CFA Issues Statement to Fed’s Small Business Lending Conference

The Commercial Finance Association (CFA) issued the following statement to the Federal Reserve small business lending conference in regards to the importance of issuing funds to independent commercial finance companies:

“The Federal Reserve conference, [held on Monday, July 12] about increasing lending to small business is yet another example of political theater. Once again, our nation’s lawmakers have gathered to share vague ideas, point fingers and simply agree that the small business credit crunch continues.

“Disappointingly, no tangible solutions are being offered. The Commercial Finance Association continues to believe that providing support to independent commercial finance companies, a crucial source of capital for small businesses, is absolutely imperative. Independent commercial finance companies extended hundreds of billions of dollars to U.S. small businesses in 2009. Additionally, more than half of these lenders increased their credit commitments in 2009, during a time of severe economic distress, thereby enabling many U.S. businesses to survive. Our elected officials and our nation’s banks should remain committed to extending credit to independent finance companies. Doing so will set in motion a sequence of events that will allow these lenders in turn to provide additional funds to small businesses, allowing them to add jobs and make meaningful investments in their operations. This is a tangible, practical and needed step that will help fuel real economic recovery in America.”

How to Control Small Business Cash Flow

An informative article written by Max Newnham, entitled: Knuckle down on cash flow terms gives some practical advice for business owners who are struggling to keep a healthy cash flow.

For the benefit of our business owner readership, PRN Funding condensed the article down to it’s main points:

Too often, business owners focus primarily on sales and fail to administer and manage their companies appropriately. As a result, invoices oftentimes go out late, and there is rarely any follow-up on overdue invoices.

In order to prevent the above situation, small business owners should be upfront about payment terms and late-payment penalties before agreeing to take on new business.

Furthermore, companies should set credit limits for new accounts and monitor how much business is being done. If it jumps significantly, the payment terms should be re-visited and possibly re-negotiated.

Next, when it comes to collecting, small business owners will be more productive by making phone calls than sending out threatening letters or statements with stickers.

It’s comforting to know that out of all the suggested small business tactics for managing cash flow, PRN Funding is able to assist with each of these steps. Contact us today for more information on our invoice funding services.

Medical Transcription Funders at ACE10

Austin, TX-PRN Funding is exhibiting at the Association for Healthcare Documentation Integrity’s (AHDI) Annual Convention and Expo at the Hilton Austin August 4-7, 2010.

Owner of PRN Funding, Phil Cohen, and Account Manager, Ryan Elliott, will be available in booth 511 to speak to attendees about PRN Funding’s medical transcription accounts receivable factoring program.

MTSOs and medical transcriptionists are encouraged to stop by PRN Funding’s booth to get a sticker as part of the Wheel of Prizes game. After visiting with participating exhibitors and collecting stickers, attendees can turn in their completed cards for a chance to spin the Wheel of Prizes. In addition, convention attendees will judge exhibitors and their booths during the exhibit hall based on two categories: Most Friendly Booth Staff and Most Creative Booth.

With years of experience in the medical transcription industry, PRN Funding has a precise understanding of the unique challenges within medical transcription. PRN Funding offers financial resources to these companies by purchasing their accounts receivable–a process known as ‘factoring,’ which provides the cash needed to sustain and grow a healthcare business.

Cleveland Seeks Proposals from Medical Staffing Agencies

The medical staffing invoice factoring specialists at PRN Funding received a mis-directed letter last week that we thought might be interesting news to our local Ohio healthcare staffing agencies. For the sake of our Ohio staffing agency owners, we’ve posted the letter below:

Greetings:

The City of Cleveland, Department of Public Safety, Division of Correction is reviewing the viability of pursuing service contracts with outside vendors to provide certain inmate services. Your organization has been identified as a potential partner is such an endeavor. Enclosed you will find information in the form of a “Request for Proposal” highlighting required services and products.

Please review the Request, and, consider how your business could, or, could not become a provider. A pre-proposal meeting will be open on July 16, 2010, for all interested vendors; at that meeting, and and all questions regarding services in question will be welcome. The application deadline will be July 30, 2010. A final decision will be made some time afterwards – it may be that no vendor is chosen, and, that the City will continue with its in-house system.

We ask that you carefully consider the enclosed Request as a potential new business opportunity, and wish, your organization the best during this process.

Sincerely,

Joseph Stottner, Acting Commissioner

Walmart Does All…Even Small Business Loans

Sam’s Club, a division of Wal-Mart Stores, Inc. announced yesterday that it is testing an online program with Superior Financial Group to offer small businesses loans between $5000-$25,000 to its members. The decision to offer these small business loans came as a result of a November 2009 survey, in which nearly 15 percent of Sam’s Club’s business owners reported being denied a loan to run their operation.

According to the official press release, “the Sam’s Club small business loan pilot program is a first-of-its kind and will complement other offerings that cater to small business including low rate merchant credit card processing, convenient order-ahead programs and early shopping hours.”

Sam’s Club members who apply for a small business loan will receive $100 off the application fee, a 20 percent discount and a 7.5 APR, which is a 25 basis point discount. (NOTE: The Sam’s Club Membership fee is $35/year.)

PRN Funding’s Take:
It’s a good thing that Wal-Mart is trying to fill a business loan gap with their pilot program, however, the loans are backed by the Nation’s leading Small Business Administration (SBA) lender. Therefore, there will still be stringent lending criteria that a small business owner will need to meet in order to qualify. This is bad news for brand new businesses and companies who have less than three years of operation.

Still, there’s hope, as small business owners can test out accounts receivable factoring to help fill in the cash flow gaps. Even if a small business owner has been turned down by a traditional lender, accounts receivable factoring firms will be able to fund them.

Little is Known about Small Business Lending

A $30 billion plan to offer capital to small banks with incentives to loan it to small businesses just passed the House of Representatives on June 17, but no one really knows whether or not it will increase small business lending.

There’s an underlying problem when it comes to small business lending – lack of information.There’s no data available to discern why small business lending is down, nor is there any information available to determine what a proper fix might be.

The three most common hypotheses are as follows:

  1. Banks are unwilling to lend,
  2. Small businesses are not interested in borrowing, or
  3. Today’s small businesses don’t have good enough credit to borrow.

In order to help shed some light on the small business lending picture, the Federal Reserve Bank of Atlanta recently started a quarterly survey. In addition, regulators are starting to make banks report small business lending each quarter, rather than annually, and the Treasury is considering using data from credit bureaus as well.

For more information, read: What We Don’t Know About Small Business Lending.

Calling MTIA Members – Host Congressional Visits

According to MTIA’s blog, the medical transcription organization is “encouraging its members’ companies to continue efforts initiated during the Advocacy Summit in strengthening and building relationships with members of Congress in local and regional locations over the summer. These meetings, or constituent coffees, provide a rare opportunity to interact directly with elected officials about the industry as well as discuss the important role MTs and MTSOs play in the healthcare community. Meetings can be held in company offices or in client locations to share the work we do in contributing to patient care delivery.

The Dewey Square Group has created Guidelines for Hosting a Regional Congressional Meeting to assist you with scheduling a local visit with your members of Congress.

If you have any further questions or would like assistance in getting started, please contact Andrew Wolf at awolf@ahdionline.org or Miranda Youkhaneh at myoukhaneh@ahdionline.org.”

Healthcare Reform – 1099 Nightmare for Small Businesses

Last week, BusinessWeek published an article entitled: Health-Care Bill Surprise: 1099 Nightmare, and we thought the small business owners who read The Factoring Blog should be aware of its contents.

In essence, the article says: Small business owners should be aware of page 737 of the recently-approved healthcare reform bill, as it contains a three-paragraph provision, inserted by Democrats on the Senate Finance Committee to help offset the cost of the bill. In a nutshell, this insertion requires companies to report to the IRS payments of more than $600 a year to any vendor. The intent is noble: to capture $2 billion or more a year in taxes on income that currently goes unreported by contractors and small businesses.

Business advocates fear that the new rule will create a massive paperwork headache for small businesses because come 2012, the new rule will expand 1099-MISC reporting to include payments to companies, and for goods as well as services.

Read more here: Health-Care Bill Surprise: 1099 Nightmare.

Lingering Small Business Credit Crunch

Did anyone see the Wall Street Journal article: A Credit Crunch That Lingers earlier this week?

The reporter, Emily Maltby, wrote that even though the economy us “on the mend,” small business entrepreneurs are still struggling to land credit. She went on to discuss the myriad of explanations:

  1. Most of the government programs created to address the problem have been focusing primarily on Small Business Administration loans, which amount to just 10% of all small business lending.
  2. Some bankers claim that loan volumes are dwindling because the demand is down. These bankers say that business owners aren’t willing to take on more debt during these difficult times.
  3. Other bankers blame federal regulators for insisting that banks to be more prudent with lending.

Entrepreneurs are stuck in the middle of the finger-pointing debate with limited or no access to cash. Many of these small business owners are being forced to curtail their growth and hiring, which in turn, is slowing the nation’s recovery and keeping unemployment high.

The article highlighted Julio Valencia’s business, JTI Landing Systems because his somewhat new business has been turned down four times by larger banks. Exhausting his personal cash and retirement savings, Mr. Valencia struggles with cash flow, though not because of poor money management. Rather, his cash flow problems stem from slower-paying customers.

PRN Funding’s Take: Mr. Valencia and other small business owners who are struggling with poor cash flow should look into accounts receivable factoring as a lucrative alternative financing option.

2010 Small Business Credit Problems

The Gallup Organization conducted a survey in November-December 2009 for The National Federation of Independent Business Research Foundation (NFIB) of 751 small business employers (employing people 1-250) to help better understand the small business credit crisis.

Below are some of the survey’s key findings (as reported by The Secured Lender:

    1. 55% of small businesses attempted to borrow in 2009.
    2. 23% of those businesses were not able to have all of their credit needs met (which dropped significantly from earlier in the 2000s when up to 90% of businesses had their credit needs met).
    3. The financial institution extending a line of credit changed the terms/conditions of the line(s) during 2009 for 29% of small businesses.
    4. The most frequent “change” was increased interest rates for small businesses.
    5. The best predictors of success in meeting the credit needs were higher credit scores, customers of banks with less than $100 billion in assets, more properties collateralized for business purposes and fewer second mortgages held.
    6. Most common planned purpose of credit rejected was to fill cash flow needs. (SIDE NOTE: Payroll Funding and Invoice Factoring companies are used every day to fill cash flow needs.)