SOURCE: The Interface Financial Group
BETHESDA, MD--(Marketwire - Aug 16, 2012) - According to The Interface Financial Group (IFG), North America's largest alternative funding source for small to medium-sized enterprises, a study by the Small Business Administration (SBA) reported that U.S. small business loans ($1 million or less) declined 5 percent last year. The dollar amount of small business loans declined 7 percent. In addition, more than 170,000 small businesses in the U.S. shut down between 2008 and 2010. The report also showed that many of the small businesses could not receive the funding required to start up.
(Source: U.S. Census Bureau data.)
The financing challenges that small to medium-sized enterprises (SMBs) face today were highlighted even further in The New York Fed's recent Small Business Borrowers Poll where 544 small businesses in New York, New Jersey and Connecticut were polled by the central bank during April and May. This poll determined that about 13 percent of small business loan applicants got the full amount of credit they were seeking over the previous year, and only a partial amount of credit was approved for another 36 percent of them.
Typically, more than half of the loan applicants sought a microloan, which is $100,000 or less. This was short-term working capital, and lenders seemed more likely to turn down microloan applications than larger loan applications. Of course this could be because they were nervous about loaning money to start ups.
The poll also indicated that businesses in the New York area funded with a small business loan had 233 percent more employees than firms that could not secure a small business loan and they were also 21 percent older. These lenders seemed less likely to lend to small businesses that could not show existing bank relationships, constant or rising sales along with constant or increasing sales numbers.
Finally, between May 2011 and May 2012, 59 percent of New York area small businesses applicants did not even apply for a loan, according to the poll, simply because they did not think they would be approved.
"Accounts receivable factoring is a way of financing a business that has been gaining in popularity among American businesses that, as the report indicates, cannot get the funding they need to start a business, or for many, remain in business, let alone grow," said George Shapiro, president and chief executive officer of IFG. "This method of funding offers a very simple financing proposition and we are seeing the factoring market grow as businesses turn to this alternative financing method to remain in business. Banks base their decisions on a company's credit worthiness, whereas factoring is based on the value of the receivables."
This alternative method of financing enables an SME to get an advance of cash against invoices, and in fact, IFG is one of the few factoring companies that offer Spot Factoring services, otherwise known as single invoice factoring. This is not a loan -- it is the purchase of financial assets, or one single accounts receivable at a time, and it differs from traditional bank loans in that bank loans involve two parties, while factoring involves three parties -- the business, their customer and IFG. With single invoice factoring, there are no minimums, no maximums, no long-term commitments and no lengthy application process.
Since many businesses do not get paid right away for delivered products/services, this negatively impacts cash flow, making it challenging for the business to produce new orders in a timely fashion. Invoice factoring benefits businesses that do not get paid for 30, 60 or 90 days by advancing up to 90 percent of the invoice total. IFG looks at the creditworthiness of the client's customers and can provide funding within as little as 24 hours.
In addition to Spot Factoring, IFG's other financing solutions include: Export Factoring, providing services for companies who export from the United States and Canada; Construction Factoring for contractors; Purchase Order Financing; and Inventory Financing, a solution promoting a company's growth by funding them when they must expand and purchase inventory.
About The Interface Financial Group (www.ifgnetwork.com)
The Interface Financial Group (IFG) is North America's largest alternative funding source for small business, providing short-term financial resources, including invoice factoring services (invoice discounting). The company serves clients in more than 30 industries in the United States, Canada, Singapore, Australia, New Zealand, UK and Ireland, and offers cross-border transaction facilities. With more than 140 offices across North America and over 39 years of experience, IFG provides innovative accounts receivable factoring services and solutions by offering short-term working capital to growing businesses. Single invoice factoring, or spot factoring, is an extremely fast way to turn receivables into cash.
The Interface Financial Group was founded in 1972 to provide short-term working capital to help small to medium-sized businesses grow. The IFG organization operates on a local level, providing clients with local knowledge and experience and business expertise in numerous diverse areas in addition to accounts receivable factoring, including accounting, finance, law, marketing and banking.