Economic Confidence Rises Among Small Business Owners
May 11th 2009 09:51 pm
I was surprised to read that headline. Economic confidence among small business owners rose to its highest level in 14 months in April 2008. Discover Card commissions Rasmussen Reports, LLC, to survey 750 small business owners every month and that headline reflects its recent findings. On closer examination, however, small business owners rate economic conditions “fair to poor.” Here are the actual numbers: percentage of business owners who say the economy is getting better doubled from 16% in March to 31% in April and the number of owners who see the economic getting worse declined from 69% in February to 51% in April. These numbers certainly show improvement, but they aren’t all that inspiring. The most optimistic business owners were those in business for less than 2 years.
As we come out of this recession, where are small businesses turning for financing. I’d like to give you a couple of stories about recent transactions at The Interface Financial Group (IFG).
The Interface Financial Group is one of the few factoring firms that will finance sub-contractors in the construction industry. Until the recent economic turmoil, IFG targeted companies with $250,000 to $5,000,000 in sales. In December 2008 IFG financed a window distributor and installer who had done about $6 million in sales for the first half of 2008. Then, the contracts that he had on his books for the second half of the year didn’t mobilize. Sound familiar? His competitors went out of business.
IFG Knows Construction!
A general contractor on a mixed-use commercial/residential project approached him to supply and install the windows. He took on the business, who wouldn’t? He ordered the windows from his usual supplier. But when the time came to take delivery of the windows and install them, his supplier refused to ship the windows because the supplier was owed money on previous orders that had not been paid. IFG was able to structure a transaction, including subordination from two banks, where IFG advanced money so that the window supplier was paid. He shipped the windows, and our client installed them. The client completed the progress billing to his general contractor, and IFG was paid about 53 days later. Usually, IFG is able to complete a transaction in 48 hours; because of the bank subordinations, this transaction took longer – 8 business days.
Our usual transaction size is $25,000 to $50,000. The transaction just described was for a total of about $500,000. The next transaction is on the other end of the spectrum. In March I talked to a staffing company in the construction industry that had done about $8 million in revenue for 2008. But, as we all know, business died in the latter part of 2008 and early 2009. He was having trouble making payroll. Sound familiar? He liked the concept of our “use it as you need it” service, but he didn’t want to have his customers notified that he had sold the invoice to IFG. On a Wednesday afternoon he changed his mind and called me. I visited his office on Thursday morning and funded him by the 1 p.m. wire deadline on Friday for a total of about $16,000. IFG was paid about 45 days later.
The survivors will need financing as we come out of this recession. The Interface Financial Group is fast, flexible, and cost-effective.
