"Commercial credit tightening at banks - here is a solution"
Try an invoice factoring company that provides business financing through the purchase of business accounts receivables. A typical client of this solution would be:
1. Early or growth stage but must have incoming revenues (invoices). 2. Not necessarily profitable yet, can have negative net worth. 3. Very steep growth curve (dealing with larger than usual contracts or orders). Inconsistent income - high then low. 4. A service or product based company. 5. B2B only - no retail/consumer. 6. One who needs to move quickly (can start to fund in 7-10 days). 7. We base our decision on the credit of the client's "customers", not the client's (prospect) own financials. 8. Only need a current A/R aging report to determine whether the deal is fundable.
Check about bringing working capital into your business. We have been funding nationwide for over a decade.
#3. "RE: Commercial credit tightening at banks - here is a solution" In response to Reply # 0
This is "a" solution but it certainly isn't a good solution. It had it's origins in the clothing business where the purchases are made several seasons ahead of when the goods will be sold. It's been useful in that environment because of the high margins in retail clothing. Now it's very similar to the sub-prime mortgage market. It thrives on new businesses that typically struggle with cashflow, but the HIGH cost of factoring is never considered. Not only that, but factoring tells your customers that you have a financially weak business, and if that customer fails to pay, they get to charge you back for it. Typically, they'll only take your cream accounts...those you get paid timely from anyway so why factor them. I've seen factoring rates as high as 14%/month. I don't care what business you're in, taking 14% out of your profit margin is a killer.
I've tried to find a positive to factoring for the business owner and so far I haven't been able to find anything. If you're business is already suffering, it's only going to suffer more from the high cost of factoring.
#4. "RE: Commercial credit tightening at banks - here is a solution" In response to Reply # 3
I beg to differ with your opinions. The factoring industry has come a long way from the garment industry period you describe. Comparing it to the subprime mortgage racket is a red herring because they literally have nothing to do with each other. There are no similarities especially given that the rates on factoring do not automatically increase like an ARM, which gave rise to the mess (making a mortgage payment unaffordable.)
Common state usury laws make your claim of 14% monthly discount rates highly unlikely.
Having provided clients with factoring services for two decades I can speak to real examples of businesses utilizing it properly as a bridge to institutional commercial financing and moving on to greater success.