Staffing agencies have unique needs, and, despite the seemingly endless funding options available online, some specific options might be the best fit for your business. While it may be tempting to find a quick source of funding online, the benefits of building a long-term, trusting relationship with your lender goes beyond the funding itself.
Because of the nature of running a staffing agency, cash flow may be inconsistent, especially when you are working on starting and growing your business. Luckily, several types of funding are available for your business to help it thrive.
Payroll Factoring
Payroll factoring is a widespread option that helps generate cash flow in times of need. Staffing agencies typically use this type of funding for outstanding invoices with long net terms. When the invoice has a long net term, typically between 30 to 120 days, it creates a cash-flow challenge for business owners who need to pay their employees.
Payroll factoring is a solution that keeps employees paid even when there is a gap in invoice payments. When utilizing this form of funding, you sell the unpaid invoice to a factoring company. The factoring company uses the invoice as collateral. You receive the cash, typically between 80% and 90% of the original invoice, so that you can pay your employees on time. When you receive the actual invoice payment from your client, you pay the money back to the factoring company.
There can be fees and such associated with payroll factoring, but if you work with a lender you trust, there are flexible payment terms that are small-business friendly.
Line of Credit
A line of credit is another highly effective way to help fund your staffing agency. This type of funding is common in the business world, and with good reason. Credit lines are a reliable way to have cash flow without taking on a large amount of risk.
A line of credit works like a credit card. You can use the credit to pay for business expenses, payroll, and more. One of the benefits of a line of credit is you only pay interest on the amount of money borrowed. For a small business, this is key because you will not be paying interest on the money you did not need or use.
Business Loans
Business loans are a great option if you need a more considerable sum of money. There are numerous business loans, so the loan can be very specific to your needs. When weighing a business loan as an option, it is important to note that the amount and interest will need to be paid back on the total amount of the loan, not just the amount used.
Business loans are a great option if you want to expand your business or have a significant expense you cannot pay for in the short term. The interest rate and length of the loan repayment are very specific to the loan you choose.
Midwest Business Funding works with you, as a business owner, to find the best fit for your funding needs. We partner with your company to ensure success and are fully transparent about the funding options we can offer you. If you are interested in applying with Midwest Business Funding, you can do so here or give us a call at (317) 342-4405.
