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Job Losses Prompt Factoring Invoices for Small Business

Congress has been looking at expanding two lending programs for the owners of small businesses, hoping to create more jobs as part of President Obama’s strategy for economic recovery. Every day more United States businesses are forced to close their doors. The Administration’s plan to assist small businesses in applying for loans, as well as U.S. House of Representatives legislation toward increasing the ceiling on federal government loan programs. Small business has typically always been the seed and a stimulus for new jobs in a struggling economy. This commitment to small businesses will be measured carefully over the next five years, along with job loss statistics.
 
Unemployment rates fell from 10.0 to 9.7 percent in January while the number of unemployed persons decreased to 14.8 million. The United States government uses a macroeconomic model as the method for calculating the number of jobs that have been saved or created through the economic stimulus package to show, for example, that when the plan was first implemented it saved or created 100 or 150,000 jobs during days one through 100 of executing the Recovery Act and the notes the estimated statistics for projecting that it will create, as an example, 600,000 more by the end of the summer. 

The government’s estimates are fairly conservative - a one percent increase in gross domestic product equals a bump to approximately one million U.S. jobs. There are an estimated 29.6 million small businesses in the United States that
employ more than half of the country’s  workforce in the private sector

According to the American Recovery and Reinvestment Act of 2009 from the Executive Office of the President, Council of Economic Advisers, the jobs that were saved or created by the ARRA of 2009 include: for the fourth quarter 20091.5 million jobs were saved. Projections for 2010 are around 3.5 million, and in 2011 the numbers are at 1.7 million, while in 2012 the statistics are at .3 million. 

Smart small business owners are familiar with the strategy of factoring invoices to turn their accounts receivable into fast cash. It’s used as a short-term solution for some, while others have discovered factoring as a long term, or permanent, business funding tactic. Now, the Obama Administration is expanding two lending programs for the owners of small businesses, hoping to create more jobs as part of his strategy for economic recovery.

Also known as factoring accounts receivables, factoring begins with due diligence that usually takes one to two business days. Once completed the client is at liberty to offer invoices to the factor for purchase. Upon receipt of invoices, the factor checks the credit of the debtor named on the invoice and makes sure that the sale has been satisfactorily completed. Next the debtor is advised of the purchase by the factor and the client receives funding.

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