"Let's Talk Cash Flow" Is there a credit squeeze in the atmosphere for small to mid-size business borrowers? If so, what can you do to prepare for it? View Recent Transactions What did banks do in the last recession? A: They used covenant violations to get rid of the loans they did not want, and they may do the same now if their auditors come down on them to tighten underwriting standards. The sooner you realize that this may cause you to need money, the sooner you can start looking for it.   The covenants in any loan agreement set the conditions under which the lender offers the loan and may call it. Covenants may require the borrower, for example, to maintain financial ratios at specific minimums or report inventory or receivables in specific ways. Lenders want borrowers to adhere to covenants, of course, but don't commonly call a loan for covenant violations alone - at least in good times.   It is important to anticipate your financing needs in good and hard times. We have found that the reality is many businesses don't. You always want to seek a backup source of financing TODAY. Just in case your bank pulls your credit line.   The smart thing is to start looking now for at least one other source of debt financing in case your bank pulls the plug in the coming months. Ask yourself if you had an increase in your credit line, could you increase your profit margin as the economy slows? Or, is your working credit line essential in the survival of your business?   If you answered yes, it is very important to consider an alternative lender soon. In bad times, a reliable supply of debt or credit line can prove more important to the survival of a business than the cost of borrowing. For most businesses with tight profit margins, interest becomes the primary consideration. But if you can use debt or an increase in your credit line to prosper in difficult times, your worries about interest costs should go in second place. Here are some corporate finance suggestions by one of our investments banking partners. Anticipate your financing needs. Do not assume that you can't borrow even in a tight lending market. Do not make interest rates your primary consideration. Borrow or have access to as much working capital as you can. Watch for watershed events in your company's development, positive or negative, and keep your lender informed at all times. Keep lines of communication open with several lenders. Don't think just because one says no, the others will too. Investigate financing sources other than banks, including commercial finance companies and institutional lenders such as insurers and pension funds. When applying for a loan, ask when you can expect an answer to your loan application and a follow up call. Get all commitments in writing. Pay for performance, not effort. When you arrange a credit line, make sure your lender offers you all you're entitled to, given the condition of your business. Banks are not going to offer leverage, because they are risk-averse and highly regulated. But if you can get a large loan with fewer covenants and a higher interest rate from an alternative lender, take it. 1st Commercial Credit can provide interim financing for your business using only your accounts receivable as collateral. Account receivable factoring is not regulated like a bank and a credit facility can be establish in approximately 5 working days. There are no up-front fees and no financials required to set up an account. Our recent client came to us because the business was experiencing a 200% growth and outgrew the credit line at the bank. They plan to factor for about 24 months and then re-apply for a credit line at the bank once the growth stabilizes. About 1st Commercial Credit, LLC 1st Commercial Credit, a nationwide factoring company headquartered in El Paso, Texas. Provides accounts receivable financing in the US, Canada, and the UK; offers export trade finance to clients in every major world market and can convert receivable finance transactions in 17 currencies.   Other Services: Purchase Order Finance View Recent Transactions US and Canada Tel 1 800 450 9653 United Kingdom Tel 0 800 404 9669 Start Factoring Today! This Document has been digitally date stamped and is monitored. Please do not copy without permission. Other Articles: 02-05-2005 Factoring is an alternative form of business financing 03-09-2005 Factoring Companies: Number one providers for growth capital in the IT Staffing industry. 11-11-2004 Nurse Registry benefits by Business Manager Program Termination 03-29-2005 Why should I choose a full-service factoring company instead of a Bank offering factoring services. 05-10-2005 What to look for in a factoring company? 07-05-2005 Is Accounts Receivable Factoring right for your Business? 10-10-2005 The Hidden Value in Factoring Accounts Receivable - Credit Expertise. 12-30-2005 Press Release: Flexible International Finance available to US Exporters 12-31-2005 Banks should consider Export Trade Finance Outsourcing 01-12-2006 How to use Accounts Receivable Financing in an acquisition of a business. 01-15-2006 Press Release: 1st Commercial Credit expands receivable financing to Mexico 01-31-2006 Texas oil drill bit manufacturer taps into a $1 million receivable factoring credit line. 02-14-2006 Press Release: 1st Commercial Credit Allocates $30 Million for Fort Bliss 8a Contractors 03-13-2006 PR: 1st Commercial Credit offers new freight factoring products for the transportation industry. 05-08-2006 1st Commercial Credit offers factoring and accounts receivable financing in Quebec, Canada. 07-18-2006 PR: Free Freight Matching Load Board sponsored by 1st Commercial Credit 08-28-2006 How to hurdle fast growth financing without adding debt to your business? 09-18-2006 How to improve cash flow without alienating customers or stringing out suppliers. Other related pages by industry: Factoring Temporary Staffing Companies Factoring Medical Providers Factoring Medical Staffing Agencies Factoring IT Staffing Firms Asset Based Lending 1st Commercial Credit (SM) is a trademark of 1st Commercial Credit, LLC.

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Quick Link to Financial Resources:

Accounts Receivable Financing  |  Financing Purchase Orders | Asset Based Lending |

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Value Added Services:

Free Load Board sponsored by 1st Commercial Credit

 

 Load Board

Commercial Truck Financing

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Popular Industries and links:

Freight Factoring | Construction Factoring | Government Contract Factoring | International Factoring
Medical Staffing Factoring | Temp Staffing Factoring | Oil & Gas Industry Factoring | Consumer Contract Factoring

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