Daily Archives: February 3, 2012

U.S. Jobs Show Solid Growth as Unemployment Rate Drops to 8.3%

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The United States jobs rate showed solid growth in January. The unemployment rate dropped to 8.3 percent, which is the lowest in three years. People hope this is a sign that the nation and the economy has turned the corner. Usually unemployment numbers are worse in January, so this drop is especially surprising. Keep in mind that the holiday seasonal retail hires are often no longer needed in the January.

One state – North Carolina – showed that their jobs figure still lagged national numbers. Even though statewide unemployment rates for January will not be available until later this February, the statewide rate increased to 9.8 percent in December. This figure is up after a 9.5 percent figure in November, and then 9.7 percent for the month of October.

Although this is good news for small to medium-sized businesses, many have taken into account slow cash flow for Q1, and have started using spot factoring to raise funds on an as needed basis.

SMEs can raise cash from their own invoices by finding a trustworthy factor like IFG, the setting things up in advance so that when the funds are needed, they’ll be ready to go, and begin an invoice factoring program immediately.

Five Alternative Financing Solutions

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many small businesses are in need of financing, whether it is for acquiring new business or stock, acquiring franchises, expanding into new markets, or just covering short-term cash flow problems, businesses often have to turn to outside resources to address their financial needs. Here are five ways in which businesses can get outside funding, one being invoice factoring.

– Asset-based lending. A traditional source of funding, asset-based lending is a loan that is secured by an asset, meaning that if the loan is not repaid, the asset is seized. These loans are usually tied to inventory, property, accounts receivable, machinery and equipment.
–Hedge Funds and Private Equity Funds. A growing number of funds with healthy portfolios are lending to businesses as traditional bank loans become more difficult to get. These funds do not always market themselves and finding a fund willing to invest in your business is often dependent on existing relationships and networking. It is also good to keep in mind that these funds often charge high interest rates.

–The 401(k). Owners can sometimes tap their retirement accounts for up to 50 -percent of the value of the account. a start-up businesses can also be financed with a 401(k), though this involves jumping through some hoops. A C corporation must be established that has been created, but with no issued stock. This corporation then adopts a profit-sharing retirement plan. Then funds are rolled over from your previous retirement fund into the new 401(k) plan.
–suppliers and Vendors. It is possible to approach your suppliers and/or vendors for some financial assistance. They may actually help because they have a stake in your success of your firm, and some might help with the financing.

Another option is factoring, a practice wherein a business sells its accounts receivable invoices to a third party at a discount in exchange for immediate cash with which to finance more business. This method is used by businesses to cover for their short-term cash needs.It is not the company’s credit that is up for inspection but rather it is the debtors and there are nothing to repay. Once popular in early merchant banking activities, accounts receivable factoring is experiencing a resurgence in popularity as many small businesses struggle in the current financial climate. A bank loan is based on your assets and the ability to pay the loan back. But when you factor, the funds available are based on your customers with good credit and are unlimited.