•
Cash Flow Is King For Small Businesses
In a good economy,
small businesses can afford to let a few customers slide when it comes to paying bills on time. In a tight economy, late payments cascade through the system, impacting not only the small business that isn’t getting paid, but also its vendors and suppliers, who may have to wait for payment. One or two late payers can turn an efficient small business into another late payer.
When regular collection methods don’t work, one potential solution for small businesses is to consider a merchant cash advance. A merchant cash advance from Rapid Capital Funding allows you to get the cash you’re owed now and repay it when the cash actually arrives.
By putting cash into your hands right now, a merchant cash advance from Rapid Capital Funding can help your business break the potentially catastrophic cycle that delayed payments from customers can set up. A merchant cash advance is ideal for businesses that accept Visa or MasterCard and have credit card sales of at least $2,500 per month. Rapid Capital Funding collects repayment as transactions come in, along with a small fee. As a business owner, you can pass that fee on to the late-paying client(s). Your business doesn’t suffer because your customers are late in paying their accounts.
A merchant cash advance isn’t a loan. There are no monthly bills to pay, which makes it a convenient way to get cash fast. Most merchant cash advances can be completed within just a few business days. Better than that, 95% of merchants who fit the basic advance criteria are approved for advances, even those with less-than-perfect credit.
When you need cash for your business, you need Rapid Capital Funding!
Photo Credit: Jypsygen, via Flickr
Bookmark it
•
Consumer Reductions in Dining Cut Into Restaurant Financing
A new Morpace Omnibus survey shows that about half of all consumers have reduced the number of restaurant visits they’ve made in the last six months. This figure is up from data in September 2008 that showed that only one-third of consumers had reduced the number of restaurant visits.
The new data also suggests that the reduction in consumer visits is being spread across all restaurant sectors. Consumers say that they’ve cut their fine dining by about half, while consumers at the least expensive fast-food restaurants have cut their visits by one-third. The survey interviewed 1,010 adults over the age of 18 across all demographics.
This news isn’t new for restaurant owners who are feeling the pinch of the recession. Restaurant financing can be difficult, especially in a poor economy. Banks have tightened lending restrictions, making it more difficult for small businesses to get the capital they need to remain in operation.
One potential solution to the restaurant financing issue is a merchant cash advance. Merchant cash advances are ideal for restaurants, bars and other businesses that have an ongoing stream of revenue from credit card sales. A merchant cash advance can be arranged in as little as a few business days and can put as much as $250,000 into your business. Your cash advance limit is based on the average amount of monthly credit card sales and about 95 percent of merchants who apply for a business cash advance are approved.
When you’re looking for restaurant financing and your bank is saying no, talk to Rapid Capital Funding and get the cash you need today.
Bookmark it
•
Restaurant Financing Is Key To Survival
The Wall Street Journal reported last week that industry analysts expect a surge of bankruptcy filings in 2009 as consumers reign in discretionary spending. Among those hardest hit are fine dining establishments and independent operators that may lack the restaurant financing needed to survive a downturn.
Sales at low-end fast-food restaurants like McDonald’s are increasing, as customers trade down from higher priced casual dining establishments. The fine dining sector shrank by 7.5 percent in 2008, and approximately 2.8 percent of the nation’s family dining restaurants also closed. According to industry estimates, about 80 percent of the casual dining restaurants are independently owned.
Analysts say that as many as 3 percent of the nation’s restaurants may close, with independent owners, bar-and-grill operators and small dining establishments bearing the brunt of the failures. Having a cash cushion is especially important for small operators, who can’t take advantage of the economies-of-scale that larger chains can.
Independent owners are being squeezed at both ends. With declining sales and tightened credit restrictions, many restaurant owners are not finding the cash they need to sustain their operations.
An alternative to loans or lines-of-credit is a business cash advance. The business cash advance isn’t a loan, but an advance payment of credit card receipts. US businesses that accept Visa or MasterCard and have sales in excess of $2,500 per month can qualify for a cash advance of as much as 1.5 times their total monthly average credit card receipts.
The advance is paid back as credit card transactions are registered, so there’s no monthly loan payment, either. Most applicants - about 95% - qualify for the program. If you’re looking for a fast cash alternative to loans in order to finance your restaurant business, contact Rapid Capital Funding today and ask about a business cash advance.
Photo Credit: Mark Altamero
Bookmark it
•
Need Access To Cash For Your Small Business?
While the final details of President Obama’s economic stimulus plan have yet to be worked out, some analysts are questioning whether there is anything of value in the plan for small business. Additional loan provisions and increased lending guarantees from the Small Business Administration are in the current package, but some fear that the plan will do little more than create additional governance without addressing the issue of
small business financing.
The potentially expanded powers of the Small Business Administration allow the government to be a buyer in the secondary loan market. While that may seem to stimulate the loan business, many analysts are skeptical about plans to saddle the government with extra debts, likening the new SBA to troubled mortgage guarantors Fannie Mae and Freddie Mac.
Instead, advocates favor extending small business tax relief, a move that is currently absent from the stimulus plan. In the short term, small businesses need cash for operations and longer-term growth. As credit markets tighten, the access to cash has become a major issue for small businesses.
One approach that more business owners are taking is a business cash advance. Based on future credit card sales, a business cash advance supplies access to readily available cash immediately.
Business cash advances aren’t like loans. There is no monthly payment. Instead, businesses can use future credit card sales to fund their current activities. Repayment of the advance occurs as normal credit card transactions for the business are processed. Depending upon average monthly credit card receipts, a business can take up to $250,000 in cash advances.
A business cash advance is a short-term unsecured debt, so there’s no collateral. About 95% of applicants are approved for an advance. To apply for a business cash advance, a business must be registered to operate in the United States, accept Visa or MasterCard, and have total credit sales of $2,500 or more per month.
If you are interested in learning more about how a business cash advance can help your small business, contact Rapid Capital Funding today.
Photo Credit: Kamil Dratwa
Bookmark it
•
In January of this past year (2008), there was a report at Research Central and CIO Insight online stating that 186 different financial institutions (credit unions included) had been victimized by online fraud. Additionally, attacks on online credit unions had accounted for 45% of all monthly activity during 2007. Conversely, attacks against national banks had decreased by nearly 44% during the same time frame. Speculation has arisen that with a weakened economy that the credit unions are now easy targets for hackers and scam artists.
The above reports appeared to be just the tip of the iceberg for the problems that the nation’s credit unions have been experiencing throughout 2008, or possibly a harbinger of worse issues to come. It became obvious that the financial sector in the US was infected by the evidences of numerous credit losses and write-downs. Back in August, a report was released by the Wall Street Journal that five of the biggest credit unions in the US have lost considerably on mortgage-backed securities in the residential real estate sector. Entire equity bases were literally wiped out in the process.
This indicates that this housing market distress has been spreading even into the financial sectors were there is less risk involved. Gerald Hanweck, who is a finance professor at George Mason University and is a visiting scholar at the FDIC, has studied the banking industry for quite some time now and feels that the situation has been growing more serious throughout 2008.
In addition to the above, the federal regulator who oversees the US credit unions claims that the losses will most likely reverse themselves once the mortgage markets become more stable, and once these institutions become more adequately capitalized. However, there are some outside observers who are very concerned that these credit unions have underestimated how deeply the problem is running within the mortgage industry.
According to Hanweck, this is a very serious situation and it isn’t getting any better. Hanweck believes that the five credit unions have sufficient funding available to handle a deeper downturn in the situation, but he continually worries that added risk could lead to a more serious run on funds with one or all of them. Since 1990, the total assets of US credit unions have been consistently increasing from just over $200 billion to just under $800 billion as of the end of the second quarter of 2008.
Credit unions are member-owned, not-for-profit cooperatives (organizations) that lend money and take deposits like regular banks. The credit unions have become key players in the mortgage industry, and their problems are focused on the so-called “corporate” credit unions. Unlike the standard credit unions, the corporate entities do not deal directly with the consumer. However, they do provide financing and investment services to the regular credit unions who do deal directly with consumers.
According to several federal regulatory filings, the five corporate credit unions that are showing the largest mortgage-related losses are:
Constitution Corporate Federal Credit Union
Members United Corporate Federal Credit Union
Southwest Corporate Federal Credit Union
U.S. Central Federal Credit Union
Western Corporate Federal Credit Union
As of the end of May, 2008 they had reported nearly $5.7 billion in “unrealized” losses which occur when the current market value of any security drops, whether it has been sold or not.
The fact that these credit unions are experiencing grave financial strain, even though they are the most conservatively operated institutions in the financial sector, indicates that no financial sector is immune from this mortgage meltdown malady. It has also caused far-reaching damage throughout the commercial bank sector and the Wall Street financial services. Mark-downs of over $300 billion in connection with the mortgage industry dilemma have already taken place as well.
As a result of regular credit unions being too small to engage in more sophisticated investing, the corporate credit union came into being for the purpose of serving these smaller entities. A portion of the assets/funds of these regular credit unions gets placed with one of the corporate ones who in turn will invest the money. Assets of the 28 corporate credit unions (which are owned by the member credit unions) total roughly $90 billion. US Central provides the member credit unions with investment services in addition to being a service provider for the corporate ones.
Credit unions, like banks, are insured by the Federal Government for up to $100,000 per account and up to $250,000 for retirement type accounts. Seven of these regular credit unions failed in 2007, and as of August (2008), nine have failed so far. Since these regular credit unions have funds deposited with the corporate ones, a financial failure at that level would equate to losses for the regular credit unions involved, as well as losses for the depositors/members of them. Additionally, it has been 13 years since a corporate credit union has failed, but eventually, the regular credit unions involved with them did recover their funds.
From a historical standpoint, 25 years ago in 1983, Congress passed legislation to increase the United States’ contribution amount to the International Monetary Fund. There was also a conference of 13,000 government financial officials and international bankers that was held in Washington, D.C. during Reagan’s Presidency. It was the joint annual meeting of the IMF and World Bank wherein they addressed problems with the US dollar and interest rates. Of equal importance, these issues shared the stage with concerns over the deadlock of IMF funds.
As of early December, 2008 a two-tiered plan to help those institutions battered by investments in the lending and mortgage sectors has been introduced by the federal agency that oversees the operations of US credit unions. As of this coming January, 2009 the NCUA (National Credit Union Administration) will be awarded a $41.5 billion “shot in the arm” that was approved by Congress in September (2008) to stimulate some liquidity for corporate credit unions that are experiencing continually mounting losses on securities tied to mortgages and other types of home lending.
Additionally, this plan also provides another $2 billion for retail credit unions so they can cut their interest rates on mortgages that are currently held by homeowners who are struggling to make their payments on time. In addition to this, the funding has been structured in the form of repayable loans. No matter what the future holds, or what happens with the long-term viability of these troubled corporate credit unions, the NCUA is counting on the retail credit unions having a serious interest in (and committed to) preserving the entire credit union sector through these difficult financial times.
Bookmark it