Tag Archives: small business

Small Business Confidence Wanes

Posted on by
Reply

(Reuters) – “Small business confidence fell to a two-year low in the third quarter on increased economic uncertainty that could keep growth on a slow path and unemployment elevated through 2012. Vistage International said on Tuesday its confidence index dropped to 83.5 from a reading of 92.9 in the second quarter. The index is compiled from a survey of more than 1,700 small business chief executives.”

Once again we see small business confidence falling. In prior posts, we commented on the fact that this recovery will be slow and will go through periods of two steps forward and one back. It appears that currently it is one back based on the small business confidence indicators for the past quarter.

IFG experienced an increase in business through the summer months with a large increase in new clients searching for funding sources. These new clients sold receivables to generate cash for expanding business. Using IFG’s invoice factoring solution helped these businesses continue to grow during a difficult recovery.

Invoice factoring allows businesses to obtain cash quickly and easily. Once a client is setup, repeat fundings can occur in as little as 2-6 hours providing cash when needed. It is a “use it as you need it” service with no contract and no additional fees.

Jan J. Cunningham
The Interface Financial Group

Money for Small Business

Posted on by
Reply

The government is providing funds to banks around the country to be used for small businesses. It is difficult to ascertain what the selection process is. Not all banks are receiving these funds and the amount provided ranges considerably from one bank to another.

What we do know is that many small businesses will never see this money. The funds will be loans and lines of credit for small businesses that have excellent credit. The banks will not be lending to the majority of small businesses.

There are options available though through various types of alternative financing for those businesses that will not qualify for traditional lending. Invoice factoring is one option that provides for fast and efficient receipt of funds based on a companies receivables. This service is available to any B2B business that has current receivables and needs working capital to help with cash flow restraints caused by growth in the business.

While the banks are not going to be lending to most small businesses it does appear that funds are getting to select banks and in the future may become available to less qualified companies.

Two Steps Forward and One Back

Posted on by
Reply

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, gained 13 percent in July from a year earlier, PayNet said on Wednesday. That followed a revised 22 percent gain in June, and a 27 percent gain in May.

As measured from a month earlier, the index declined 7 percent, and is now just above the level reached in April. “It’s two steps forward, one step back,” Phelan said in an interview. “It’s really an indication of the slow growth of activity.”

As we have seen recently, business lending is improving for many businesses but for some like construction, new businesses or business with no credit it will be impossible to obtain bank financing. Invoice factoring provides a workable solution for business that are unable to qualify for traditional financing. The service is fast and efficient and can get capital into the hands of the business owner for use in helping to grow the business.

Jan J. Cunningham
The Interface Financial Group

Small Business and the Debt Problem

Posted on by
Reply

The US news is filled with discussion about raising of the debt ceiling, lowering credit ratings and how to lower the debt. There is certainly more concern about raising the debt ceiling in order to prevent a US default. While the debt ceiling is a legitimate concern, not addressing the amount of debt and continuing growth of debt will in itself cause the ratings agencies to lower the US credit ratings. How will this affect small business?

It is difficult for most small businesses to obtain bank credit today. It will certainly become more difficult in the future if the current debt problems are not resolved or, if credit is granted, the interest rates will increase and may increase substantially.

Invoice factoring is a solution. Receivables can be sold providing immediate cash to the business for day to day operations and to support growth. Factoring receivables is an alternative approach for funding a business that has existed for many years. It is a viable, low cost means of obtaining cash quickly and efficiently.

Jan J. Cunningham
The Interface Financial Group

Small Business Optimism

Posted on by
Reply

Small business optimism in the US is stagnant according to the National Federation of Small Business June Survey. It is currently higher than 2009 and 2010 but lower than the beginning of the year.

According to the survey the number one issue is, “The sales outlook for small firms continues to look grim as expectations have declined for 4 months in a row and “poor sales” continues to be the #1 problem for owners in operating their business.    The net percent of owners expecting higher real sales fell 3 points to a net 0 percent of all owners (seasonally adjusted), 13 points below January’s reading. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past 3 months improved 2 percentage points, rising to a net negative 7 percent, more firms with sales trending down than up.”

A review of the June survey is available by clicking on the link June 2011 Small Business Survey.

While many believe that the numbers will improve during the fall months, others are not quite so sure. Some businesses are seeing growth albeit slow. For those businesses the require additional capital to fund the growth, invoice factoring provides and option when money is needed quickly and painlessly.

Jan J. Cunningham

The Interface Financial Group

Subordination Agreements

Posted on by
Reply

 

How & When to Use the 2 Types of Subordination Agreements

You have received signed documentation from your client, the completed Notification from their customer just popped up in your email, you’re almost done! All you have to do is verify their UCC filings and you will be ready to go…Uh Oh…There is a UCC certificate that lists all of their assets as pledged to…Oh, no, not that, not THE BANK!

It is getting increasingly rare to fund clients without a Subordination Agreement being signed. In most cases, your client will have a loan or line of credit with their bank or financial institution. Which in turn means they will have a UCC filed pledging their assets, including receivables. A Subordination agreement will allow you to fund your client while they retain their relationship with their financial institution.

There are 2 types of Subordination Agreements: 1. The Standard Subordination Agreement and 2. The Revolving Subordination Agreement*. In most instances, you should use the Revolving Subordination Agreement or the RSA. The RSA is preferable because it allows you to finance your client on a continual basis whenever he/she needs financing. The RSA will usually work well when dealing with a supplier, an alternative financial institution or a community bank.

Recently, more financial institutions have been willing to sign the RSA. In these cases, you may use the Standard Subordination Agreement or SSA with the Offer to Sell attached. The SSA only allows you to finance the specific invoices listed in the Offer to Sell and cannot be used for future transactions. This means that every time your client needs funding you will need to get a new Standard Subordination signed by the bank or financial institution.

In either case, when performing invoice factoring transaction, you need to have a conversation with your client and explain the Subordination Agreement. Meeting jointly with the bank or a conference call can make it easier to obtain subordination.  A good rule of thumb is to offer the Revolving Subordination Agreement first. The Standard Subordination Agreement should ONLY be proposed if the lender and/or supplier refuses to sign the RSA.

Sabeen Ahmed

The Interface Financial Group

 

Initial Contact

Posted on by
4

 

The client needs to improve cash flow and wants it to happen immediately.IFG wants to help, but must collect some basic information prior to even suggesting the product that may be appropriate for the client.

The IFG representative will ask for general information about the clients business: location, name of company and caller, position, what does the company do, what are the names of a few major customers, approximate monthly revenue, payment terms offered, what is the money needed for, approximate total A/R and A/P, if they have loans or lines of credit and what is the security for those.

This basic data collection should be enough for the IFG representative to suggest whether invoice factoring is appropriate or if standard factoring would be better.The data may also suggest that IFG is not the solution to the client’s cash flow issue.Whatever the outcome of this first contact, at the least, rapport will have been established.

If it seems as though IFG can be a solution then the client will be requested to submit a simple one page application and some business financial information (Income Statement, Balance Sheet, A/R and A/P Summaries). The IFG representative will follow-up within hours to see if the client needs any help or has other issues.Once the application and financial information is received by IFG, the client’s file enters the Due Diligence process (due diligence refers to the care a reasonable person should take before entering in an agreement or transaction with another party). Usually IFG will respond to a client within 24 hours once the requested documentation is received.

 

Lorin M. Spak

 

The Interface Financial Group

 

Surviving Small Businesses Are Moving Forward

Posted on by
3

We are all aware that a significant number of both large and small businesses have struggled to survive during the economic downturn. Small businesses do not have the resources that larger companies have and have been particularly hard hit. Many have closed and the owners have walked away, others have either changed their model, changed the product/service mix or have added products that others would purchase in order to survive.

A recession tends to take out businesses that are marginal. An example of this is two restaurants in the same area. One has quality food, great service, reasonable prices and is well managed. The other restaurant serves a lower quality meal, the service is less than desirable and the prices are the same. During a recession, the second restaurant is not as likely to make it through the rough times. This is true for all industries and businesses. This “cleansing” opens the door for new businesses and new competition as the economy begins to improve.

This creates a significant opportunity for The Interface Financial Group. The surviving businesses will start growing and will need IFG invoice factoring services. New businesses are starting and because the business is new and probably has limited assets, as the owners begin to grow the business, the businesses will require funding that can not be obtained through traditional financing (banks, credit unions and other asset based lenders).

As the economy slowly continues to improve IFG stands ready to help existing and new businesses.

Jan J. Cunningham

The Interface Financial Group

Small Business and the IRS

Posted on by
12

The Wall Street Journal recently reported the following, “The Internal Revenue Service, moving aggressively to collect more taxes from small businesses, is telling companies being audited to turn over exact copies of the electronic records kept in their business-software programs, according to a letter from an agency official to the American Institute of CPAs.”

It is always important to keep good financial records in order to understand how your business is doing but it looks like it may become much more important if the IRS is requesting files from automated accounting software. Banks, factoring companies and now the IRS will want to see financial statements. Well kept accounts make it easier to provide the requested information. IFG’s invoice factoring service will always require financial statements as a part of the initial requests for information as will other financial institutions.

Maintaining good financial records is important and can save you considerable time when applying for money or working with the IRS.

Jan J. Cunningham

The Interface Financial Group

US Small Business and the Economy

Posted on by
11

A recent quote in a Stansberry publication stated, “We own a small [business]… 15 employees. We cannot raise prices because of market pricing competition. Our cost of goods have gone up… rent etc. we are being squeezed on profits which have been [negative] for 2 years. Small business which is the largest employer in the country is having a difficult time adjusting.”

This is not unfamiliar, many companies are facing the same issues and continue to work hard to overcome the problems. The economy as it relates to small business continues to be a mixed bag.  The April Discover Small Business Watch states that, “April results show a surge in the number of small business owners who say economic conditions for their own businesses are getting better: 30 percent of them say the climate will improve in the next six months, compared to only 20 percent in March. Of the remaining respondents; 48 percent say the climate is getting worse, but that number is down from 53 percent in March.”

There may be some downward revisions in the next survey as several economic indicators are showing a possible slow down in economic growth which could have a big impact on small businesses. Those businesses that are growing can benefit from invoice factoring to assist with cash flow. Funds can be obtained in 24 or 48 hours when required and there are no contracts, it is a “use it and you need it” service.

Jan J. Cunningham

The Interface Financial Group