- Financing Rates at 0.69% - 1.59%
- No Financials - No monthly minimums - No invoice minimums
- No facility fees - No audits - No up-front fees - No hidden fees
- Set up account in 3 to 5 working days - 24 hr funding thereafter
- Credit Lines starting at $5,000 & up to 10 million
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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?
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.
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We offer lending services in the United States, Canada and the UK
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Call Now1 800 876 6071Click Here for a Quote Rates At 0.69% - 1.59%