A Tuesday, November 2, 2010 news article by Ann Saphir of www.reuters.com reports that financing to American small businesses was up in September based on year-to-date comparisons. She writes, “Small U.S. businesses stepped up borrowing in September, data released by PayNet Inc on Monday showed, suggesting the recovery is gaining steam even before the Federal Reserve Bank embarks on an expected new round of monetary stimulus.”
This is great news for small businesses, demonstrating a strong move toward recovery. States Saphir, “The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S small businesses, rose 16 percent in September from a year earlier… and is now at the highest level in almost two years.”
With small companies representing the vast majority of new hiring, the increase in borrowing by these companies indicates that we are, indeed, on the path to economic recovery. PayNet founder and president William Phelan states, “This doesn't point to anything but a robust recovery. These small businesses are people who see the demand in the economy every day, and they are alert to react very quickly to that demand." This means more hiring and more jobs. Phelan says, “I think we'll see jobs start to happen over the next six months or so.”
More lending activity and job growth bring new opportunities for small businesses. Gone are the blanket hiring and spending freezes of recent years. Small businesses can prepare to meet the increased demand that will accompany a recovering economy by managing their small business financing through accounts receivable factoring.
Using accounts receivable factoring enables companies to sell their invoices to a factoring company in exchange for payment within just days as opposed to waiting 30 to 90 days for a customer’s payment. This enables small businesses to meet payroll, increase marketing efforts, purchase new equipment, and plan ahead for economic recovery. It also saves small businesses time and money by decreasing in-house accounts receivable work and expenses.
Although lending is increasing, small business loans still create debt. Accounts receivable factoring services are not loans. There is no interest to pay and no debt created. In fact, accounts receivable factoring is actually a balance sheet asset, which can, in turn, improve companies’ credit history all while providing an accessible, reliable form of small business financing.
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.
