Small Business Funding Alternatives

Here’s a great article, written by an associate in the cash flow industry, I’d like to share here along with some comments following it ….

Factors and Asset Based Lenders Fill Bank Financing Void
The results are in and the numbers show what many of us were already seeing, factoring and asset based lending are on the increase.  Amazingly, factoring has experienced continued growth for the past 33 years in every year except 2001.Just take a quick look at these highlights from the 2008 Asset-Based Lending and Factoring Surveys recently released by the Commercial Finance Association in June 2009 to see where opportunity is knocking in the United States.Factoring Highlights

• Factoring experienced an annual volume of $136 billion in 2008 compared to $20.2 billion volume in 1976, the first year reported for the survey results.
• While the growth was a nominal .5% compared to 2007, it still reflects stable volume during volatile economic times.
• The major regional market for factoring continues to be the Northeast (47%) followed by the West (24%) and the Southeast (20%).  The Midwest and Southwest comprised just 5% and 4% respectively of market share.
• The textile/apparel industry prevails as the primary client base for large scale factoring companies while transportation and business services contributed to much of the small factor volume.
• Non-recourse factoring makes up 77% of transactions with the remainder consisting of full or partial recourse factoring.
• Notification factoring comprised 78% of the volume with non-notification contributing the other 22%.

Asset Based Lending (ABL) Highlights

• The Asset-based lending industry reached $590 billion in 2008, an 8.3% increase over the prior year.
• The regional market allocation for ABL was more consistent across the United States but was still led by the Northeast (27%).  It was followed by the Southeast (25%), the Midwest (20%), the West (16%), and the Southwest (12%).
• Just 12 states represented almost 65% of ABL outstanding loans.  Read more…
   

And yet I still get comments from professionals about the cost of factoring being 50 cents on the dollar. Unfortunately, it is misinformation such as this as well as the “too good to be true” belief that is really frustrating to cash flow professionals such as me. As with any new product (i.e. factoring) that becomes readily available the price is higher in the beginning but, over time, it drops. Such is, as is natural, the case with factoring. But 50 cents on the dollar it has never been! The fees in the cash flow industry just like others will bear what the market will bear and no more!

And that’s if these same professionals are even aware of the tools we cash flow consultants bring to the table with factoring being only one of many tools.  Unfortunately, I have found there is a sad lack of education for these professionals of the tools we work with.  One MBA student I spoke with, in her final semester of studies, had about two weeks in one semester regarding our funding tools.

So, anyway, I’ll get off my bandwagon but, just suffice it to say, that most of the cash flow consultants and the funders we work with are small business enterprises just like those we market to.  Thus, we, of all people, understand the cash flow dilemmas that small businesses suffer with as we, ourselves, have experienced them at one time or another as well!

Till next time, be safe.  Debra

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Not sure how many business owners have been turned on to “Meetup.com” yet but it’s a great tool for business as well as personal networking and meeting of people with similar interests.

I attended my business meetup yesterday with the Baton Rouge Business Networking Meetup Group and really enjoyed it.  It’s a very inexpensive and effective method of networking for people on a shoe-string budget — and fun.  This group was recently featured in the Baton Rouge Business Report too since this is definitely an idea that has reached it’s time!

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Don’t know about any others reading this blog but I love semi-precious gems and minerals and am a member of my local Gem & Mineral Society - we’re called Rockhounds, by the way! Anyway, thought I would do a little promoting of the Earth Sciences some here since this happens to be the week to focus on them as they are doing in the classroom above.

 I wasn’t able to go to the last dig we had at our gem & mineral club, but 20 or so members went and had a great time at the Hogg Mine in Georgia.

 Any other rockhounds out there?  Got any stories to share?

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