Banks are not very keen to lend. Equity markets are also not accessible for many business owners. So, the option left for borrowers is ‘factoring’. ‘U.S. Bancorp’ some time back commissioned a survey of firms having less than $10 billion in assets. One-third of respondents say that banks are giving them what they need when it comes to loans and company solutions.
Factoring also termed as ‘Finance accounts receivables’ makes it possible to keep a company’s balance sheet robust. Factoring is a substitute to financial institution lending as funds are made available to small businesses based on a flexible formula that is proportional to revenue. The factoring line increases as trustworthiness of customers improves. This ‘Liquid Capital’ also does not require time-consuming process, enterprise history, personal credit score, and restrictive clauses.
Even large organizations can encounter problems with liquidity issues. Liquid Capital provides account-receivable financing, and also offers extra financing alternatives. Liquid Capital is seeing a record growth in 2011 and it is far more common.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to email@example.com