Working Capital Is Available for Small Businesses

Working capital is available for small businesses that know where to find it.. The current economic crisis has severely impacted small businesses with no end in sight. Traditional bank loans have basically dried up leaving them with no place to turn.  Many small businesses still think that the traditional bank loan is their only source of capital.  They are wrong.  Alternative financing providers are providing working capital to small businesses every day.

 

ACD Financial Services (www.acdfinancial.com) provides invoice factoring and alternative financing to small businesses.  We are direct funders and our principals are able to make decisions with very little paperwork.  We understand small business and don’t rely on traditional credit scoring models to determine if a small business is worthy of financing.

 

CIT's Bankrupty Filing Seems Inevitable

Unless a white knight arrives, CIT's bankruptcy filing is inevitable. Small businesses affected by CIT should seek alternative financing to ensure their survival. Getting a business bank loan is literally impossible in the current environment and it takes too long. If your company is starving for cash, consider invoice factoring. The application process is short - most factors have a 1 to 2 page application and the approval process is usually a few days vs. bank loans which can be 30 to 45 days or more. Contact ACD Financial Services (http://www.acdfinancial.com/) if you need cash now to keep your business operating.

from Inc.com

CIT Group, the nation's largest commercial lender that provides loans to roughly a million small and mid-size businesses, is facing the possibility of failure after being denied a second round of government bailout money. Last week, CIT received the bad news that the Federal Deposit Insurance Corporation would not provide the company some relief by granting access to its debt guarantee program.
"We have a comprehensive and aggressive strategy to restore stability to the financial system," the Treasury said in a statement. "Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies." Last Wednesday, CIT issued a brief statement announcing that there was "no appreciable likelihood of additional government support being provided over the near term."
For small businesses with loans from CIT this could spell disaster, but analysts don't suspect the ripple effect will be big enough to warrant government intervention. Some customers began drawing on their credit lines last week, adding to an already mounting pressure onto the endangered company. Dr. Kim Jones of the Stoney Brook Veterinary Hospital in Lebanon, N.H., took out a $1.3 million loan from CIT in June 2008. "I don't know what it will do to me," she says, "they have to do something, the money has been spent, the money is done."
Unless a buyer quickly surfaces, the century-old lender could be heading for bankruptcy, despite the $2.33 billion taxpayer-financed bailout they received last December. "Earlier in the year, when the other big banks were having trouble, I asked my contact person if I should be concerned," Jones says, "and she replied that CIT had plenty of liquidity. Now I don't know."

CIT's Woes Prompt Surge In Activity At Receivables Exchange

ACD Financial Services is a member of The Receivables Exchange which was the subject of a very favorable article in the Wall Street Journal. Contact us at www.ACDFinancial.com or 678-565-9870 to learn more about invoice factoring and The Receivables Exchange.

ACD Financial Services Alternative Financing for Small Business ACDFinancial.com 678-565-9870

Wall Street Journal

By Jacob Bunge

Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--The turmoil surrounding finance giant CIT Group Inc. (CIT) is driving a surge in new business for a New Orleans-based company that runs a market in receivables.

The Receivables Exchange, which lets small- and mid-sized companies auction their accounts receivable to buyers that include hedge funds and commercial banks, on Wednesday recorded its busiest day ever and is fielding a flood of calls from businesses searching for financing alternatives.

"These people want to do their own underwriting and do their own credit determination," said Justin Brownhill, co-founder and chief executive of The Receivables Exchange, or TRE.

Events this week have shown that "they can't rely on others like CIT to do it," Brownhill said.

New York-based CIT, among the biggest U.S. lenders to small and mid-sized businesses, disclosed this week that it could face bankruptcy and won't be able to get help from the U.S. government.

The company is among the biggest names in the factoring marketplace, a $125 billion sector that functions as a middleman for short-term financing - paying vendors for goods up front and collecting full payment from retailers later.

Factors extend credit to many businesses that don't have the capitalization or credit rating to do business with traditional lenders.

CIT did $42.2 billion in factoring business last year; faced with the possible failure of a major credit provider, small and mid-sized businesses are now scrambling for short-term financing alternatives in an already tight credit market.

The Receivables Exchange, which opened for business in January, is positioning itself as a new option.

"When you think about somebody like CIT, they're a single point of failure, and we have a market-based solution that brings all these sources of funding together at an auction," said Brownhill.

The company's electronic market model, which resembles that of eBay Inc. (EBAY), lets businesses such as vendors sell their short-term debt at auction and generate cash quickly, while buyers earn a profit when the debt is paid back by retailers or others.

Receivable sellers at TRE include textiles, media, manufacturing and technology companies. Hedge funds represent about half the buyers, along with factoring companies, commercial banks and other participants.

Competition among receivables buyers has driven price discovery in the receivables market, Brownhill said, helping businesses get a better lending rate than they would by going straight to factors such as CIT, Wells Fargo & Co. (WFC) or GE Capital Corp., a unit of General Electric Co. (GE).

TRE's average rate ranges between 1.5% and 2%, with factors generally charging a fee of between 2% and 7%.

From January to June, TRE saw a tenfold rise in sales of receivables, Brownhill said. With nearly 1,000 auctions completed to date, the company has facilitated about $65 million in loans this year.

TRE's growth comes as CIT, last year the top lender under a U.S. Small Business Administration program with $770 million in loans, has scaled back lending activity.

CIT made less than $60 million in loans between October 2008 and May 2009, according to data from the Small Business Administration.

Brownhill said TRE's participants represent more than $20 billion of deployable capital available to finance small businesses.

"As an organization, we aren't dependent on lines of credit and we're not relying on the capital markets, which have dried up generally in this credit crisis," Brownhill said.

CIT’s Troubles Are Small Business’ Troubles

The troubles at CIT will have a big impact on America's small businesses. Below is an article about CIT's troubles. CIT is an excellent example of why small businesses should have multiple funding sources such as alternative financing providers. Invoice factoring is an alternative source that small businesses should consider. By selling your invoices to a factor like ACD Financial Services, a small business can get immediate cash instead of waiting 30, 60, or 90 days to get paid.

July 13, 2009, 8:02 pm

CIT's Troubles Are Small Business' Troubles

By Robb Mandelbaum

The Agenda

The liquidity problems at CIT Group are certain to mean more bad news for small business. Late Sunday night, CIT acknowledged that it was "in active discussions with its principal regulators on a series of measures to improve the company's near-term liquidity position." CIT said it had retained a major New York law firm that specializes in bankruptcy filings but would not comment on the specifics of the assignment.

CIT is a diversified financier; among other lines of business, its commercial aircraft and railroad freight car fleets are among the largest in the United States. But of interest here is its role as a major lender to small- and medium-sized businesses. According to the most recent annual report filed with the Securities and Exchange Commission, CIT's lending to these firms totaled $21.1 billion in assets at the end of 2008, making this corporate financing segment the company's largest. (A separate division that provides trade financing to retailers reported $6 billion in assets.)

Moreover, CIT is among the largest lenders in the Small Business Administration's flagship 7(a) loan program. From 2000 to 2008, in fact, it was the single largest 7(a) lender, as measured by total dollars lent — in 2008, for instance, CIT lent 6 percent of all 7(a) dollars. However, CIT's S.B.A. lending has plummeted in 2009. In the first nine months of the fiscal year, the lender had made only $65 million worth of 7(a) loans; its share had fallen to just 1 percent of the total.

CIT had an unusual method for financing 25-year loans, according to Bob Coleman, an industry analyst who publishes the Coleman Report. It would sell the S.B.A.-guaranteed portion, or 75 percent of the loan, on the secondary market, and the proceeds would finance much of the company's new loans. To finance the other 25 percent, CIT would borrow short-term money and refinance it every three months. "They had a very good credit rating, so they could borrow at low rates in the commercial 90-day paper market." But when credit markets, including both for short-term notes and pools of S.B.A.-guaranteed loans, froze last fall, CIT couldn't fund new loans.

Mr. Coleman does not believe these problems figure greatly in CIT's bigger liquidity problems. In S.B.A. lending circles, CIT is regarded as having a strong portfolio of loans. "You cannot be the No. 1 lender for 10 years in a row and have a sloppy portfolio," he says. "They weren't doing some of the crazy things that other lenders would do." Though CIT's corporate financing segment lost $167 million in 2008, it was hardly the company's worst performer: CIT Group reported a total net loss of $633 million.

Other banks could enter the small business market, but so far few have. In fact, big players here are retrenching. In March, Bank of America's chairman, Kenneth Lewis, called his institution's small business portfolio a disaster; in the first nine months of 2009, Bank of America was the 85th biggest 7(a) lender by volume, down from fifth place in 2006. Then in June, Advanta, which billed itself as a leading credit card issuer to small businesses, closed its customers' accounts to new charges. With nearly one million accounts, Advanta apparently reached nearly 5 percent of all small companies.

Reported efforts by the Obama administration to bolster the 7(a) loan program will become even more urgent if one of the 7(a)'s biggest participants becomes the latest casualty of the present economic troubles.

Invoice Factoring Provides Needed Cash

Invoice factoring for small businesses can help provide needed cash every month to cover monthly bills. Accounts receivable financing for small business has been around for more than 4,000 years. Factoring is an extremely fast way to turn your receivables into cash so that you don't have to wait 30, 60, or sometimes even 90 days for invoices to be paid.

 

SBA Patriot Express Business Loan - SBAPatriotLoan.com

The Small Business Administration (SBA) has a special business loan program for veterans and military personnel. Apply today at SBAPatriotLoan.com to access ACD Financial Services' preferred SBA lenders.

Who May Apply for These Business Loans
Veterans
Service-disabled veterans
Active duty service members
Reservists and National Guard Members
Current spouse of a veteran or service member
The widowed spouse of a service member who died while in service or as a result of service connected disability

Loan Features
Loan amounts from $5,000 to $50,000
7 year term - Fully Amortized
Unsecured - no collateral required
Variable interest rate based on Wall Street Journal Prime
No prepayment penalty
Free technical assistance provided

Eligibility Requirements
All SBA eligible industries considered
Start-up business allowed
Loan proceeds for business acquisition not allowed
Working Capital loans are permitted
Franchise must be on the SBA approved Franchise Registry (www.franchiseregistry.com)
Utilizes Fair Isaac Small Business Credit Score System for pre-approval of credit

 

ACD Financial Services Offers Short-Term Working Capital To Growing Businesses

ACD Financial Services provides spot factoring (single invoice factoring) solutions by offering short-term working capital to growing businesses. Many businesses do not get paid right away for delivered products/services. But every business needs some cash on hand in order to sustain and grow. So what happens if you do not get paid for a few months, and you do not have time to seek alternative financing through banks or venture capitalists? Spot Factoring is the answer to your troubles.  Spot factoring is an extremely fast way to turn your receivables into cash. In an ordinary scenario you might have to wait 30, 60, or sometimes even 90 days for invoices to be paid; ACD Financial looks at your customers' credit (not yours) and can pay you the majority of what's owed to you within as little as 72 hours.  We understand that time is money to your business!

Private Lending Can Generate A Great Investment Return

Private Lending is not only an  alternative financing source for small business owners, but it's an investment strategy that investors should consider to diversify their investments.  Private Lending can generate a fabulous return on an investment without the volatility and ups and downs of the stock market. Here is an excellent video on how to be a private lender.  http://www.slideshare.net/iamaninvestor/private-lending. 

 

The Myth Of Traditional Business Banking

Why Most Small Businesses Do Not Get Bank Loans

 

1.  Banks Are Asset Lenders:

Banks primarily make loans against hard assets which are pledged as collateral.  (i.e. buildings, property, CD's, homes.)  Most small businesses and their owners do not own enough equity in their assets to justify a bank loan.

 

2.  Banks Want A Guarantor(s):

Banks often require additional people to guarantee the repayment of the loan.  The majority of small business owners come from modest backgrounds without rich relatives and friends that are able and willing to guarantee their loan.

 

3.  Banks Lend Money To Older Successful Businesses

Getting a business loan requires that you have a profitable track record of at least 2 or 3 years.  This record must be documented on tax returns and financial statements (both business and personal) which are thoroughly scrutinized.

 

4.  Banks Require Stellar Credit Ratings 

Owners and businesses who do not have strong credit scores do not get business loans.  Slow pays, NSF, and high debt to income ratios are disqualifiers (not to mention being turned into collection, write offs, tax liens, judgments and prior bankruptcies).

 

ACD Financial Services  (www.acdfinancial.com) understands that small businesses need financing even when they don't meet bank criteria.  ACD Financial Services specializes in providing innovative financing solutions.

SBA Announces New 100%-Guarantee Interest-Free Loan Program

The SBA announced a new interest-free loan program for struggling small businesses. The new program starts June 15. Expect more details over the next several weeks. Here is what we know so far based on information from SBA's website (SBA.gov).

ARC Loan Program
If your small business is stressed meeting expenses during these economic times, the U.S. Small Business Administration has a new loan program designed just for you.

SBA’s America’s Recovery Capital Loan Program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability. Each small business is limited to one ARC loan.

ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.

About the ARC Loan Program
ARC loans can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. ARC loans provide an immediate infusion of capital to small businesses to assist with making payments of principal and interest on existing debt. These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll.

ARC loans do not require collateral, are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Loan proceeds are provided over a six-month period and repayment of the ARC loan principal is deferred for 12 months after the last disbursement of the proceeds. Repayment can extend up to five years.

The best candidates for ARC loans are small businesses that are struggling, yet have been making loan payments, or those just beginning to miss loan payments due to financial hardship.

ARC loans are made by commercial lenders who are SBA participants. Non-SBA lenders can easily become SBA participants by working with their nearest SBA district office. Businesses interested in applying for an ARC loan should first contact their current lender.

ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.

ARC Loan Eligibility
ARC loans are available to viable, for-profit small businesses in the U.S. that have qualifying small business loans and are experiencing immediate financial hardship.

Your small business must be an established business, have financial statements demonstrating it was profitable in one of the past three years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval. If your business does not meet these criteria, you can discuss your eligibility with your lender. ARC loans are not designed for start-up businesses.

Examples of qualifying loans may include credit card obligations for your business, capital leases, notes payable to vendors/suppliers, Development Company Loan Program (504) first lien loans, other loans to small businesses made without an SBA guaranty, and loans made by or with an SBA guaranty on or after Feb. 17, 2009.

ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as:

· Loss/reduction of customer base
· Increase in cost of doing business
· Loss/reduction of working capital and/or loss/reduction of short term credit facilities
· Inability to restructure existing debts due to credit restrictions
· Loss/reduction of employees (intellectual capital)
· Loss/reduction of major suppliers (major suppliers out of business)

Borrowers whose loans are already severely delinquent or whose past performance or future cash flow indicates that the business is not viable are not good candidates for an ARC loan.

Applying for an ARC Loan
ARC Loans are provided by commercial lenders and guaranteed by the SBA. Your next step is to contact your lender who will help you determine if you are a candidate for an ARC Loan. Questions they may ask include the following:

· Does your small business have an established banking relationship?
· Has your small business been in operation for a minimum of two years?
· Do you have financial statements (balance sheet, income statement, and cash flow
statement) which demonstrate your business had a positive cash flow in one of the past three
years (or as long as your business has been operating, if less than three years)?
· Does your cash flow projection for the next two years indicate sufficient cash flow to meet
your current and future loan payments?
· Regarding your debts, is your business no more than 60 days past due on any loan (you can
be current on all your debt obligations and still qualify for an ARC Loan)?
· Is your business suffering an immediate financial hardship? For example:
· Declining sales and revenues;
· Difficulty in making loan payments on existing debt;
· Difficulty in paying employees;
· Difficulty in purchasing materials, supplies, or inventory; and/or
· Difficulty in paying rent and/or other operating expenses.

Cash Flow Essentials for a Business Owner

Here is an interesting article I came across about the importance of cash flow to a business owner.

Cash flow essentials
By Symon Brewis-Weston on Wednesday, 12 November 2008
· Getting cash flow right
· Cash flow management strategies
· Practical investments

Getting cash flow right from the start is important for any business owner.
As Symon Brewis-Weston discovers, a business is only as successful as its cash flow management practises so it’s important to understand how to get it right.

Poor cashflow management can bring down the foundations of any business, no matter how successful it may appear. So, whether you simply want to keep the business ticking over, or are planning to propel it to the next level, one of the easiest ways to reach your goal is by speeding up the cashflow cycle and streamlining your processes.

Efficiency really is the key to effectiveness when it comes to running a business; a little time invested now to get your finances in shape, could be the best investment you will ever make.

Back to basics
There are a range of variables that can impact the cashflow cycle and having the right levels of stock, the best payment facilities, well timed and organised accounts payable and receivables procedures, and the right types of bank accounts are at the core of successful cash management. Investing some time with financial advisors such as accountants, bookkeepers and business bankers to review these processes upfront will quickly set the business on the right path.
Keeping up-to-date and accurate financial records is also essential. These will not only help you keep track of all monies flowing in and out of the business, but will be useful further down the track if you need to seek additional financing or look to sell up.

Stock to sell
For most owners, inventory and wages comprise the major business expenses; they can also be among the most difficult to manage financially. It may sound obvious, but carrying excess inventory in the stockroom ultimately means less money in the bank. It also means that excess cash is being tied up in stock that could be diverted elsewhere across the business.
Every business is subject to seasonal fluctuations and stock levels should mirror this. Sales records will give a good indication of how much product is required each month and should be used to help you develop a tailored inventory order. This may be more time-intensive than lodging a standard monthly order, but in the longterm will be more cost-effective. It may also help to reduce unnecessary storage and staff costs, which would otherwise be required to manage the additional stock.

Paying up
When paying your suppliers, look at where you can make some savings. Paying on time is good business practice, but there is nothing gained from being too efficient with your payments and depositing money earlier than required. Remember, there is no penalty for paying bills on the day they are due, and the longer you leave the money in your account, the more interest it will earn.

Of course, it can also pay to negotiate early payment deals with suppliers, especially if you use a few regularly. Consider whether you can secure a discount for pre-ordering, or early payment.
Similarly, review your outgoings and think strategically about the timing of your payments. Make sure they aren’t all due at the same time otherwise you could be left short. Also, if you’re making large purchases that require periodic payment, try to structure these around other bills due in the same period.

At the most basic level, this could simply mean delaying the purchase for one week so that the bills will fall across different months. Alternatively, you could look for ways to make smaller payments more frequently. Leasing equipment instead of buying it outright could also be an option to free up cash that could be injected back into the business.
When it comes to wages, no small business can afford to be weighed down by excessive costs. However, it’s important not to sacrifice valuable personnel just to keep head count and costs down, as over time, talented employees will more than likely pay their way. If you’re a start-up business or experiencing a busy period, bringing in contractors can be a good solution as they won’t incur all the additional expenses and responsibilities associated with a full-time employee.

Cash in
When it comes to money coming in to the business, pricing and payment terms are the biggest influencers, and it can literally pay to get these right as quickly as possible. The key to pricing is to build in every cost associated with the product or service, including your own time, while ensuring that it reflects the market and is competitive. Your goal should be to make a good profit margin on your product or service, if you’re not, or if you’re not even breaking even, then you need to reassess your pricing strategy.

Simply put, the fundamental rule of successful cashflow management is to have more inputs than outgoings. If you aren’t generating this through your products or services, you will struggle across the rest of the business. Your business will also be put under strain if you don’t have an effective accounts receivable process in place. When it comes to collecting money from clients, timing is everything. Make sure you have clear agreements in place and issue timely, simple invoices with easy to understand language and payment terms. This is essential in getting payments processed quickly.

ACD Financial Services Helps $1.5M Media Company Obtain $200K In Working Capital

FOR IMMEDIATE RELEASE


ACD Financial Services Helps $1.5M Media Company Obtain $200K In Working Capital

McDonough, GA - April 15, 2009 - ACD Financial Services helps a $1.5M boutique multi-platform media company and think-tank obtain a $200K working capital solution. "The current economic environment for small business financing requires that business owners think outside of the box for financing to grow and expand. ACD Financial Services leads the way in helping small business with innovative financing solutions. We take pride in going that extra mile", says Adrian Davis, President and CEO.



ACD Financial Services
Tel: 678-565-9870
Fax: 678-868-1885
Web: ACDFinancial.com


ACD Financial Services
"Leading the way in innovative financing solutions for small business"

Introducing E-bay Style Auctions for Accounts Receivable (Invoices)

ACD Financial Services has partnered with The Receivables Exchange - the world's first online marketplace for real-time trading of accounts receivable - to offer another alternative financing solution to America's small businesses. ACD Financial Services is constantly looking for innovative financing solutions to help small businesses in need of cost effective financing. The Receivables Exchange is a real-time online market for trading accounts receivable (invoices) that gives businesses access to working capital at a competitive cost. It allows small- to medium-sized businesses to auction their accounts receivable (invoices) for working capital to a global network of institutional investors. If you would like to learn more about this new service offered by ACD Financial Services, please don't hesitate to contact us at ACDFinancial.com or at 678-565-9870.

Alternative Financing

If you are thinking about starting a business or already have one, you know that the traditional bank loan for financing has basically dried up. As a result, small businesses should think about alternative financing strategies for financing. Some strategies include equipment leasing, sale-leaseback for working capital, invoice factoring, and credit card sales receivables. These strategies can be more expensive than a traditional bank loan, but when you are starving for cash they may be exactly what your small business needs to keep growing.