NEW YORK CITY -- The most recent work by the U.S. Congress to spur job growth in the U.S. -- the Jumpstart Our Business Startups (JOBS) Act -- is designed to spur the growth of startups and emerging growth companies by eliminating much of the red tape and cost associated with attracting investors. Unfortunately, bringing on investors or turning a private company public may not be the right approach, or may simply not appeal to many small and midsize businesses (SMBs) that are in need of financing to grow their businesses.
Despite the government's push to create new jobs and improve economic conditions, most SMBs lack sufficient access to credit, which prevents them from growing and hiring. According to an opinion poll released earlier this year by Main Street Alliance and the American Sustainable Business Council, 90% of small business owners nationwide agree the availability of credit for them is a problem, and 61% agree it's harder to get a loan now than it was four years ago.
But don't lose hope. There are alternative financing options, such as online receivables financing, which can give businesses access to the working capital they need to thrive.
A Flexible Alternative
Using receivables in commercial finance transactions is not a new idea; they are widely used as a collateral component in business lines of credit, asset-based lending solutions and factoring deals. What's different about online receivables financing is the way in which the transactions are structured.
The Receivables Exchange provides an online marketplace that matches businesses (sellers) with buyers -- a community of banks, financing companies and factors -- looking to purchase their outstanding invoices. As a seller you control the terms by setting minimum advance and maximum fee amounts. You pick and choose which receivables to sell, with buyers competing to give you the best possible rates. Once you accept an offer, the proceeds are wired into your business account the next business day.
The Receivables Exchange does not require a long-term contract, covenants, all-asset liens, or personal guarantee on the invoices sold. Buyers are bidding for specific receivables and they assess their risk based primarily on the credit rating of the selling company's customers, not the credit rating of the company itself. Firms are not judged by their short track record or lack of tangible collateral, which can be an issue when trying to secure traditional financing. Instead, they are able to leverage the credit quality of their customers to increase their short-term capital.
Whether you plan to take advantage of the new JOBS Act or are simply looking for an alternative approach to fund new growth for your company, The Receivables Exchange offers a flexible and affordable financial solution for supplementing existing lines of credit, or to use as your primary source of working capital.
» NIC PERKIN is president and cofounder of The Receivables Exchange, an online marketplace for sale and purchase of accounts receivable.
EDITOR'S NOTE: Information contained on this page is provided by an official of The Receivables Exchange and distributed by the company. Vending Times Inc. and VendingTimes.com make no warranties or representations in connection therewith.