Small Business Funding Alternatives

HOW DID YOU LEARN ABOUT ALL THE DIFFERENT FUNDING OPTIONS AVAILABLE TO PEOPLE EVEN AFTER BANKS TURN THEM DOWN FOR A LOAN?
 
Through hours of study and a training course with the American Cash Flow Association as well as working with a Mentor for the first two years. 

And, it’s been interesting for me to learn that MBA graduates and students and others in the financial services realm you would think would be very knowledgeable about the options available in the cash flow industry for the funding needs of small businesses are not aware of these tools at all (or very little).  Or, they do not give enough import to these options (if they are aware of them) which are so desperately needed by small businesses.  The tools of the cash flow industry seem to be glossed over and not really acknowledged as the option they are. 

For instance, I met with an MBA student (Electrical engineer) who was in her last semester before getting her MBA and she happened to have a class on our funding options that semester and a homework assignment on them the same weekend we met and talked.  So, she told me, “thank you very much!” and took my literature and flyers I brought to our meeting and used to complete her homework assignment!
 
WHO ARE YOUR CLIENTS?

Almost any business that has a piece of paper to leverage.  Construction is sometimes difficult because of retainage fees but it can be done too – by companies that specialize in construction. 

Some examples, though, are:

Medical facilities of all sorts
Manufacturing
Service industries of all types – staffing agencies, trucking, fabricating, engineering, printing, import, export and the list goes on and on…
  
IN YOUR YEARS OF EXPERIENCE, WHAT OBSERVATIONS CAN YOU MAKE ABOUT SMALL BUSINESSES ON THE THRESHOLD OF GROWTH?

I would say that I have observed that oftentimes they are afraid to go for the larger clients and faster growth because of fear of the resultant cash flow issues.  But – that need not be the case! 

Now, the small business owner can do just that and know that the tools offered in the cash flow industry can assist them in accomplishing faster, more rapid growth!  It all goes back to educating and making people “aware” of the options available to them. 

But this, too, is one of the many reasons I love this business I have found!  I like being able to help people and when I can do that and myself in the process, I call that a win/win situation!

WHAT IS THE CASH FLOW INDUSTRY ALL ABOUT AND HOW CAN IT HELP?
 
In a nutshell, it’s about leveraging a businesses “liquid” assets to  self-finance it’s own growth and expansion without incurring debt or giving up equity in the business.  It looks good on the balance sheet  because it is not a “loan” per se but a “sale” of a liquid asset of the business.

The asset-based lending industry is what I call a close cousin to the cash flow industry in that it is more often an actual loan with liquid assets as collateral.
 
WHAT IS THE MOST IMPORTANT PIECE OF ADVICE YOU WOULD LIKE TO GIVE OUR LISTENERS? 
 
Well, at the risk of sounding like I’m promoting myself –  but I think if your listeners agree about cash flow being such an important issue for small business owners – my most important piece of advice would be…..
 
If you have cash flow issues and your traditional funding sources haven’t  been able to help, check with a cash flow consultant — whether that be me or some other cash flow consultant. 

And, I don’t say a funding company that does the actual funding (for example, factoring of accounts receivable), but a “cash flow consultant”, in particular, because there are soooooo many different funding niches/sources in the cash flow industry that a business owner can get lost in it  as easily as in the traditional funding arena.  The cash flow industry  is very, very niche  oriented and that is where a cash flow consultant’s expertise comes into  play — to assess the business owners needs and direct them to the  appropriate funder and save them time and effort and let them do what they  do best…..run their business without worrying about cash flow issues!

So, whether it be me or some other cash flow professional, be sure to check out the funding tools in our industry to supplement the fulfillment of your funding and cash flow needs!
 

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OK - so who, besides me - in my “blogworld” - is going to be watching the 41st Annual CMA Awards tonight?

This will, in fact, be my first one to watch!  I have come to realize in the last several years just how much I do like Country music and how much “country” is really in this girl…a lot more than I realized previously.  On a recent visit by my brother I made him laugh when I told him I had a lot more yeehaw’s in me than I realized before.  But then, I love our cajun music, zydeco, dancing, etc. etc……but I digress…on to examples.

Specific Examples

These are some examples I am aware of first-hand, post-Katrina.

The asset-based lenders I work with also work in conjunction with an already established banking relationship. However, they are able to be much more responsive to the urgency of a business’ cash needs to take advantage of profit opportunities when they present themselves.

 

Right after Katrina, a purchase order funder in the asset-based lending industry was able to help a NY power company fulfill a $2.2M order from the USACE. The power company’s bank was not able to process their funding request fast enough and they were about to lose the order. The purchase order funder (in Dallas) took the application on Wednesday and the order was being shipped by Friday of the same week. The power company was able to fill that order and other future ones due to the speed with which they were able to get the funding they needed.

 

Another Katrina-related example..

 

Right after Katrina, I had a display in the “Resource” section of a contracting conference in Baton Rouge since my business (as is the cash flow industry) is a “Resource” for small business. Lots of my referrals come from bankers (also a Resource and positioned next to me at conferences) unable to help a struggling new business but realize that it is a viable business that just needs some help with cash flow issues for a while. The Cash Flow Industry is definitely a “niche” industry that fills a need. We help businesses before they have the financials required by banks but also in conjunction with a banking relationship as shown in the previous Example.

 

In any event, after this contracting conference, I received a call from a plumbing company who had received lots of government work but was having cash flow problems. To make a long store shorter, we ended up factoring $1,000,000 in FEMA receivables for them so that they got $800,000 almost immediately and were able to put it immediately to work for them to expand and grow their primary business and take advantage of other opportunities which presented themselves (as a result of Katrina) (i.e. added port-o-potties business and trash dumpster rental for construction/reconstruction). If they had not factored their receivables, they would definitely not have been able to do this because FEMA ended up taking 9 months to pay. Can you imagine what would have happened had they not been able to factor??

 

If you can’t imagine it, don’t worry!  I have another example of a similar situation with a security company I also worked with which clearly demonstrates what “could” have happened.

 

In this case, the security company was doing about $1.5M a month in receivables as a second tier under a prime contractor for FEMA. They, however, did not attend the seminar (where the plumbing company got my information) or otherwise find out about factoring and came to me from a banker referral 6 months after starting the FEMA work. At that time, they already had tax liens and shortly thereafter had to go into Bankruptcy for reorganization. We worked with them all this time and still could have helped them to pull out of their dilemma had all the parties been willing to work together but this was not the case and they ended up going out of business after delivering worthless payroll checks to their employees.

 

This example really shows why I am passionate about this industry which can (at times) literally make the difference in whether a business stays open or not!

 

 

 

 

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Tags: country, factoring, Funding examples, purchase order

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