As the American people slowly peek their heads out from their homes and venture to shops on main street, they will notice a much different landscape. Many of their favorite businesses that were open at the beginning of 2020 may be gone. The survivors will find their stocks depleted or outdated. This will require a new round of financing of the supply chain to get goods moving back on store shelves and both consumers and businesses buying. There may be a completely different mix of goods required in a country that will look much different as we approach 2021.
It’s not just manufactures selling to the stores; it’s suppliers of materials and raw goods to manufacturers as well. The financing of the supply chain will be one of the most difficult in American history as credit is reined in and banks assess the fallout from 20% unemployment. Between banks pulling in credit and businesses who have drawn on their existing credit lines to the max to stay afloat, credit surely will be scarce; and who knows how the Paycheck Protection Program loans (PPP) will shake out? Will businesses be able to qualify under the terms for forgiveness, or will they be required to pay the funds back, saddling these businesses with additional debt?
One bright spot; the financial arena made up of privately held specialty lenders. These lenders made up of primarily Factors and Asset Based Lenders, have the capital available, if you have the sales and collateral. Factoring is one of the oldest forms of financing in the world. Factoring played a big part in the founding of United States commerce. To provide assurance to an English business that a colonist would pay his bills, a local representative from England would be stationed in the colonies and act as a sort of guarantor of an American businessman’s debt to the English supplier. These guarantor’s would come to be known as Factors, the origin of the name lost to history.
Factoring companies since the 1960’s have been expanding to now include all types of secure lending to help businesses thrive. From the traditional accounts receivable financing, to inventory and purchase order financing, factoring can get goods moving in a moment’s notice.
Through all business cycles, specialty lenders like AeroFund Financial have been there with their checkbook open to finance orders and create liquidity for businesses. Throughout the 2020 pandemic, it was the specialty lenders; , factors, asset based and supply chain lenders, who were willing to take on the risk when Chinese manufactures demanded cash upfront for medical supplies, like personal protection equipment (PPE). While banks closed the lending window, factoring companies continued to fund truckers carrying critical supplies by providing AR financing, fuel advances and liquidity as credit dried up.
Whether it’s a terrorist attack, a great recession or a worldwide pandemic, it’s the cash made available by private specialty lenders who smooth out the rough spots in the economy. If you or someone you know needs to smooth out the rough spots in their business, take a minute and give AeroFund Financial a call.