Jobless Entrepreneurs A Factor In Economic Recovery

Earlier this month, the Kauffman Foundation issued a report detailing an increase in the number of small businesses being formed in the U.S. However, the news is exactly as good as it seems. While new entrepreneurship is at its highest rate in 15 years, a significant percentage of those new business owners are running one-man shows. They are the so-called, ‘jobless entrepreneurs.”

Jobless Entrepreneurs

During the Great Recession, unemployment skyrocketed, and even as the country is recovering, unemployment remains high. With no one hiring, many jobless people have turned to entrepreneurship to keep themselves working. The problem lies in the fact that so many of these jobless entrepreneurs are not creating companies with employees; they’re simply working for themselves. So, while there’s an economic benefit to keeping people working, the reported increase in small business startups is not indicative of an imminent uptick in hiring.

According to the Kauffman Foundation’s report, “…0.34 percent of American adults created a business per month in 2010, or 565,000 new businesses, a rate that remained consistent with 2009 and represents the highest level of entrepreneurship over the past decade and a half. In contrast, however, the quarterly employer firm rate has dropped from 0.13 percent in 2007 to 0.10 percent in 2010.”

Going it Alone

With so many small business owners striking out on their own, financing is a major concern. In order to stay in business, entrepreneurs need feasible working capital solutions so they don’t end up sidelined by startup costs, overhead, or lagging accounts receivable. Services provided by factoring companies are a safe option for today’s jobless entrepreneurs, particularly as they begin to take on larger, creditworthy customers and slowly start hiring employees.

Beyond providing those necessary working capital solutions, factoring companies offer tremendous benefits to small businesses, including startups with no employees. For example, running a single-person operation means the owner not only does all the work but also manages all the books. With accounts receivable financing through a reputable company (always look for the International Factoring Association and Factors Against Fraud logos when hiring a factoring company), much of the burden of managing accounts receivable, financing worries, and stress of going it alone is alleviated.

Factoring companies are great partners for jobless entrepreneurs and other startups. For more information, contact your financial advisor today.

France Surpasses US in Lending: Factoring Invoices More Relevant

As the United States climbs out of the Great Recession, countries around the world are doing the same, each in their own ways, and each with varying successes and struggles. Taking the lead at the moment: France. reports this week that, “French lending to small and medium-sized companies -- with fewer than 250 employees -- never turned negative and is growing at an annual rate of about 4 percent, data compiled by the Bank of France show.” Beyond that, Bloomberg reports, “France outstripped every major economy in Europe in terms of full loan approval rates for small businesses for the January 2009 to June 2010 period, according to European Central Bank data.”

By contrast, the U.S. continues to struggle with small business lending and bank closures, among other major financial concerns. Key among the successful strategies employed by the French is the use of government mediators to help entrepreneurs secure private and public funding, which in turn aids job growth and sales.

Without such programs in place in the U.S., particularly in light of the recent "Small Business Administration (SBA) cuts, entrepreneurs remain unsupported in their efforts to keep their small businesses afloat. This environment has made accounts receivable financing particularly relevant, as it is an ideal source of working capital solutions for today’s small business owners.

Factoring companies provide alternative business financing by purchasing small business’ outstanding invoices, providing fast access to the operating capital those companies need to stay afloat, recover, and grow. Invoice factoring also helps small businesses focus more on their core competencies and less on managing their accounts receivables. Factoring companies essentially serve not only as a source of funding, but also as an outsourced accounts receivable department, handling much of the invoicing and documentation for their clients.

For more information about accounts receivable factoring companies and services, consult your financial advisor.

Small Business Lending Falls Short Without Increased Consumer Spending

New numbers released this week show that the Thomson Reuters/PayNet Small Business Lending Index has January’s small business lending volume up 14% from just one year ago. However, Reuters also reports that, “Seasonally adjusted borrowing actually fell to just below November's level.” In short, it appears we’re taking two steps forward and one step back in what PayNet’s president/founder William Phelan called “the long-haul recovery.”

Why the lack of linear progress? It comes down to where the money goes once small business owners borrow it. Reports Reuters, “With the jobless rate at 9 percent, small businesses are seen as key to the recovery, because they create most of the new jobs in the U.S. The money they borrow is usually earmarked for new equipment, which in turn can signal future hiring, as companies take on new employees to operate their new machines.” Unfortunately, job creation is falling short of economists’ predictions. Small business owners are largely avoiding taking out small business loans or using their borrowed funds to replace current equipment, maintaining (rather than increasing) their capacity.

Additionally, small business loans are being viewed with skepticism these days, as entrepreneurs are hesitant to acquire new debt in an unstable economy. Congressman Jeb Hensarling (R-TX), told Reuters of a local businesswoman who seemed to sum up the feeling among the entrepreneurs he’s met, saying, “Congressman, you could pay me to borrow the money and I wouldn't do it because you can't guarantee me the customers.”

Without increased consumer spending, small business lending may remain stalled, which can result in a vicious cycle. Some entrepreneurs, however, are finding that they can obtain small business financing without creating debt or worrying about new customers. Accounts receivable factoring allows small business owners to sell their invoices for immediate access to needed operating capital, keeping them out of debt while maximizing the benefits of having outstanding accounts receivable.

For information about accounts receivable factoring, consult your financial advisor.

Small Business Financing Tops List of Entrepreneur Concerns

Running a successful small business typically begins with a passionate entrepreneur who is willing and able to offer an excellent product or service. This is only part of the larger picture, however, as success also requires knowledge of small business financing, management, and business operations.

Hiscox USA recently released the results of their Small Business Survey, part of which details the four biggest mistakes small business owners report making during the startup phase. Not surprisingly, two of the four have to do with small business financing. A full 32% of small business owners reported that underestimating their monthly expenses was their biggest error, while 18% said they failed to secure enough small business financing.

Business knowledge related to small business financing is also essential for a successful startup. Hiscox’s survey notes that 26% of small business owners felt they did not know enough about small business financing and credit, while 33% reported feeling they lacked the proper knowledge about how taxes would impact their business.

To secure the proper financing, small business owners often turn first to their local banks or credit unions, only to find that small business loans are highly dependent on personal credit and assets as well as business history. Additionally, even as the American economy shows improvement, most small lenders are still keeping tight reigns on their small business loans. For most startup companies, this is a major stumbling block.

Proper access to small business financing, however, is not limited to local lending institutions. In fact, small banks can be unstable in today’s market, creating additional risk for borrowers. For today’s entrepreneurs who find they have underestimated operating costs or small business loan needs, accounts receivable factoring is an ideal solution.

Accounts receivable factoring through a reliable firm, particularly one aligned with the International Factoring Association (IFA) and Factors Against Fraud (FAF,, is an excellent method of small business financing that can help startups bridge the gap while they learn the ropes. For more information on whether accounts receivable factoring may be right for you, consult your financial advisor.

SBA Cuts Endanger Small Business Lending

President Barack Obama released his proposed budget for the 2012 fiscal year (beginning October 2011) this week, bringing about new concerns for American small business owners who are fearful of the dramatic decreases in Small Business Administration (SBA) funding and subsidies. According to CNN Money, “President Obama's 2012 budget proposals calls for SBA funding of $985 million, down slightly from the $993 million proposed for fiscal year 2011. The 2012 proposal is an increase from the $824 million core budget the SBA had in 2010, but a sharp 45% drop from the $1.8 billion the SBA actually got in 2010, thanks to its supplemental allocations.”

Simply put, the President’s proposal would cut just $8 million from the SBA budget next year. However, the SBA enjoyed government subsidies amounting to $963 million in 2010, money it will not see in 2012 under Obama’s current proposal. This news is concerning to entrepreneurs, many of whom depend on small business loans backed by the SBA as their primary form of small business financing.

Without the subsidies that have bolstered the SBA during the recession, the agency is likely to make dramatic cuts, which will impact small business owners. Without assistance from the SBA, such as SBA-backed small business loans, those entrepreneurs are less likely to obtain the small business financing they need, further endangering their operations.

With this level of uncertainty surrounding the 2012 budget and its impact on the SBA, particularly considering that Congress has yet to approve the President’s budget for 2011, despite the fiscal year having started back in October 2010, those seeking small business loans are increasingly more likely to find a better result by looking into other forms of small business financing. One such method of small business financing is accounts receivable factoring.

Accounts receivable factoring services, particularly those through firms with private funding sources as opposed to those reliant on today’s potentially unstable banks, represent an ideal alternative to traditional small business loans. Factoring involves less risk and is more accessible to today’s struggling small businesses. In the past, accounts receivable factoring was considered a last resort for those unable to obtain traditional financing. In today’s market, however, factoring works for small businesses because it is fast, accessible, and enables small business owners to have reliable, quick access to the working capital they need without creating debt the way a small business loan does.

Sell Your Products Sell Your Invoices to a Factoring Company

Even for the very best of sales people, in today’s market, getting retail shelf space is a massive challenge. While big box stores and major retailers may once have considered purchasing from start-up companies and small businesses, in today’s market, the answer is almost always a resounding “no.”

Fortunately, “no” can always change to “yes” in time, and the best way to get to “yes” is to build up a positive track record of great sales. An October 2010 New York Times “Small Business Guide” article cites small, local businesses and area-specific chains as the ideal places to market new products, and for good reason. Small businesses are more likely to help other small businesses. The owners may even know you or someone on your staff, helping with the proverbial foot in the door. In addition, smaller companies have more autonomy to make buying decisions, making it more likely you’ll get to “yes” faster by staying close to home.

Of course, once you get that first big order, you need the operating capital to actually fill it. For example, your company, Chili Mania, sells Matt’s Homemade Chili Sauce, and your local grocer agrees to carry it, purchasing one case. Sales become steady, and the grocer carries it for a few months, buying one case at a time. At this pace, your overhead is relatively low, and you are able to meet the grocer’s needs easily. Unexpectedly, you receive a new order from the grocer for five cases. At the same time, a competing grocer has been receiving customer requests for Matt’s Homemade Chili Sauce, and orders two cases for each of his three stores. Suddenly, you’ve gone from one case a month to needing to produce 11 cases immediately. And, ideally, this increase in business will continue as word spreads about your great product. This is where accounts receivable factoring can help.

Seeing your product catch on is an exciting time and a great opportunity to get ahead. How you handle your small business financing, however, can make as big a difference in your success as your order volume. Increased overhead such as new production costs and payroll expenses can strain your budget as you produce the goods to fill your customers’ orders. And once you deliver the product, you’ll most likely wait anywhere from 30 to 90 days to get paid.

At this point, many entrepreneurs look into small business loans, only to find that their lack of business history, spotty personal credit, or inability to produce adequate collateral makes the weeks they spend in the application process completely fruitless, as they are repeatedly denied loans. Small business financing through accounts receivable factoring, however, is much more accessible.

Fast A/R Funding provides invoice factoring services to small businesses just like the chili sauce company in the example above. Chili Mania saw its orders rise, and that would be the ideal time to apply for invoice factoring services.

Because Fast A/R Funding bases approvals on your customers’ creditworthiness and your invoices’ values, funding through invoice factoring is much more accessible than a small business loan. In as little as 48 hours, we can provide the funding you need to fill those make-or-break orders. And because we help manage your accounts receivable and credit risk, you can focus on building your business instead of billing your new customers.

For more information on how your business can benefit from accounts receivable financing, contact Fast A/R Funding at or call 888.833.8826 today.

VIDEO Of OnlineApplication Process



Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.

Factoring For Growth

For most American small business owners, the “Great Recession” has been a challenging, often crippling time for their companies. Fortunately, current economic indicators show that the American economy is on the mend, a trend mirrored in the expectations of entrepreneurs throughout the country. In fact, according to www.gaebler.coma recent Administaff survey showed very encouraging numbers:

The Business Confidence Survey, conducted by Administaff, found that 47 percent of small business owners thought that the economy would recover before the end of the year, while 21 percent said they … [expected an upturn] before mid 2011. Thirty-two percent of those surveyed said that they weren't sure when the economy would be back at full strength.

The survey also found that, compared to the same time last year, average salaries had risen by 3.2 percent, bonuses were higher by 14.9 percent and commissions were up by 8.1 percent. The leader of Administaff said that the statistics showed that while the mood is improving, many small business owners were still cautious.

"Owners and managers of small and medium-sized businesses are seeing signs of improvement in sales but remain cautious in their economic expectations," said Paul J. Sarvadi, Administaff's chairman and chief executive officer. "However, many have hopes the election results may lead to a more favorable business climate and increased predictability for their businesses."

As the economy continues to recover, American businesses have a unique opportunity to grow their businesses as a way of preparing for the future. One of the simplest ways of doing that is through accounts receivable factoring.

Accounts receivable factoring services, often called “invoice factoring services” are a useful method of small business financing that enables business owners to budget and plan better by creating consistent cash flow. The small business sells its invoices to the factoring company at a small discount. The factoring company, in return, pays the small business, usually within a couple of days. This means that instead of waiting 30 to 90 days for customers’ payments, the small business has its funds almost immediately.

Additionally, accounts receivable factoring enables small businesses to save money on their in-house accounts receivable work. Reputable factoring companies, such as those affiliated with the International Factoring Association and Factors Against Fraud, provide not only funds, but also help collect on invoices and manage accounts receivable. The factoring company handles all the billing, reducing printing, mailing, and personnel costs. As well, the factoring company provides access to advanced credit-screening tools to help small businesses decide how much credit to extend and to whom. This minimizes credit risk, again saving companies money.

The time and money small businesses save by using invoice factoring services are resources that can be put into growth opportunities. New equipment, staff training, marketing campaigns and other growth-oriented costs are easier to plan for and pay for when a company knows what its monthly budget will be, as it does with invoice factoring. The economy is improving. Will your small business be ready to meet the demand?

Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.

Consumer Spending Increases Among Top 20%

American small business owners have been cautiously optimistic in recent months, as reports of increased consumer spending have become more consistent and reliable. Fourth quarter stock market gains helped many ring in the New Year with high expectations for a rapid economic recovery in 2011. However, a Bloomberg Businessweek article released January 27, 2011 indicates that small business owners may still have a long road ahead of them as the economy continues its upward trek.

With invoice factoring services, small business lending is fast and generates no debt, actually appearing as an asset for a company’s ledger, as opposed to small business loans, which are liabilities. As well, with invoice factoring, entrepreneurs see the ability to budget and plan more effectively while spending less time managing their accounts receivable. Finally, because invoice factoring approvals are based on the customers’ creditworthiness and invoices’ values (not the business owner’s personal credit or assets), invoice factoring services are an affordable, accessible method of small business financing, ideal for today’s economy.

Still, American businesses need operating capital. And with consumers and businesses working to save every penny, many vendors are truly feeling the pinch as customers wait a full 30 or 60 days to remit payment on their invoices. This is where invoice factoring can be of great benefit to small businesses.

For small business owners functioning in this changing economy, finding new ways to obtain small business financing while remaining fiscally conservative is not just good business, it’s a necessity. Although interest rates remain at record lows to bolster lending, many entrepreneurs find that their credit has been damaged by the recession, making them ineligible for small business loans. Others fear taking on the debt of a small business loan, hoping to improve their company’s credit by maintaining a healthy balance sheet.

What this boils down to for small business owners is simple: The wealthy are seeing the fastest, most appreciable recovery as the stock market rallies, while the vast majority of Americans continue to struggle to make ends meet as economic stability slowly trickles down. This disparity is particularly relevant to small business owners, as the majority of Americans continue to spend cautiously. As well, the longer the recession’s effects are felt throughout the country, the greater the impact on overall consumer spending habits, meaning that many will continue to do without items once considered essential even after they regain financial stability.

While Businessweek acknowledges the gains seen in consumer spending during the fourth quarter of 2010, it notes a large discrepancy between spending by the wealthy and spending by the average American family. In fact, it notes that top economists estimate between 40 and 50% of current consumer spending is done by income earners in the top 20 percent. That spending accounts for nearly 70% of the American economy.

Overcoming The Lending Drought

The Associated Press reported November 3, 2010, that obtaining credit continues to be a significant challenge for American small businesses, even as the economy is improving: “Tight credit for small businesses is a major obstacle for the economic recovery. Small business owners say they can't get loans to hire or expand because lenders worry the economic picture could darken…[and] bankers now say there aren't enough creditworthy borrowers to merit an increase in lending. Lending to small businesses has remained low for much of the year, after falling sharply during the credit crisis of late 2008 and early 2009.

With banks remaining extremely cautious during the economic recovery, small business owners are left attempting to hold onto, and even grow, their companies while meeting increased customer demand without adequate small business financing. As a result, many entrepreneurs are seeking alternative funding sources and finding that perhaps traditional small business loans, which create debt and make companies dependent on potentially unreliable banks, aren’t the ideal solution in the process.

In today’s market, the most ideal solution for most small business financing is accounts receivable factoring. When obtained through a reputable online factoring company, accounts receivable factoring services (often referred to as “invoice factoring services”) are a reliable, accessible, and fast alternative to the traditional small business loan. With factoring, small businesses simply sell their outstanding invoices to the factoring company and receive payment in a matter of days. The factoring company then owns the accounts receivable, and they help collect on those invoices directly from the small business’ customers.

Invoice factoring is not a loan. In fact, invoice factoring turns accounts receivables into assets, enabling small businesses to have fast funding to meet the growing demand of a recovering economy. With more predictable cash flow, small businesses are able to make better hiring and expenditure decisions. And with the help of invoice factoring companies, small businesses have access to money-saving tools such as advanced credit-screening processes for customers. As well, invoice factoring companies handle billing for their clients, which drastically decreases in-house accounts receivable costs for those clients. Without the expenses of the personnel, paper, printing, and postage required to bill and re-bill customers and process those payments, small businesses are able to reallocate staff hours and have their employees focus on tasks more relevant to their specific business goals.

As traditional small business loans remain scarce and costly, accounts receivable factoring services provide a safe, affordable alternative that actually meets the needs of 21st-century companies in an improving global economy.

Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.

Factoring For Staffing Companies

Staffing companies are seeing steady increases in demand as the American economy continues to recover and companies respond by hiring new staff to meet their own increased business levels. But staffing companies themselves took a direct hit with the economic crisis, as businesses in every industry enacted massive spending and hiring freezes in response. Those staffing companies that have managed to stay in business are now seeing the potential to capitalize on the recovery and move toward a more stable existence.

Most staffing companies function on a basic model:

  1. They hire staff to work for customers’ companies.
  2. They directly pay the staff they’ve hired, typically on a weekly basis.
  3. They invoice their customers’ companies.


The end result for staffing companies is that, while they’re seeing a marked increase in hiring opportunities, they’re also seeing their costs go up exponentially as they pay out to new hires while waiting anywhere from 30 to 90 days for the new hires’ companies to remit payment on their invoices. This is where invoice factoring services come in.

Invoice factoring services, also called “accounts receivable factoring services,” are a particularly beneficial method of small business financing for small staffing companies experiencing cash-flow challenges as business picks up. Instead of waiting on customers to pay their invoices (and spending time and money managing those accounts receivable), staffing companies can sell their outstanding invoices to invoice factoring companies for payment within days. This helps them meet payroll, increase marketing efforts, and take on more customers as they’re better able to budget, plan, and keep up with demand.

For those staffing companies that experienced credit challenges during the recession or those just opening their doors, invoice factoring services are a great option. Based on the creditworthiness of the debtor (in this case, the company requesting new staff) and the value of the related invoices, accounts receivable factoring services are an accessible, fast, reliable alternative to costly small business loans. Invoice factoring creates no debt, making it a conservative, sound option for both start-ups and seasoned staffing companies alike.

Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.