When your bank says no…

Many of the companies I have worked with over the past six months are looking for an additional way of acquiring money when they cannot go to a bank.  In many cases, these are start-up businesses without the credit or assets to acquire a traditional loan.  In others, they may have a loan already, but just need some extra cash.

Factoring your receivables can be a good solution to help improve your cash flow.  Here’s some more info about factoring, click here.

Invoice factoring is a reliable source of financing for your business as over the years many businesses have used it to generate quick capital. The best way to describe it is as the sale of accounts receivables. Perfect for a start-up business or businesses in need of capital fast; invoice factoring allows lenders to make a decision based on the clients’ credit decisions, and not the business credit.

It can take a long time to get approved for a bank loan, and most businesses get turned down when they go after a regular loan. That is where invoice factoring comes in because it doesn’t take much to get approved. All it takes is some clients with good payment histories, and you will have the cash quick.

The process is simple; you sell your accounts receivables for a discount of maybe 5% to 10% of the actual value to the lender, or the factor. The factor will than work to collect the accounts receivables for the full amount which is where they make their profit. Even though you lose some revenue and profits, it is better for your business sometimes to have the capital quickly to fund new and better projects.

Here are some more benefits to invoice factoring:

1. You gain working capital without adding debt or diluting your equity
2. You can finally begin to take advantage of early payment discounts from suppliers for prompt payment
3. You can purchase equipment that will increase your profitability
4. It can protect and improve your credit ratings
5. It can increase your sales through credit extensions
6. And most importantly, it allows you to focus on the success of your business instead of worrying about your cash flow.

- hope that helps!

Slow-down hitting commercial real estate?

The scope of our economic troubles seems wider and deeper than many of us want to admit.  If you are a real estate owner looking to refinance your current property, sooner rather than later may be best option.  I recommend you do your homework now and explore all of your options.

For the full article, go to the wall street journal article.

Here’s a summary:

Cracks are starting to show in commercial construction.

For the second month in a row, the Commerce Department reported a decline in spending on nonresidential construction — which includes everything from hospitals to office parks to shopping malls. The report yesterday showed construction spending fell 1.7% in January from December, the steepest drop in 14 years. While residential construction accounted for a big part of the decline, spending on nonresidential construction slid 0.8%.

Meanwhile, there may be an oversupply of shopping malls and office buildings after a period of intensive construction. It adds up to bad news for employment, the economy and investors.

While the boom in commercial construction wasn’t as dramatic as in home building, the impact of a slowdown on the economy could be significant. Nonresidential construction accounted for 3.6% of gross domestic product in the fourth quarter of 2007, up from 2.5% five years ago and the most since the second quarter of 1988, according to Moody’s Economy.com.

As home construction got caught in a downward spiral last year, nonresidential construction continued to expand at a healthy clip. Spending on nonresidential structures rose 16% in 2007, the biggest four-quarter increase since 1984, according to Morgan Stanley.

Signs of trouble cropped up at the end of the year. As credit markets tightened, office space sold in the fourth quarter dropped 42% from a year earlier, and sales of large retail properties declined 31%, says Real Capital Analytics, a New York real-estate research group.

If spending continues to slow, construction workers, who are reeling from the housing slowdown, face more layoffs. Construction jobs made up 5.4% of nonfarm payrolls in January. While that’s down from a peak of 5.7% in April 2006, it’s still above the long-term average of 4.9%, say economists at Payden & Rygel in Los Angeles, leaving room for more job losses.

Nonresidential construction payrolls, down 2.7% in January from their recent peak in March, posted year-over-year declines in December and January, the first such drops since August 2004. A construction slowdown will be especially tough on specialty-trade contractors, such as plumbers, painters and electricians, who account for about two-thirds of overall construction payrolls. This could spell trouble for consumer spending, which accounts for two-thirds of the U.S. economy.

Another problem: Property values of commercial real estate are declining. A Moody’s index of commercial real-estate values fell 1.5% in December from the previous month. It was the fourth steepest monthly decline in the seven-year history of the index, which nearly doubled from the end of 2000 through October.

Moody’s expects a peak-to-trough decline of 15% to 20% in commercial real-estate values, returning prices to where they stood about four years ago. Goldman Sachs Group Inc. analysts have projected a drop of as much as 26%.

The outlook is souring. Retailers have reported a slowdown in sales. Wal-Mart Stores Inc. and J.C. Penney Co., among others, have pared expansion plans. Electronics seller Best Buy Co. has reined in its quarterly earnings forecast. Talbots Inc., Movie Gallery Inc.’s Hollywood Video and numerous home-furnishings retailers have announced store closings. Others, including Bombay Co., have liquidated under bankruptcy protection.

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My company, Bedrock Financial Group, LLC. is a small business financing firm which can help you determine the best option for purchasing or refinancing your property.

Click here for to check out my programs.