Alternative Financing for Small Businesses
One such source is an account receivables factoring company. A factoring company is a financial lender that can show your small business how to leverage your account receivables into cash. Lets face it every small business has cash flow issues, and an account receivables factoring company can be a good source to turn to when times are tough. For example if you need to make payroll, expand, invest in new equipment or raise capital quickly for any purpose, you can do so based on the value of your uncollected receivables. Basically factoring involves a transaction between your business and the account receivables factoring company in which you sell your open invoices, generating immediate income instead of needing to wait for the net term of that invoice. In most cases an accounts receivables factoring company can wire funds to your business in less then 24 hours once purchase of the invoice has been made. Besides the fast availability of funds factoring has the other advantages of no interest, loan payments, or turning over any equity in your company. Account receivables factoring is simply a process of converting your invoices into cash.
You may not have heard ever heard of an account receivables factoring company, but the concept of factoring is not new, in fact it dates back centuries, to the days of Hammurabi. Hammurabi was the king of Mesopotamia, and ancient culture that has been called the cradle of civilization. In addition to many other things, the Mesopotamians first developed writing, put structure into business code and government regulation, and came up with the concept of factoring. So what exactly does an accounts receivables factoring company do? And how much will you get? Well that all depends on several things, your company’s credit history, the credit history of your clients and mostly volume. As in any business transaction the more invoices you are willing to sell to the factoring company the better deal you can anticipate making. But generally speaking the advanced or “up-front” payment you can expect to get from the account receivables factoring company is usually 70 – 90% of the total value of the receivables. After charging a small fee (2% and up) the remaining balance is released upon full receipt of payment for all the receivables/invoices.
There are other avenues of so called “Cash Flow Financing, and one of the best places to find out more about them is The American Cash Flow Corporation (ACFC). ACFC can be a great resource when you need alternative or “creative” financing. The American Cash Flow Corporation specializes in cash flow sales. The idea of “cash flow funding” is to convert the payments you receive over a period of time into a lump sum of cash today. These income streams could be in the form of annuities, leases, insurance benefits paid in installments, retirement accounts, royalties, lottery winnings, tax lien certificates, and many others. The American Cash Flow Corporation is the industry leader in cash flow financing. ACFC is a single source for information, education and training as it relates to the cash flow industry. American Cash Flow Corporation offers many valuable services form finding a reputable and licensed cash flow professional in your area, to seminars and training sessions. Established in 1994 the American Cash Flow Corporation is an organization you should consider contacting before you make any decisions regarding the buying or selling of cash flow assets. The American Cash Flow Corporation can also show you how you can enter this lucrative field of cash flow financing. Through programs and their affiliated organizations you can train to become a Certified Cash Flow Consultant. American Cash Flow Corporation offers comprehensive training on a wide variety of cash flows and income streams. Students receive a firm foundation on which to build a successful business. Many areas in the cash flow industry are ideally suited to a home-based business. Once certification is obtained American Cash Flow Corporation offers continued programs of support that can help ensure your success.
Small businesses especially those that are woman or minority owned should consider Business Enterprise Financing. Business Enterprise Financing refers to the number of programs that are available to small enterprises, small business and or micro-enterprises. There are many government sponsored grant and loan programs and other sources of business enterprise financing available to start or expand a small business or enterprise. Many of these programs are specifically designed to help woman and or minorities obtain business enterprise financing. Two good resources to start your search for business enterprise financing are the Association for Enterprise Opportunity and the Corporation for Enterprise Development.
Other sources for business enterprise financing can be found by looking into these government resources:
�· The Commerce Business Daily which lists government-awarded contracts, some of which are to be subcontracted to minority firms
�· The U.S. Department of Housing and Urban Development is always on the lookout for minority-owned businesses. Entrepreneurs and those seeing business enterprise financing who qualify and are subcontracting to a majority firm that is revitalizing an urban neighborhood under the Community Development Block Grant program can also use the Section 108 Loan Guarantee Program. These loans may be used for construction costs and equipment purchases.
And or course there is the SBA (Small Business Administration). SBA programs include the the 7(a) loan guarantee program. In most cases, up to 75% of a small business loan, or up to $75,000, is guaranteed by the government to a bank or other commercial lender. Also The SBA’s LowDoc and SBAExpress loans are available for those firms that need cash fast and have little time for documentation. Some of these loans can be turned around in as little as 36 hours.
