Small Business Credit in a Deep Recession

Denny Dennis, senior fellow with the NFIB Research Foundation, let me know a while back that he was working on a new small business survey looking at the impact of the recession on credit. The NFIB released the report “Small Business Credit in a Deep Recession” today. Here are a few highlights of the report:

* Fifty-five (55) percent of small employers attempted to borrow in 2009; 45 percent did not, although five percent of owners, so-called discouraged borrowers, did not try because they did not think they could obtain credit.

* Forty (40) percent of small business owners attempting to borrow in 2009 had all of their credit needs met; 10 percent had most of their needs met; 21 percent had some of their needs met; and, 23 percent had none of their credit needs met. The current level of borrowing success is significantly lower than in the mid-2000s when up to 90 percent had their most recent credit request approved.
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Think Banks Are Out of the Woods? Maybe Not

More than $1 in every $10 that American banks have outstanding in loans is lent to a troubled borrower, a ratio far higher than previously seen in the quarter-century that such numbers have been compiled, The New York Times’s Floyd Norris writes in his Off the Charts column.

The problems are greatest in construction loans for single-family homes, where nearly 40 percent of the loans either are delinquent or have been written off as uncollectible. But they are also high in mortgage loans for single-family homes, where $1 in every $8 of loans is troubled.

The figures were released this week by the Federal Deposit Insurance Corporation, as it announced that the number of banks in trouble had risen sharply, and forecast that the rate of bank failures would increase.
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How Large Companies Can Take Advantage of Purchase Order Factoring

Purchase order factoring is not only for small companies. It can also greatly benefit larger ones. By giving businesses the opportunity to access good and materials necessary to fulfill an order without having to pay for them, they can save money or at least avoid tying up the cash they have on hand.

Purchase order financing is sometimes used by companies when they are having cash flow problems. When they are unable to come up with the money to pay for materials from their own cash stores, working with a company that can aid them in doing so is extremely helpful and sometimes necessary so that they are able to meet any contractual obligations they have with a customer.

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Get An Advance On Your Invoices With Invoice Financing

Under normal circumstances, a company that accepts invoice payments would have to wait between 30 and 90 days to collect money owed to them. While being able to make payments in this manner is convenient for customers, it can be financially difficult for the company offering it because they have already provided the labor and materials necessary to provide the service or goods. As they wait to receive payment for work they have already completed, they still have bills that must be paid. If they do not have incoming payments on a consistent basis, this can become burdensome. Invoice financing is an effective work around. It allows companies to receive the most of the money owed to them via invoices right away.

Invoice financing is not a brand new concept. However, it has been receiving much more attention and interest lately, largely because traditional commercial financing options are waning. For example, it has become increasingly difficult to receive a bank loan.

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