When Banks Stop Lending Money
Last time updated: 9 April, 2024
Last updated on April 9th, 2024 at 06:32 pm
During this time of economic uncertainty, you may find that banks and perhaps other payroll funding companies are tightening their credit requirements. This is especially true with staffing firms, who lenders have always seen as high risk and are often the first to be told “no” during times of economic downturn.
Even before the current banking crisis, banks were pushing back on staffing firms looking to take on new business. Although banks are in the business of issuing loans, their underwriting process was always at odds with the goals of staffing firms looking to grow. Even for long time bank customers, staffing firms found that bank managers often dragged their feet, required approval from an ever-widening group of executives, and needed to fill out seemingly endless forms to increase their credit lines.
Another option to fund your payroll needs is using an accounts receivable financier, like Advance Partners. Since we leverage your invoices (accounts receivable) to provide immediate cash for you to continue accepting new business opportunities, we don’t have the same strict credit requirements a bank does.
However, not all accounts receivable financiers are created equal. Most funding companies have to borrow their money in order to lend it to you, so they may have to stop lending if they get cut off from their lender. Also, some are beholden to Venture Capitalist or Private Equity funding, which means they’re just as vulnerable to being forced to tighten their credit restrictions.
In times like these, it’s important to partner with a funder that meets three criteria:
What makes Advance Partners uniquely prepared to help staffing firms thrive during uncertain economies is that we’re backed by a multi-billion dollar human capital management company, Paychex, Inc. This means we can provide unlimited funding, won’t be going anywhere regardless of the economy, and we don’t rely an outside financing source so we never have to tighten our requirements. And since we only work with staffing firms, we understand the pay/bill components of companies you work with, which means flexible contract terms and pricing structures.
Accounts receivable financing can be a great alternative to banks because you get immediate access to working capital to take on new contracts that you otherwise would have to turn down. Without it, you may lose business to a competitor and the cost of financing is typically built-in to cover your additional business.
Get notified about the latest AP blogs and resources on staffing topics
Strictly Necessary Cookies should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.