Consider other financing during loan drought - Kansas City Business Journal:

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One very old but underused optionis factoring, or account s receivable financing, where a third party buys a company’sw outstanding invoices or receivables. “Accountx receivable financing isn’t a loan,” said Chad Todd, regionap vice president with A/R Funding. “Whenever a company creates an A/R Funding purchases that invoice and advances the money to thecompany immediately, which helps theire cash flow.
” Businesses can then use that cash to coved cash flow shortages or to finance “It doesn’t have to be a big as long as your company is doing business with creditworthh customers [according to] , and we have a few other groupd we use to look at that and we establisn credit limits,” Todd said. “We actually have a 90-dayt agreement that you can terminate atany time, withouty fees. We only have one fee, which is the fee on our it’s less than 2 percent for the face amoung ofthe invoice.” After tryinb traditional banks and credit Adam Hoyles, vice president of operations for , said it turnedf to A/R Funding.
“Fodr whatever reason,” traditional lenders “weren’t interested in doing a businessw lineof credit,” Hoyles “We were growing and our operations were increasing in both speex and intensity, and it was more and more difficultf to keep running. “Clients would go 30 to 60 days topay us, but when you send someonde in the field, you still have the same The business still has to run whiled you are waiting to get paid. When I look at my abilitgy to predict cash flow on aregular basis, the fee is absolutelyg worth it.” Another funding sourcw that’s worth looking into is the ’sx America’s Recovery Capital loans.
Beginning June 15, the SBA will starrt guaranteeingthe loans, up to a maximum of “It’s an unusual loan: The SBA is paying the said Ralph Ross, deputy director of SBA’s Nortgh Florida district office. “We have never done it quite thisway before. The bank will disburse the loanand we’lpl start making monthly interest payments on the loan straight to the bank. Plus, we guarantee 100 percent of the principal forthe bank.” The SBA is stilll drawing up guidelines for the but Ross said it estimates the program coulde provide for as many as 10,000 loans. The loan prograk is designed to help businesses that are struggling due to theanemivc economy.
“The idea is it’s just somethinhg that a company can use to help pay its Ross said. “There is still going to be a credit we want to make sure they are viable Chris Rodatz, vice president/SBA lender at , has already had a numberd of clients call to learn more about the “They say, ‘We could sure use it. I need to buy or, ‘I’m falling behind on my ” Rodatz said.
For any businessx that’s investigating the ARC loan program, now is the time to “First, they need to contact their bank to make sure the bank is goingb to participate inthe program,” Rodatz “Then be prepared to have an updated tax return and personal finance statements — the basic prequalification materials.” Anothetr new SBA funding option in the workx specifically targets vehicle dealers and will allow lenders to provided lines of credit througu the 7(a) program for titled inventory. “Dealer floor-planninb is something we traditionally haven’t been involved in,” Ross said.
“We raised the size standards,” to allow dealerzs that normally don’t qualify for 7(a) lending. “Andr the new program will help us finance the inventory on theshowroomm floor. Any property that has a title can That’s a very interesting, new Obviously, there’s a lot of distressd in the auto industry andrelated industries, such as RVs and and we are hoping to help out with