Financial Products for Small Business

The economy is officially doing better. Not on fire, but many a businessman/woman I've talked with lately have noted that they've had their "best years ever". Now there is always a good amount of hyperbole in people's ranking of their own profits, but its true, times are better than the past few years.

One thing helping small businesses specifically, is the amount of financial tools available for the small, medium, and big business. Now I am not going to write about the big business financing out there. If you are a big time businessman you shouldn't be reading this blog. But for you small to mid-sized businesses there are some great products available to you.

Invoice Factoring  from companies like Merchant Bridge Finance are one way businesses are getting the expansion and operating capital they need to prosper today. So what the heck is invoice factoring. Well unless you are a finance major, you may not have heard of this tool. Basically, if you are a business that issues invoices to your customers (account debtor) then invoice factoring may be for you.

Let's say your client has a 90 day turn on their accounts payable and you have a chance for a job that will require more capital than you have available. You could tap a business line, if you have one. Or you can sell your invoices for cash today. A typical factor can provide an advance on that invoice of between 70-95% and will charge anywhere from 1-5% of the face value of that invoice. The terms vary widely between factor, industry and based on the strength of your client. Your credit and financial stability is important but not the over-ridding underwriting concern to be sure.

This product is great in industries like transportation, energy (oil & gas), textiles and apparel, temporary staffing and many others.

If you are interested in this service reach out to me and I will connect you with a factor who has a specialty in your industry.

Beware of the advice you get

Had a Realtor call me...Got a deal, its a RUSH.. Shocker there. I had it somewhere else, but they closed. I have a DU approval. It's a previous short sale...can we close in three weeks.

So the first thing that pops up is no one is really closing right now. And it's a short sale, right? So when was the previous short sale completed? "Over two years" Ok that is an exception right there for conforming and not all lender investors or brokers are even considering these. So I ask further..."When was title transferred from your clients on the old house?" I don't know..So I call the title plant and pull the old deed and sure enough they have three more weeks until it is even two years. In addition the DU approval even tells the client it needs to be two years.

So I say send me the deal and let me do the research, which fewer and fewer LO's are doing. Of course, the Realtor doesn't like that I've just basically said no to his new buyer. Even though I've really only said you need to wait three weeks and THEN we need to re-run credit and submit to an underwriter for a TBD decision.

But that isn't good enough, so he calls someone else who has been in the business 30 years as opposed to my 25 years, and he said no problem, send it over I can do it now.

Call two days later and sure as you know what, he can't do it now AND can't do it later because he has an overlay that requires four years after a short sale.

The moral of this story is, you can find anyone to tell you what you want to hear, but a true professional will tell you what you NEED to hear.

Side note, the Realtor is STILL showing the buyer homes knowing full well he had no approval and doesn't even know if the buyer can find financing. Oh yeah the buyer wants the best rate too... And people in hell want ice water.

Oh Relitters!