With Lenders Tightening Requirement How Will Businesses Get Capital?

The COVID-19 pandemic disrupted businesses across all industries. To mitigate hardships, the CARES Act was passed, giving businesses access to Paycheck Protection Program (PPP) loans. However, that well has run dry and a second round of funding for businesses is still up in the air, so lenders are tightening their requirements for loans. Businesses need an easier way to get working capital without facing loan turndowns.

Lenders Are Steering Clear of Risky Investments

When government-backed PPP loans reached their deadline in August, banks had to handle funding requests on their own, with their own money. As expected in an uncertain economic climate, lenders began tightening their requirements for funding solutions. Even the trucking industry, which was able to get approvals even during severe recessions in previous years, was not immune to the new requirements rolled out by banks and similar lending institutions. Unfortunately, businesses of every size and type need working capital more than ever right now, and they have few options outside of lenders.

Loans Are Not Ideal for Working Capital

Even though lenders are tightening their requirements, businesses are not eager to go through the loan process. Loans take time, and businesses need access to capital right now. Additionally, many businesses are not in a position to take on extra debt, risk assets for collateral, or have their credit ratings impacted by taking out loans. Freight carriers, manufacturers, suppliers, and small businesses on Main Street need a viable alternative for working capital.

There Is a Solution

Invoice factoring provides a debt-free option to businesses that need fast access to working capital. Instead of waiting 30, 60, or even 90 days for clients to make payments on their invoices, factoring turns unpaid receivables to cash within 24 hours. The simple exchange does not place debt on the books and allows businesses to preserve their credit ratings. Invoice factoring improves cash flow and provides the working capital businesses need to maintain operations and make plans without having to wade through red tape or deal with turndowns from traditional lenders.

Single Point Capital is a national leader in factoring services. We are committed to providing fast, efficient, and accessible working capital for businesses across all industries. Contact our offices to learn how invoice factoring can work for your business.