Top 3 Ways to Increase Small Business Lending

There are currently 34 million Americans who are without a bank or underserviced by their current bank, according to a recent survey from the FDIC. How is this possible you may ask? Well, many individuals simply don’t know where to turn to obtain credit.

Our weakened economy has made starting a new business more challenging than ever. The process for getting a loan requires mass amounts of calculation, documentation and time. Well, we don’t agree with this convoluted process. It is our goal to help small businesses learn the best practices that we have gathered using our financial intelligence tools. Below are the top three ways we suggest entrepreneurs pursue their venture to gaining capital.

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What is Asset Based Lending?

Asset based lending, also known as revenue based lending, is a loan based on monthly revenue/sales. This type of loan allows business owners who don’t qualify for a traditional business cash advance loan to receive financing. The loan is paid as the business earns income.

When to use inventory financing

When does inventory financing make sense?

Inventory financing makes sense when:

  • when your company enjoys a high inventory turnover rate but is short of the cash needed to replenish its supply,
  • your small business has a warehouse of goods ready to ship, but is short of cash to buy supplies for the next production cycle,
  • when having to maintain high levels of inventory ties up much of your cash.

 

When is inventory financing not advised?

It’s not a good idea when you have either obsolete or hard moving inventory. Why add interest charges to your problems?

What is Purchase Order Financing?

Purchase order financing refers to the assignment of purchase orders to a third party who then assumes the obligation of billing and collecting. Typically, this form of financing is tied to a specific transaction where the company requires cash to be able to acquire the raw materials to manufacture the goods for which it has received the purchase order.

 

Benefits of PO Funding

 

What is purchase order financing

Benefits of Purchase Order Financing

The Advantages of Purchase Order Financing

Preservation and business growth

  • Create revenue growth without adding more debt or taking equity partners
  • Increase sales while preserving existing capital
  • Focus more time on growth as collections are handled by FinishLine

 

Better supplier relationships

  • Your suppliers are paid quicker and more routinely whic can result in more favorable rates

 

Improve your financial condition

  • Increase your cash flow by  taking on new jobs (many business turn down jobs due to cash flo constraints arrising from paying suppliers and wiating 30-90 days for customers to pay)
  • Take on larger jobs that may be more lucrative (larger jobs require larger investments in supplies which can limit certain companies with tight capital)
  • Avoid costly bank loan rates especially for companies with less than A-1 credit