Invoice Factoring and Economic Recovery Versus Bank Loans

Banks make money by issuing loans to small businesses, and even though they are seeking more, but there aren’t viable borrowers. What’s more, the banks are now being criticized by the federal government for not lending to enough small businesses. Small businesses employ about half of Americans, accounting for 60 percent of new jobs.

Most banks have the cash to make loans, however research says that most loan officers are saying most applications fail. Loan apps typically fall into two categories, 1) business expansion, and 2) helping a business stay afloat. Employment growth has been negative for 10 of the 12 quarters since April of 2007. Source:Study by the National Federation of Independent Business – NFIB. The Market continues to be elusive, and overall consumer confidence is at an 11-month low, according to the same study.

The majority of businesses are trying to reduce their debt levels, so why would the average small business owner want to borrow money at this time. They don’t because with so much uncertainty, many small businesses can’t imagine going into debt via a loan.

As the administration keeps pushing for new lending, Washington is pushing large commercial banks to set up small-loan funds. The president of the Small Business Legislative Council, Jack Satagaj recently said, ” taking out a loan to invest in inventory in this climate requires a leap of faith.”

However, a business that has funds due to invoice factoring, and leveraging their accounts recevables, makes enough money in less than 48 hours to purchase more inventory.

19 thoughts on “Invoice Factoring and Economic Recovery Versus Bank Loans

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