Small businesses still feeling credit squeeze

In May Advanta suddenly announced it was shutting down one million business credit cards, leaving tens of thousands of small businesses without a credit lifeline. Now business lender CIT’s financial condition is deteriorating giving further angst to small businesses that rely on credit lines to meet payroll and carry them through valleys of lean times. Even SBA loans, which logic should indicate would increase as a result of the stimulus package, are decreasing.

Small businesses, it seems, are still being squeezed from all side. It is increasingly important to hang onto cash, and to find alternative financing funding: Getting paid by credit card rather than waiting 60 days or more for payment brings in instant cash – but at a cost of 2 to 3 percent. If businesses must extend credit, accounts receivable Factors can also provide instant cash at a cost of 3 percent and more. Leasing equipment can improve cash flow. Hungry vendors may be willing to extend more favorable terms. Customers in dire need of products may be willing to front money for inventory and manufacturing. Innovation in financing is key – as small business just can’t rely on traditional credit. Consider what you can do to conserve cash and find innovative ways of financing.

Share with me unique thing you have done to finance your business.

Will Limkemann
www.siqualtd.com