Equifax, Inc. states that commercial bankruptcies among the nation's more than 25 million small businesses increased by nearly 81 percent in June 2009 from June 2008.
More than 1,000 emergency loans have been granted to small businesses in the United states after the Small Business Administration (SBA) launched the America's Recovery Capital (ARC) small business loan program last June.
ARC's goal is to grant 10,000 loans by the time it ends in late 2010. There are 8,200 FDIC-backed banks in the U.S., but many are slow to participate in this program nationwide, with only 400 lenders currently making ARC loans. Banks thus far that are doing these loans include Wells Fargo, PNC Financial and Zions Bank.
Of all the states participating, it appears as if Minnesota and Wisconsin have generated 28 percent of the ARC loans to date, while Alabama, Oregon and South Carolina, have fewer than five lenders offering the loans.
ARC loans are insured, and will grant business owners up to $35,000 to small business owners if they get approved. The SBA is paying banks two percentage points over the prime.
Forecasting a 56 percent default rate, the SBA knows that small businesses are in jeoprody, and it takes awhile for the applications to be processed.
Another alternative to going out of business or bankrupt, is the age old concept of invoice factoring for small businesses. Factoring services allow small businesses to capitalize on significant growth opportunities over a short period of time; often tripling their workforce and increasing revenue 10-fold.
Single invoice factoring (a.k.a. invoice discounting) which is a unique finance tool superior to standard invoice factoring services, as well as factoring funding provided by traditional old line factors, accounts receivable financing, receivable funding and assets based lending approaches.
businesses can acquire additional funding for immediate working capital by selling credit-worthy invoices to a factor.
According to a new survey, U.S. small-business owners say the recession is pushing them to be more efficient, innovative, and cultivate stronger teams. Small businesses have 500 or fewer workers and are a key portion of the country's commerce food chain. They account for more than 99 percent of all employer firms, according to federal statistics, pay nearly 45 percent of the country's private payroll and produce almost a third of the nation's export value.
The survey shows that 66 percent of small businesses are finding new ways to operate more efficiently during the economic downturn.
Many of these small businesses have found invoice factoring as one of most innovative solutions to be efficient during a bad economy.
The good news is that 38 percent of small business owners expect the economy to improve over the next 12 months. Only 23 percent of them believed it would improve last January of 2009.
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Kristin Gabriel is a writer who works with The Interface Financial Group (IFG), North America's largest alternative funding source for small business. The company provides short-term financial resources including
invoice factoring, serving clients in more than 30 industries in the United States, Canada, Australia and New Zealand. IFG offers expertise in
factoring, accounting, finance, law, marketing and banking.
