic account. Physicians can carry the iPad with them to review archived reports, then dictate immediately upon seeing a patient.

Click here to read the official press release: New iPad App Accent HD Takes Medical Dictation and Transcription Mobile

Happy Medical Transcription Week 2012

Did you know that President Ronald Regan established May 20-26 as National Medical Transcriptionist Week? He did–In 1985.

So the medical transcription invoice funding experts at PRN Funding, LLC wanted to wish all of medical transcription blog readers a very Happy Medical Transcription Week!

Of course, the MT industry is not going away, but it is in a constant state of flux as large MTSOs acquire small ones in addition to incorporating EHRs. If you’re an MTSO or a transcriptionist, we want to hear your thoughts on the future of the industry. Feel free to leave comments.

Hospitals Benefit from Outsourcing Release-of-Information

Did anyone happen to read ROI in a Hybrid Environment in For The Record magazine’s April 23rd issue? It a nutshell, the article discussed the pains involved with switching over a facility’s paper medical record system to an electronic medical record system. The article referred to the transition phase as an ROI (Release-of-Information) Process.

Although the article was an interesting read, the outsourced medical transcription factoring specialists at PRN Funding wanted our MTSO audience and any other business owner of an outsourced healthcare company to be aware of the side bar article that accompanied the article, Outsourcing Can Help. It caught our attention, and for the convenience of our business owner readers, we’ve summarized the small article below:

A lot of hospitals think that transitioning to EHRs will reduce staffing needs around ROI–This assumption couldn’t be further from the truth. As a matter of fact, the staffing needs tend to increase in order to avoid falling behind while personnel adjust to new policies and procedures. Furthermore, there’s an underlying need to have specially-trained individuals to help train staff and assist with ROI implementation.

Steve Hynes, president of MRO Corp was quoted in the article: “Switching to EHRs “can be very resource intensive for the hospital and specifically for the HIM department to manage the changes while keeping up with day-to-day operations…Over a long period [resource needs] might fluctuate, but there will be a temporary bubble to get everyone up to speed during the conversion.” And that’s exactly where MRO Corp because outsourcing ROI is a way to lessen the labor-intensive burden.

We may be jumping the gun, but it sounds like outsourced ROI companies could be another good candidate for invoice factoring, as hospitals routinely take their time paying vendors.

Small Business Lending on the Rise in 2012

SmallBizTrends.com recently had some exciting news to share about small business lending–The site highlighted some key findings of Omega Performance’s 2012 Banking Trends Outlook Survey, such as:

  1. 19.8% of U.S. banks plan to ease their lending standards for consumer and commercial loans
  2. 73.5% of United States banks plan to do more commercial lending
  3. More than 78% of banks reported they will pursue small business lending in 2012
  4. 66% of U.S. banks think the economy will “improve slowly” for the remainder of 2012

Click here to read more on SmallBizTrends.com: Is Lending on The Up?

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