There are many options for small businesses to find the right financing for their business. It’s important to remember that each one is unique and has its own benefits and drawbacks.

1. A Growing Industry: Accounts
Receivable Financing
By – M1Xchange.com

2. Introduction
Credit is the lifeblood of a small business, and when
it comes to financing, banks are usually the easiest
place to get money. But times have changed since the
Great Recession and banks aren't lending like they
used to. Now there's a new way for small companies
to get the cash they need—accounts receivable
financing—but it isn't always easy for businesses to
understand this new type of lending.

3. It's growing because the industry has had to grow
up.
•In 2008, the economy collapsed. The recession hit businesses
hard and forced them to cut costs wherever possible. Accounts
receivable financing gave companies a way to keep their doors
open when they were having trouble collecting from their
customers.
•The industry has had to grow up in order to meet the needs of
today's market. A few years ago, they were called "factoring
firms" or "accounts receivable lenders". Today, they're often
referred as simply ARFIs (Accounts Receivable Financing
Institutions).

4. Pre-recession, banks were the place companies looked for
financing.
• For the majority of companies, banks were their only option for financing. Before
the recession, banks were the only financial institutions who extended loans and
lines of credit to small businesses. Banks have a reputation for being risk-averse.
They are slow to lend, they don't respond well to change or flexibility in terms of
payment methods or timing and they are not transparent with their customers
because they don't want competition from other lenders like peer-to-peer lending
platforms (or even other banks).
• Bankers also aren't honest with their customers because they don't want to lose
them as clients; if you ask a banker why he can't extend your line of credit by
another $500K so that you can pay off your debt earlier than planned and then save
on interest payments over time—especially when it's clear that the company's cash
flow has increased significantly since last year—he'll say it's against bank policy or
something similar that makes no sense from an accounting standpoint but still
keeps him from doing what should be done anyway: helping out his customer!

5. But post-2008, bank lending slowed way down.
Banks became more cautious after the recession and were less
willing to lend money than they had been before. Banks
tightened their lending standards, which meant that many small
businesses that normally would have qualified for loans no
longer did so. Banks were more focused on their own bottom
line and survival than in helping out small businesses that
needed their help maintaining cash flow for operations or
expanding into new markets.

6. This left a financing void that many smaller
businesses rely on.
 Banks are increasingly unwilling to lend to small businesses
 Larger companies receive more attention from banks than small
businesses do
 Loans that are risky or underperforming don't get approved by
banks.
 Interest rates on bank loans have increased to make up for the risk,
but they're still less than what you'd find on an account receivable
loan.

7. That created an opportunity for new lenders to
step in.
The economic downturn has created an opportunity for new lenders to
step into the accounts receivable financing market. Many companies
that traditionally used bank credit lines and loans are now turning to
alternative lenders, who can offer more flexible terms than banks. But
it also led to new problems. The industry is still young, so there are
lots of new players. Some of these new players are not well-regulated,
and they can make promises that don’t hold up in court in the event
that a client defaults on payments. This means that small business
owners must be careful when choosing their AR financing company,
because if they choose the wrong one, they might end up with higher
interest rates than they expected or hidden fees and penalties if they
default on payments.

8. So where can a small business owner go if they
need help with receivables?
• If you’re looking for help, there are a few things to keep in mind. First and
foremost, it's important to know that not all accounts receivable financing
companies are created equal. The best way to find one is by talking with other
business owners who have used their services or doing research online. You can
also check out the Better Business Bureau (BBB) website and read reviews of
various companies that offer this service.
• Second, keep an eye out for fees and interest rates—and make sure they match
up with what competitors offer. If a lender offers a lower interest rate than
another but charges more fees, then perhaps it's time to look elsewhere.
• Third, don't be afraid of asking questions about how much money you will owe
at certain points during repayment; lenders may not tell potential clients this
information outright because it could cause them not to take on these loans due
to fear about how much debt they'll accumulate over time if they can't pay back
what they've borrowed quickly enough

9. Conclusion
There are many options for small businesses to find the
right financing for their business. It’s important to
remember that each one is unique and has its own benefits
and drawbacks. The best route will depend on your goals,
current financial situation and how much risk you are
willing to take on. We hope this article has helped shed
some light on where you might look first as well as some of
the pros and cons of each type of financing available today!

10. ThankYou