Category Archives: Blog

Loan Turndowns: Lenders, Requirements, and Business Financing

As banks raise their requirements on loans, business owners are trying ti figure out how they can get the working capital they need to cover obligations, maintain day-to-day operations, and even roll out plans for growth. Loan turndowns have been on the rise, and they are not just experienced by businesses going through a rough financial patch. Loan turndowns impact individual businesses, but have a greater impact on our economy as a whole.

What Triggers Loan Turndowns?

When a business applies for a loan, the lender will compare their requirements with the applicant’s profile. The largest portion of any loan consideration is credit score. For a business loan, lenders prefer their applicants to have credit ratings above 770, and ideally above 800. Anything below that frequently undisclosed number throws up a red flag that the business may not be able to repay the capital they borrow. Cash flow and sales are also major factors when lenders review business loan applications. If sales are low or cash flow is strained with expenses overshadowing revenue, then that poses another big risk to lenders. Any one of these factors could trigger loan turndowns for businesses.

The Impact of Loan Turndowns

Loan turndowns have a widespread impact. Prohibitively high requirements from lenders can result in businesses not getting the financing they need to sustain operations or grow. For a new or small business, a loan turndown can prevent them from successfully weathering those crucial first years ore keep them from getting a stable foothold in the marketplace. On a macro level, turndowns lower competition and place downward pressure on innovation in every industry. Businesses need a viable working capital solution without suffering through turndowns or relying on debt-based financing.

Avoiding Loan Turndowns

Instead of jumping through hoops only to receive turndowns from lenders, businesses use accounts receivable factoring. Factoring is a fast, efficient, and transparent process where unpaid receivables are turned into cash. Factoring does not place debt on the books and it preserves credit ratings while also boosting cash flow. Factoring is an ideal solution for new, small, and even large businesses so they can build up working capital without needing to navigate the red tape of traditional lending channels.

New Century Finance is a leader in accounts receivable factoring services. If you need working capital for your business and want to avoid turndowns, contact our offices today.

Relaunching Your Business without Cash Flow Concerns

As cities across the country start to lift COVID-19 restrictions, businesses are gearing up to resume operations. Starting back up may be challenging but sustaining cash flow the country reopens may be a bigger obstacle. Fortunately, there is a way to ensure a smooth transition so you can ensure success.

Obstacles to Relaunching Businesses

If your business is ready to start taking customer orders, there are a few things to think about before relaunching. After the first round of sales are made, how will you sustain operations? If your business issues invoices with payment schedules of 30 days or longer, then you could be waiting upwards of a month to see revenue. During that time, overhead expenses still need to be met, employees need to get paid, inventory and materials for production must be purchase, and much more. If sales are high, but the revenue is tied up in unpaid receivables, a business can run into serious financial issues right out of the starting gate.

The Business Landscape Is Not Loan-Friendly

Currently, lenders are tightening their requirements more than they did during the Great Recession in 2008. COVID-19 relief loans offer some ease to business finances, but not all businesses were able to obtain them. Besides, relief and recovery loans were a one-time offer that posed no risk to lenders because they were part of a government stimulus package. Banks and similar lenders have tightened requirements within their organizations, because until the economy is in full swing, a lack of steady cash flow will be seen as a risk.

Maintaining Cash Flow When Relaunching Your Business

For businesses that are relaunching, loans should not be a necessary evil. Banks may be tightening their requirements, but businesses do not want to take on unnecessary debt and place a further strain on cash flow. To overcome cash flow concerns, businesses are pivoting away from loans and using accounts receivable factoring instead. Factoring eliminates lags in cash flow by converting unpaid receivables into cash without placing debt on the balance sheet.

At New Century Financial, we provide comprehensive factoring services to businesses nationwide. We can turn unpaid invoices to cash and make funds available within 24 hours so you can maintain cash flow, cover financial obligations, and sustain your business through the economic recovery. Contact our offices today to get started.

Getting Insights to the Creditworthiness of Your Clients

Every day, businesses are trying to understand their clients better. From analyzing sales and marketing metrics to running focus groups and more, businesses know that if they can get better insights into their clients, they can gain a competitive advantage. One of the key points in dealing with new and existing clients is understanding their creditworthiness.

What Is Creditworthiness?

Creditworthiness is used a lot in the financial sector. It’s a metric used to gauge how likely it is that a potential borrower will default on a loan. The term goes beyond simple credit score calculation and takes into account the timeliness of paying down obligations, business history with vendors and suppliers, other factors. Repayment history is a major point with lenders, because it counts as 35% of a company’s credit ratings. This is why a business can have a history of consistently high sales, great relationships with clients, and still get turned down for a loan. But how can businesses make use of creditworthiness?

Creditworthiness and Your Clients

How would you conduct business if you were able to check the creditworthiness of your clients? To have the insight to see if they were likely to pay their invoices early, on-time, or if they would age out to collections could be a game-changer for your business. Fortunately, that service is available with accounts receivable factoring from New Century Financial. Our factoring services provide cash for your unpaid client invoices within 24 hours so you don’t have to experience gaps in cash flow. There are not long-term contracts, no debt, and we let you choose which invoices or parts of invoices to factor. As an added feature, we provide a tool so you can check on the creditworthiness of your clients to help you make crucial business decisions.

At New Century Financial, we provide accounts receivable factoring for businesses of all types. Our team will work with you to understand your needs and create a factoring strategy to help you reach your goals. Whether you want to correct cash flow issues, get fast access to working capital, or build up your reserves for growth projects, we can help. Contact New Century Financial today to get started.

The Post-COVID-19 Outlook for Business Financing

Businesses are making preparations to reopen, but many of them are in need of working capital. Since not all businesses qualified for or received PPP loans during the pandemic, people are looking for alternative solutions to get the capital they need. However, business financing takes many forms, but the outlook for the most popular programs varies greatly.

Traditional Loans

The outlook for loans does not favor small business owners. As lenders tighten their requirements, small businesses that need extra working capital may have to improve their credit ratings and put up more collateral to qualify for loans. Even if businesses do qualify for a loan, that does not guarantee they will get the amount they need. As the economy contracts, lenders tend to decrease the amount of business financing they offer. Additionally, debt can be an unnecessary burden for a business to take on when holding onto revenue is of the utmost importance.

Lines of Credit

Getting a new business line of credit might be challenging as the country reopens. Quite a few businesses have been drawing on their lines of credit throughout the pandemic to stay afloat. On a similar note, credit providers are more likely to increase their interest rates and raise the bar for qualification for small businesses to reduce perceived risk. In short, business financing that can directly impact credit ratings is not the most stable solution in the current landscape.

Cash Advances

Cash advances seem like a good alternative at first glance. The appeal of cash advances is base on the idea that they do not put debt on the books and do not impact credit ratings. There are no fixed payments, so businesses get an amount of flexibility that they can’t get with traditional loans. The devil is in the details, as they say. Cash advances have high interest rates and fees to offset the risk to the lender. Because there are no fixed payments, business owners can find themselves with a large balloon payment at the end of the agreement.

AR Factoring

AR factoring is not a loan. There are no fixed payments, and there is no debt. Unlike a cash advance, AR factoring is not structured around future sales. Instead, factoring allows businesses to leverage unpaid invoices for immediate access to working capital. There are no high requirements, no long processing times, and no arbitrary loan board decisions.

Get the Business Financing You Need

New Century Financial helps businesses get the working capital they need with our AR factoring services. If you want to improve cash flow, or if you simply need fast access to capital without the red tape and restrictions of loans, lines of credit, or cash advances, contact New Century Financial today.

4 Big Advantages of Accounts Receivable Factoring

Accounts receivable factoring is often seen as an alternative to traditional loans. However, for businesses that may be unfamiliar with how factoring works, that first statement can be a bit nebulous. Accounts receivable Factoring offers a number of advantages to business owners, from improving cash flow to enabling growth, and more.

1. Factoring is not a loan

While accounts receivable factoring is frequently placed under the heading of “lending solutions,” it is not a loan. Accounts receivable factoring does not require collateral, does not impact business credit ratings, and does not place any debt on the balance sheet. Factoring is a simple exchange of receivables for immediate working capital.

2. Accounts receivable factoring improves cash flow

The success of every business relies on having a strong cash flow. When revenue is tied up in unpaid receivables, cash flow can slow to a trickle, which can impact the ability to cover overhead costs, make payroll, and even take on new clients. Since most businesses issue invoices with payment schedules of 30 days or longer, gaps in cash flow can become a recurring issue. Accounts receivable factoring eliminates the wait by turning invoices into cash and making funds available within 24 hours.

3. Factoring helps businesses build capital

Because factoring is not a loan, businesses can preserve their credit ratings, avoid debt, as well as ongoing interest rates. The improved cash flow means revenue will come in faster and proportional to sales without waiting. This gives businesses a huge advantage because they are not only able to cover overhead, but because of the accelerated cash flow that factoring provides, they are able to build up capital reserves for growth.

4. Factoring puts businesses in control

Businesses assume a lot of risk when they take out loans. Businesses have to put up collateral, take on debt, and make monthly payments on the balance owed regardless of high or low sales. Factoring, by contrast, is simpler, more transparent, and puts businesses in the driver’s seat. Businesses can choose which invoices or parts of invoices get factored, and they can check on the creditworthiness of their clients before deciding for factor an invoice. When it comes to financing, businesses need more control and more agency, and factoring gives them both.

If you want to break away from traditional financing and improve your cash flow without debt, contact New Century Financial today. We offer accounts receivable factoring for businesses nationwide.

Getting a Head Start on Business Recovery

As cities across the United States begin to come out from a state of quarantine, businesses are reopening. Due to businesses restricting or halting commerce during the COVID-19 pandemic, catching up on revenue is a top priority. However, business recovery will be challenging without a way to ensure strong cash flow and fast access to capital.

Lenders Are Tightening Requirements

As the economy contracted during the pandemic, lenders started tightening their requirements for loans. The minimums for both collateral and credit ratings increased, while the amount offered for loans decreased. This trend is expected to continue through the business recovery period, as lenders attempt to minimize their own risk and place most of the burden on the borrowers. At the same time, businesses need access to working capital to get back up and running, but taking on extra debt to accomplish is not a desired course of action.

Business Recovery and Sales

Those first few sales will be crucial to the recovery of businesses across every industry. The big obstacle facing businesses is the ability to hold out while waiting for payments from customers. Staggered payment schedule on invoices of 30, 60, or 90 days can place businesses in a tight spot, especially now. Businesses are relying on fast payments from clients, but that may not happen in the first month or so. If loans are out of the picture and staggered payment scheduled are causing gaps in revenue, how can businesses maintain cash flow and cover operational costs?

Speeding Up Cash Flow

Accounts receivable factoring offers a solution to all of the issues detailed above. When businesses use accounts receivable factoring, they can turn unpaid customer invoices into cash that can be accessed within 24 hours. This provides a healthy cash flow right from the start while eliminating the long waiting periods between sales and payments. Additionally, accounts receivable factoring does not place any debt on the books, so businesses can preserve their credit ratings.

Get a Competitive Edge

New Century Financial is a leader in accounts receivable factoring. We provide financing for unpaid invoices within 24 hours, and allow businesses to choose which receivables or parts of receivables get factored. To get a head start on business recovery, contact the team at New Century Financial today.

Taking Your Business Online? Supercharge Your Cash Flow!

Businesses continue to evolve, most often spurred on by external influences. The COVID-19 pandemic forced many businesses to rethink operations, and many entrepreneurs took their companies online to reduce potential health risks to their employees and their customers. By moving operations online, businesses found they could reach a wider audience. Businesses that once relied on local clients were suddenly tapping into demand, statewide, nationally, and even globally. They also discovered the sales side of e-commerce moves at a much faster pace than traditional sales. However, faster sales do not always translate to improved cash flow. Fortunately, there is a way to bring parity to online businesses.

Old-Fashioned Methods and the Digital Age

Technology may have advanced tremendously over the past few years, but standard business practices have remained the same. Employees still get paid on a regular schedule, banks still keep the same hours, and invoices are still issued with staggered payment schedules. Waiting for 30 days or longer for customers to make payments on invoices can place a major strain on cash flow for online businesses. E-commerce has a much higher volume potential, so maintaining a robust cash flow is essential to cover inventory, production, payroll, and overhead. Lag in revenue due to staggered payment schedules can undermine operations.

Rectifying Cash Flow Issues for Online Businesses

Accounts receivable factoring has been helping traditional businesses in all sectors, and it works the same for online businesses. Factoring takes unpaid receivables and converts them into cash within a single day, which is a big change from waiting 30, 60, or even 90 days to receive payments from customers. Online businesses in healthcare, manufacturing, distribution, and more use factoring to supercharge cash flow so they can keep up with increased demand and improve their digital presence.

At New Century Financial, we provide comprehensive factoring services to businesses of all types. We do not lock clients into long-term contracts, and we give businesses the freedom to choose which invoices or parts of invoices get factored. Additionally, there are no hidden fees, and we offer tools to help businesses check on the creditworthiness of their customers. Contact New Century Financial today to learn how we can improve cash flow for your business.

Debtor-in-Possession Financing: Reliable Capital for Struggling Businesses

Debtor-in-Possession financing (or DIP financing) is an often overlooked solution for businesses that are facing bankruptcy or restructuring. DIP financing is an essential way to keep distressed businesses cash-fluid while they are going through the Chapter 11 process.

How DIP Financing Works

At its heart, DIP financing is extended credit designed to meet the working capital needs of businesses that are seeking bankruptcy protection. DIP financing provides businesses with immediate cash to sustain operations and maintain liquidity throughout their reorganization during bankruptcy.

Why Access to DIP Financing is Important

Debtor-in-Possession financing is nothing new, but the need for DIP financing has come to the forefront. The COVID-19 pandemic led to many businesses downsizing, and some had to put operations on hold for months. As the pandemic stretched into the second, third, and likely fourth-quarter of 2020, some businesses could not sustain themselves, even with scaled-down operations. While the CARES Act does make provisions for financing alternatives, borrowers need to be creditworthy. This can cause problems for businesses that have pushed their own credit to the limits to keep operations running through the pandemic.

Using Factoring as DIP Financing

Many businesses are using factoring as a form of DIP financing. Accounts receivable factoring is perhaps the most flexible way to get DIP financing through the restructuring process of Chapter 11. Since factoring is not based on the creditworthiness of your business, you can leverage unpaid invoices for immediate capital without placing additional debt on the books or signing over assets to a bank. Since factoring is not offered by traditional lenders, the option is frequently overlooked by struggling businesses in need of assistance.

Other Options

If your business is in need of Debtor-in-Possession financing for restructuring, contact the team at New Century Financial. We provide comprehensive factoring services, as well as DIP financing options for businesses nationwide. When the going gets rough, you want a financing partner who is on your side to help you get the outcome you want. Contact New Century Financial today to learn more.

How to Avoid Predatory Business Lending in the Pandemic

COVID-19 is an ongoing challenge facing businesses, but entrepreneurs are finding ways to adapt. Some brick-and-mortar businesses are reducing foot traffic, or moving operations completely to online platforms. Others are taking extra precautions to keep customers and employees safe. Throughout all of this, businesses still need financing, but some predatory lending practices have come to the forefront. How can businesses avoid predatory lenders during a pandemic and get the financing they need?

1. Compare lenders before applying for financing

Many lenders seem to offer similar financing programs, but there are often details that get overlooked. Interest rates, origination fees, loan amounts, and more can mean the difference between legitimate and predatory lending practices. Read reviews from other borrowers and talk to the lenders directly. Since you are looking for financing for your business, you are in control, and you should screen lenders in much the same way you would choose a doctor or a new employee.

2. Alternative financing is not always the best fit

Many businesses do not want to deal with traditional lenders because banks have been tightening their requirements, and businesses do not want to take on extra debt. There are lots of alternative lenders out there offering options for working capital, such as merchant cash advances. Merchant cash advances may seem like a good alternative to traditional loans, because they offer an injection of working capital without debt, and they have flexible payments instead of rigid installments schedules. However, merchant cash advances have hidden fees and extremely high interest, because no collateral is involved. Additionally, the balance, fees, and interest make it very difficult to repay the balance before the terms are up, leaving businesses with huge balloon payments. Many fly-by-night predatory lenders emerge and offer alternatives when the market is tight.

3. Try to finance your business from within

No one knows what curve balls will be thrown our way in the near future, so when it comes to financing your business, the advice from the experts is, “Keep it simple, fast, and safe.” Instead of taking on unnecessary debt from loans or dealing with potentially predatory business lending practices from cash advances, entrepreneurs are using factoring services. Factoring has been around for almost as long as businesses have been issuing invoices with staggered payment schedules. At New Century Financial, we offer fast factoring services to turn invoices into cash and made capital available to businesses within 24 hours. Factoring is a debt-free solution, and our services are transparent, with no hidden fees and no ongoing charges. We put you in control, so you can choose which invoices or parts of invoices get factored, so you can quickly build up capital to sustain and grow your operations. Contact New Century Financial today to get the financing your business needs.

Financing Your Business without Traditional Loans

Financing is a primary concern for businesses throughout the United States. While stimulus and relief packages have come and gone in the ongoing COVID-19 pandemic, businesses are looking for something more permanent, but with more flexibility than traditional loans. Fortunately, there is a financing solution that is a perfect fit for a wide range of businesses.

Business Financing and Loans

Loans were once the “go-to” financing plan for businesses in all industries. Over the years – and especially now – that attitude has changed. Paycheck Protection Program (PPP) loans were suspended last August, and many businesses that received them may not be able to take advantage of the loan forgiveness part of PPP loans. So with PPP loans up in the air, some businesses are looking to secure other traditional loans, only to be met with more obstacles. PPP loans were a mad rush because it wasn’t the banks’ money on the lines, it was part of a relief package from the government. Banks are tightening their loan requirements, making it more difficult for businesses to qualify for the financing they need.

The Burden of Loans

In our current economic climate, loans may not be the best course of action to finance your business. Debt and lowered credit ratings negatively impact your business, especially in a time of economic uncertainty. Loan payments, plus interest, take a large portion of revenue away from businesses and can create a strain on cash flow. At the same time, interest rates on traditional loans are subject to hikes that come down from the Federal Reserve. Usually, these increases in interest rates are done to offset inflation, but they make loans more of a gamble than anything else.

Reliable Business Financing

To get their businesses financed, entrepreneurs are finding solutions without taking on debt and high interest rates. Accounts receivable factoring is a great fit for business financing because there is no debt involved, no ongoing payments, and businesses are able to preserve their credit ratings. At its heart, accounts receivable factoring is a form of asset-based financing in which unpaid invoices are converted to cash. By using factoring services, businesses can build up internal capital reserves to maintain and grow operations without relying on debt-based financing, such as loans. New Century Financial offers accounts receivable factoring to businesses nationwide. We are able to convert invoices to cash within 24 hours. Our factoring services have no hidden fees, and we offer the flexibility that businesses demand in today’s economy. Contact New Century Financial today and start financing your business from within.