There are few that can argue that there is not any need for some kind of banking reform in the US. How and what that will look like no one can really be sure of at this point. The one thing that we do know is that small and mid- sized companies in America are struggling to maintain their businesses and are getting virtually no help from banks or the government. Factoring companies offering factoring loan, the one industry that has and is continuing to help those companies, has not been mentioned amidst all the debate. Hopefully by raising this issue, it will become part of the discussion.
Who can really blame the banks for dramatically scaling back lending. Most were devastated by the credit and confidence crisis over the last few years. They made bad choices, and some very bad loans. Now there is tremendous uncertainty economically and politically in addition to abject fear. When afraid the easiest choice is to do nothing and wait, although it is rarely the smartest choice. This is not to give the banks a free pass, I do not agree with what they are doing but I understand it. And who is left out in the cold.
The backbone of this country, small and mid-sized companies. They get no help from the banks and not only no assistance from the government, but additional burdens in taxes and a health care bill that will raise costs as well. Who is helping these companies. Companies that specialize in Factoring Receivables, Purchase Order Financing, Trade Finance, and Asset Based Lending.
While many banks have walked away from this business, there are many other financial service companies who have stepped in to help. These companies help small and mid-sized businesses improve their cash flows to keep themselves afloat and even expand during these difficult times. They charge reasonable rates that are further offset by allowing the borrowing company to get discounts from their suppliers for being able to pay on time (or early).
These companies should be part of the debate in Washington, allowing them more access to capital at a lower rate, so that it can actually get in the hands of those that need it most. The fear is that not only will these companies not be included as part of the solution, but by their omission they might get lumped in with other businesses which should be regulated further. Those involved with “pay -day” lending and other predatory lending should be cracked down upon, capped on what they charge and regulated to protect individuals. They have absolutely nothing in common with those in the factoring business other than the fact they make loans.
Everyone should encourage all small and mid-sized business owners to reach out to their representatives and let them know how you feel about this issue. It is clear that soon there will be new legislation forthcoming, how and what it will look like is something we can still be involved in.
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