The weekend is here and the President has been busy all week.

AIG execs received their bonuses, and then lost them; new rules being developed for bailout takers, more funds available for small and medium sized business and the US Government has entered the Accounts Receivable Factoring Industry.

Our President has really been busy this week and I will be very interested to see what the survey say about the confidence level in North America now that all this has been happening.

The President has done more in the last week than I have seem most elected officials do in an entire term of office. I am sure there will be more to come and quickly because the work that Mr. Obama has put into motion has just started and there is no end in sight to what has been going on in the US politics recently.

I have not met one person that is not impressed by the results of the AIG bonus issue (since I do not personally know any AIG execs). Most people are impressed by President Obamas strength and determination to get the economy back on track.

In regards to the additional funding for small and medium sized business, this has been a long time coming. I must say it is not a surprise to see this developing but most people in the Commercial Finance Industry are very pleased to see it. The economy need stimulation and the best place to do this is not with the major corporations but rather the small to medium sized companies as these are the employers of most people in North America.

The US Government getting into Accounts Receivable Factoring did come as a shocker thoughnever saw that coming. I have always said that the economy is going to see a major increase in the use of Accounts Receivable Factoring and Purchase Order Financing but for the government to handling the invoices from the parts suppliers to the automotive makerwow. That being said, not all companies will have access to the government funding however, but the use and acceptance of the government in using the Accounts Receivable Factoring method will make other companies use this type of financing and will help diffuse the stigma sometimes associated with Factoring.

Can not wait to see what happens next week

Getting a Business loan at your bank is a terribly difficult task these days regardless if you are in Canada or the United States. Because of this many businesses feel they need to seek the operating cash they need from Angel Investors. But are you ready to turn your business over to an Angel Investor?

Angel Investors look at deals differently than banks, or most other lenders for that matter. Their focus is to net between 5 and 10 times their initial investment in a period not to exceed 5 years. They do this by carefully plotting their exit strategy to recover their funds within the specific time period they define which can take the form of public offerings of stock, takeover or liquidating the assets of the company. What ever it takes.

Due to the current market conditions in our economy Angel Investors are looking for higher than a 10 times ROI. This is because of all the business failures versus the successful ones. When you consider the failure rate in the Angel Investor portfolio, the effective ROI for a successful Angel Investor is about 20% to 30%.

Since the ROI for and Angel Investment is so high but the lower costing financing at the credit union and banks are not available, especially for business start-ups it makes being in business even more difficult. The reason the banks and credit unions are not interested in financing start-ups is because they lack the history and asset backing required by their underwriting guidelines.

So you are declined at the bank and you can not afford Angel Investors now what?

Regardless if your company is in the United States or Canada, there are options. The following is a real life situation that I was involved in to avert an Angel Investor situation. There is a company in Alberta Canada that possesses a unique product that he was planning to market across North America. He went to the usual places to inquire about financing for his business. After the banks turned him away, he spoke to a few Angel Investors. After considering their proposals he continued his search for financing when I presented him with an option called Accounts Receivable Factoring and Purchase Order Finance.

When I had initially spoken to the owner of the company, he had shipped out one large order and was about to ship out his second large order which was going to wipe out his entire inventory and he would have to wait to receive payment from the customers before he could replenish his stock but he had several additional orders to be filled and he had no way to fill them without cash.

After I received the application from him it was about a week when he received his first advance on his new Line of Credit using Accounts Receivable Factoring and now he has the cash to make his business run more smoothly.

In short, if your company has been turned down by the banks and credit unions plus there is no comfort for you in dealing with an Angel Investor due to their terms, be sure to check with a Professional Commercial Finance Broker so they can put together the proper financing for your business.

In another bold move to assist the economy the US Government released its intention to start Factoring US Auto suppliers invoices to the automotive sector.

NY Times (03/19/2009):

DETROIT ” The Obama administration moved on Thursday to stabilize the American auto industry by creating a $5 billion fund to support troubled parts suppliers.

The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need, the Treasury announcement said.

So what does this mean for the industry? Until the details are rolled out is hard to say specifically, but the announcement to get into the Accounts Receivable Factoring business is the latest installment of how far the US Government will go to get the economy back on track.

As I mentioned in a prior article that I predicted that Accounts Receivable Factoring is going to play a major role in the rebuilding of our economy ended up to be quite accurate.

Not everyone is familiar with Accounts Receivable Factoring so I will give you a quick overview. In it basic form, Accounts Receivable is a Line of Credit for Businesses which advances companies funds based on their Invoices that are outstanding.

In an average Accounts Receivable Factoring facility, the company that is financing their receivables will be eligible to receive between 80% and 90% of the invoice face value. One the end customer pays they will receive the balance of the funds less the finance fee,

The Factoring fee will vary depending on the advance rate and the days the funds are outstanding but the average is around 2% to 4% per month.

What is often used with Accounts Receivable Factoring is Purchase Order Finance. If you do get Purchase Order Finance you will need an Accounts Receivable Factoring line to go along with it in 99% of the cases I have seen.

This option works best for distributors but Accounts Receivable Factoring can work for companies in nearly any sector. If your company needs financing like this, the best option is to speak to a Professional Commercial Finance Broker because they will be up on all the trends and latest programs available through the various lender channels.

Generally speaking, the service of the Professional Commercial Finance Broker will not cost you anything as they are paid by the lender.