New Century Financial

There are many reasons businesses use factoring services. Some want to catch up on accounting and get revenue from unpaid client invoices. Others need short-term working capital to cover expenses or take advantage of time-sensitive business opportunities. Still other businesses use factoring to build up reserves for growth projects. No matter the reasons, businesses have found that factoring is a sensible and stable form of financing whether the economy is booming, stagnant, or in a downturn.

Loans Are Unpredictable

For the past decade or so, businesses have been pivoting away from traditional loans. The requirements set by lenders keep increasing, which makes much-needed financing inaccessible to small businesses that might not have the collateral, credit ratings, or established sales history to qualify for loans. Additionally, interest rates on traditional business loans are subject to change. In 2017 and 2018,

Businesses all over the United States are seeking financing to keep operations running and weather uncertain conditions amid a pandemic. Since April, business owners have seen stimulus packages and relief loans promising loan forgiveness and minimized risk to borrowers. But what exactly do these things mean and how do they impact businesses? Is there such a thing as stable and reliable business financing?

Debt Risk for Businesses

For the past decade or so, traditional lenders have been trying to minimize their risk by shifting it to borrowers. In order to qualify for loans, businesses must meet minimum credit ratings, have enough collateral to put up against the amount of financing requested, and a long financial history. Unfortunately, these requirements marginalize new and small businesses. Even alternatives to traditional debt-based loans, such as merchant cash advances, have very high interest rates to place

At the end of March, the CARES Act was signed into law, which provided special relief loans to businesses across the United States. Immediately, banks were inundated with loan requests, which severely slowed down the approval process. Additionally, the number of requests greatly overshadowed the amount allocated for relief loans, resulting in a total depletion of funds. This prolonged the anxiety and frustration for business owners nationwide. Even those who were approved for relief loans were kept in a holding pattern because there were no funds to be given to them. Now, with a second round of relief loans in the pipeline, can banks meet the needs of business owners?

Banks and Loans

The relief loans offered by banks were supposed to be at no immediate cost to business owners. Similarly, the major banks in the United States have stated that most of their earnings do not come from debt-based financing. However, du

Businesses throughout the United States have been impacted by COVID-19. From service companies to staffing agencies, manufacturers to logistics companies, all sectors have been affected. In order to weather the current condition, it is of the utmost importance that businesses maintain a strong cash flow.

How COVID-19 Impacts Cash Flow

As cities place restrictions on which businesses can remain open, limiting hours of operation, and more, business owners need a way to access revenue quickly. There is no doubt that some invoices will age out to collections. Restricting operations will restrict cash flow, but there is no reason why businesses should have to wait 30 days or longer to get paid for sales made prior to the outbreak. After all, businesses still need to pay bills, make payroll, and formulate a strategy to make it through this bout of COVID-19 so they can resume operations once this is all over. Businesses

Service companies play a very necessary but unique role in our economy. Service companies can be found in every industry, but they do not provide tangible goods, like traditional product-based businesses. The services these companies provide are invaluable, but finding adequate financing to maintain and grow their operations can be challenging.

Financing Challenges

Securing traditional loans can be difficult for any small business. Lenders set requirements for credit ratings and collateral to qualify for loans, but since service companies do not have physical goods, real estate, or other large assets, they might not meet the requirements for most loan programs. Even non-traditional lending, such as a merchant advance, requires a point-of-sale system to repay the balance. Alternative lending places the majority of the risk on the applicant, so there are usually additional fees and high interest rates, as well. Sin