Traditional Credit Market Tightens: Businesses Re-Examine Other Financing Options

"A banker is a fellow who lends you his umbrella when the sun is
shining and wants it back the minute it begins to rain." -- Mark Twain
SAN FRANCISCO--(Business Wire)--
A recent survey released by the Federal Reserve found that about
half of U.S. banks are tightening their standards on loans to small
businesses, up from about 30% earlier this year. Not only are
requirements more stringent, but the loans also come with a higher
price tag.

So where do businesses in need of capital to turn for help? How do
they avoid the feeding frenzy of "sharks" lurking in the financial
pool?

Many small businesses are turning to non-traditional financing,
including factoring, as an appealing and accessible option.

The use of factors as an alternative source of capital was the
topic of discussion by a panel of industry leaders hosted by the
Turnaround Management Association of Northern California on Thursday,
May 15th. The session was moderated by Chuck Doyle, managing director
of Business Capital.

Factoring is a financial transaction involving the sale of
invoices or assets, at a discount to raise immediate capital. While
the factor industry largely has polished an imaged tarnished in the
early '80s by unscrupulous finance entrepreneurs, industry experts
warn, "There are still sharks in the water," and advise businesses to
"read the contract and demand flexibility!"

Factors offer companies easy and immediate access to cash, while
at the same time assuming responsibility for debt collection. Used
correctly and through a reputable firm, factoring can provide a
lifeline and maximize business growth, even during a turbulent
economy.

The Federal Reserve reported that nearly two-thirds of U.S. banks
have raised loan rates. When you take into account hidden fees,
upfront fees and other costs associated with a traditional bank loan,
factoring favorably compares. The key to factoring, however, is to pay
promptly and even use it in conjunction with other types of financing.

Chuck Doyle, moderator of the panel and expert in the turnaround
industry, said that companies like Business Capital, which provide a
variety of alternative recovery solutions and debt reduction for
businesses in financial turmoil, are in increasing demand - despite
Fed claims that recent rate cuts will open up credit liquidity to
small and midsize business.

"You're talking to the players, not the fans," Doyle said,
explaining that while Fed rate cuts are a positive move for the
economy overall, the positive effects will take a long time to trickle
down to most small businesses in need of immediate relief.

In the meantime, he stresses the importance of being proactive.
"Don't wait for the situation to get worse, act while you can still
benefit from debt management service," Doyle said.

For more information on the panel discussion, visit the TMA's
website at www.turnaround.org. To learn more about Business Capital
and the company's full array of financial services, visit their
website at www.bizcap.com.

Business Capital
Jen McCarthy, 415-989-0970
jmccarthy@bizcap.com

Copyright Business Wire 2008