Bank Lending Down for Small Businesses in the UK

The trend of small businesses turning away from bank lending is not limited to the US- it’s worldwide. According to a recent survey, UK small-to-medium enterprises (SMEs) are at a record low for bank funding, just like their American counterparts. These results most likely come from a combination of the poor European business climate and the assumption that banks will not approve loan requests anyway. Success rates for small businesses trying to secure loans stand at about 42%. Banks in the UK were also rated low in communicating other sources of funding to denied applicants.

This survey helped show that banks are a tough source of financing for SMEs all over the world. Applications are time intensive, credit checks are necessary, and the approval process takes weeks. After approval, which is not likely in the first place, disbursement of funds can take anywhere from 30-90 days. For some small businesses in certain industries, waiting that long for cash is not feasible. Alternative financing, including factoring, is becoming more mainstream and popular as banks continue to turn away SMEs.

For the full article, see Small businesses turn their backs on banks

Local Economies Matter to Small Business

Small businesses depend on small economies. A new 2012 Bank of America survey highlights the importance of local economies to small businesses; for the majority of respondents (63%), their customers come primarily from the local community.  This is one reason that small businesses remain optimistic about the future even though national economy is struggling. This makes sense, as 75% of respondents said the local economy plays a significant role in their business as opposed to 59% citing the national economy.  Here are some other highlights from the study:

  • 54% of respondents anticipate their revenue will increase over the next 12 months
  • 31% said they planned on hiring more employees, whole 56% anticipate their staffing needs will remain consistent
  • 40% say that customer loyalty comes “because they are local.”
  • 70% of SBOs believe they have enough capital to run their business
  • 78% do not intend to apply for a business loan
  • Only 29% described themselves as “very savvy” when it comes to financial matters

For the full article, see Why a Local Economy’s Strength is Critical to Small Business Success

Knowing the Language of Factoring Helps Close Deals

According to Fred Leder from Xynergy Healthcare Capital LLC, factoring brokers can close more deals if they dress professionally and are knowledgeable about factoring. Clients are going to assume that the broker is a banker, and it is up to the broker to dress and act the part. Leder offers several tips for meeting with new clients:

  • Bring a “checklist” to see if the client qualifies for factoring and have them fill it out before you begin.
  • Speak industry lingo to improve credibility. For instance, always refer to factoring as “selling” rather than loaning, refer to interest rates as the discount fee, etc.
  • Accurately describe the process of factoring.

Credibility is key to closing factoring deals, and credibility is all about perception. Factoring is a relatively unknown and misunderstood industry- the average consumer or company might have trouble saying exactly what the process is. A factoring broker may be in charge of factoring invoices personally, but they need to know exactly how it is done in order to communicate effectively with a client. This includes learning the language of factoring, and being a fluent speaker.

For the full original post, see Learning the Language of Factoring

Small Businesses Unsure How Affordable Care Act Impacts Them

According to eHealth’s Fall 2012 Small Employer Benefits Survey, small businesses are confused when it comes to the impact of health care reform. In her article Health Care Reform: Myths and Realities, author Maria Valdez Haubrich lays out the facts for small business owners unsure about where they stand when it comes to providing insurance to employees.

  • Employers with 50 or fewer full-time employees are not required to buy health insurance for them.
  • Employers with 50 or fewer full-time employees don’t face any tax penalties for not providing health insurance.
  • Those with 51-199 face $2,000 for every employee that gets insurance through an exchange, except for the first 20 who do so.
  • Health insurance exchanges are to be created in every state by 2014, which will allow employees to buy subsidized insurance even with a pre-existing condition.

So what does this mean for small businesses? It means that for the smallest firms, health care reform really won’t have an impact at all on their bottom line. Medium-sized companies, however, will be subject to the mandate and might face higher costs of doing business, which could lead to them looking for sources of financing and cash flow such as factoring.

Credit Card Financing Risky for Start-Ups

For modern small businesses, plastic is a way of life– over 80 percent of small businesses use credit cards to finance their companies. However, there are several misconceptions about small business credit cards that a recent Inc.com article clears up, including the following:

  • Business credit cards do not shield owners from personal liability
  • An owner’s personal credit standing is key to landing a credit card
  • Interest rates on business credit cards can rise at any point
  • For start-ups, even $1,000 in debt raises the probability of shutdown by 2.2 percent

    Start-ups especially depend on credit cards, because they are easier to come by than a business loan or an investor. It is very easy to become quickly overburdened by interest and vulnerable to economic shifts.

    Small business startups might want to consider other sources of financing before turning to credit cards. Detailed descriptions of other financing options can be seen in a previous blog post, Alternative to Bank Loans. In a nutshell, they include asset-based lending, lease-backs, and cash advances.

    See the original article: The Credit Card Mistake That Can Destroy Your Company.

    Small Business Saturday is Saturday Nov. 24th

    The U.S. Small Business Administration recently announced that this Saturday, November 24th, is “Small Business Saturday.” According to the SBA website, Small Business Saturday is a day dedicated to small businesses where they encourage shoppers to celebrate and support local companies by shopping there.

    Small business owners can get involved by getting free Small Business Saturday marketing materials from the SBA website, joining the Facebook group and using their own social media to promote it, and joining the Twitter discussion with the hashtag #SmallBizSat.

    For shoppers, here is the link to find out which of your local businesses are participating: Shop Small

    Small business is the backbone of our society, so get out and show support of your local industries by shopping small this Saturday, November 24th.

    Bibby Financial Services to Offer New Non-Notification Factoring Service

    In the most recent edition of the International Factoring Association newsletter, Bibby Financial Services announced that they have added non-notification factoring as part of their repertoire.

    Non-notification factoring functions the same as traditional receivables funding, but all services by the factoring company remain in the client’s name.

    This is a good option for small-to-medium sized businesses that prefer to appear to be the sole contact for customers, but also want the advantages of factoring such as improved cash flow and not having to handle collections. Says Leigh Lones, CEO Americas: “Some companies want a seamless representation to their customers regardless of who is doing the work.” For the full article, click here: Bibby Financial Services Launches Non-Notification Factoring Product.

    Bailouts Didn’t Help Small Business Lending

    It appears that the government bailouts to major banks in the 2008-09 financial crisis did little to help small business lending- in fact, the opposite is true. According to a Bloomberg Businessweek article entitled “TARP Verdict: Bailouts Failed to Help Small Business,” the banks that took bailout money cut lending to small businesses even more than other banks (21% drop compared to 14% elsewhere). Commercial and industrial loans were the hardest hit.

    So what’s the takeaway here? Banks still aren’t lending money to small businesses. Small companies that meet the requirements for bank loans are few and far between, and approval is unlikely. In order to stay afloat, small businesses must turn elsewhere for financing. Several financing options are discussed in the “Alternatives to Bank Loans” blog post below. For the full Bloomberg article, click here.

    Karaoke Company Secures $5M in Receivable Financing

    In late October of this year, The Singing Machine Company entered into a factoring agreement with Crestmark Bank. The deal provides the thirty year old karaoke machine company with up to $5 million in accounts receivable financing. The deal went down as The Singing Machine Co. enters into the peak holiday season. According to CFO Lionel Marquis, the deal represents a “big milestone in our plans for the future” and CEO Gary Atkinson says having the agreement in place will provide flexibility and strengthen relationships both at home and abroad.

    The Singing Machine Co. is an example of the type of business that factoring helps most- a highly seasonal business that experiences uneven cash flow during off seasons. Their deal with Crestmark will allow them to expand overseas and tap into new markets, which encourages growth and increased profitability. Factoring their accounts receivable was a smart move for this karaoke company, one which will hopefully allow them to reach record highs- almost as high as the notes their customers fail to hit.

    For the full article, follow this link: The Singing Machine Company inks 5 mln in accounts receivable financing.

    PRN Funding Exhibiting at Private Duty Conference

    Las Vegas, NV- For the fourth year in a row, PRN Funding, LLC will be exhibiting at the 15th Annual Private Duty National Conference and Expo. The event is taking place from November 14-16th at the Monte Carlo in Las Vegas, and will feature the home care industry’s best and brightest providing tips and solutions for making the best business decisions.

    Account Manager Ryan Elliot and Marketing Associate Stephanie Chmielecki will be in booth #204 offering information on PRN’s invoice specialty factoring services, which includes factoring for home health care agencies.

    Stephanie and Ryan will also be holding daily casino chip giveaways. Visitors of booth #204 will be entered into drawings taking place on 14th, 15th, and 16th at various times. Contest winners will receive casino chips, get their picture taken, and receive free publicity on PRN’s social media and blogging sites. If you are attending the conference, be sure to stop by!

    ###

    With years of experience in the healthcare industry, PRN Funding has a precise understanding of the unique challenges within the private duty and homecare industry.  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.

    Older Posts
    Newer Posts