Small Businesses Unsure How Affordable Care Act Impacts Them

According to eHealth’s Fall 2012 Small Employer Benefits Survey, small businesses are confused when it comes to the impact of health care reform. In her article Health Care Reform: Myths and Realities, author Maria Valdez Haubrich lays out the facts for small business owners unsure about where they stand when it comes to providing insurance to employees.

  • Employers with 50 or fewer full-time employees are not required to buy health insurance for them.
  • Employers with 50 or fewer full-time employees don’t face any tax penalties for not providing health insurance.
  • Those with 51-199 face $2,000 for every employee that gets insurance through an exchange, except for the first 20 who do so.
  • Health insurance exchanges are to be created in every state by 2014, which will allow employees to buy subsidized insurance even with a pre-existing condition.

So what does this mean for small businesses? It means that for the smallest firms, health care reform really won’t have an impact at all on their bottom line. Medium-sized companies, however, will be subject to the mandate and might face higher costs of doing business, which could lead to them looking for sources of financing and cash flow such as factoring.

Credit Card Financing Risky for Start-Ups

For modern small businesses, plastic is a way of life– over 80 percent of small businesses use credit cards to finance their companies. However, there are several misconceptions about small business credit cards that a recent Inc.com article clears up, including the following:

  • Business credit cards do not shield owners from personal liability
  • An owner’s personal credit standing is key to landing a credit card
  • Interest rates on business credit cards can rise at any point
  • For start-ups, even $1,000 in debt raises the probability of shutdown by 2.2 percent

    Start-ups especially depend on credit cards, because they are easier to come by than a business loan or an investor. It is very easy to become quickly overburdened by interest and vulnerable to economic shifts.

    Small business startups might want to consider other sources of financing before turning to credit cards. Detailed descriptions of other financing options can be seen in a previous blog post, Alternative to Bank Loans. In a nutshell, they include asset-based lending, lease-backs, and cash advances.

    See the original article: The Credit Card Mistake That Can Destroy Your Company.

    Small Business Saturday is Saturday Nov. 24th

    The U.S. Small Business Administration recently announced that this Saturday, November 24th, is “Small Business Saturday.” According to the SBA website, Small Business Saturday is a day dedicated to small businesses where they encourage shoppers to celebrate and support local companies by shopping there.

    Small business owners can get involved by getting free Small Business Saturday marketing materials from the SBA website, joining the Facebook group and using their own social media to promote it, and joining the Twitter discussion with the hashtag #SmallBizSat.

    For shoppers, here is the link to find out which of your local businesses are participating: Shop Small

    Small business is the backbone of our society, so get out and show support of your local industries by shopping small this Saturday, November 24th.

    Bibby Financial Services to Offer New Non-Notification Factoring Service

    In the most recent edition of the International Factoring Association newsletter, Bibby Financial Services announced that they have added non-notification factoring as part of their repertoire.

    Non-notification factoring functions the same as traditional receivables funding, but all services by the factoring company remain in the client’s name.

    This is a good option for small-to-medium sized businesses that prefer to appear to be the sole contact for customers, but also want the advantages of factoring such as improved cash flow and not having to handle collections. Says Leigh Lones, CEO Americas: “Some companies want a seamless representation to their customers regardless of who is doing the work.” For the full article, click here: Bibby Financial Services Launches Non-Notification Factoring Product.

    Bailouts Didn’t Help Small Business Lending

    It appears that the government bailouts to major banks in the 2008-09 financial crisis did little to help small business lending- in fact, the opposite is true. According to a Bloomberg Businessweek article entitled “TARP Verdict: Bailouts Failed to Help Small Business,” the banks that took bailout money cut lending to small businesses even more than other banks (21% drop compared to 14% elsewhere). Commercial and industrial loans were the hardest hit.

    So what’s the takeaway here? Banks still aren’t lending money to small businesses. Small companies that meet the requirements for bank loans are few and far between, and approval is unlikely. In order to stay afloat, small businesses must turn elsewhere for financing. Several financing options are discussed in the “Alternatives to Bank Loans” blog post below. For the full Bloomberg article, click here.

    Karaoke Company Secures $5M in Receivable Financing

    In late October of this year, The Singing Machine Company entered into a factoring agreement with Crestmark Bank. The deal provides the thirty year old karaoke machine company with up to $5 million in accounts receivable financing. The deal went down as The Singing Machine Co. enters into the peak holiday season. According to CFO Lionel Marquis, the deal represents a “big milestone in our plans for the future” and CEO Gary Atkinson says having the agreement in place will provide flexibility and strengthen relationships both at home and abroad.

    The Singing Machine Co. is an example of the type of business that factoring helps most- a highly seasonal business that experiences uneven cash flow during off seasons. Their deal with Crestmark will allow them to expand overseas and tap into new markets, which encourages growth and increased profitability. Factoring their accounts receivable was a smart move for this karaoke company, one which will hopefully allow them to reach record highs- almost as high as the notes their customers fail to hit.

    For the full article, follow this link: The Singing Machine Company inks 5 mln in accounts receivable financing.

    PRN Funding Exhibiting at Private Duty Conference

    Las Vegas, NV- For the fourth year in a row, PRN Funding, LLC will be exhibiting at the 15th Annual Private Duty National Conference and Expo. The event is taking place from November 14-16th at the Monte Carlo in Las Vegas, and will feature the home care industry’s best and brightest providing tips and solutions for making the best business decisions.

    Account Manager Ryan Elliot and Marketing Associate Stephanie Chmielecki will be in booth #204 offering information on PRN’s invoice specialty factoring services, which includes factoring for home health care agencies.

    Stephanie and Ryan will also be holding daily casino chip giveaways. Visitors of booth #204 will be entered into drawings taking place on 14th, 15th, and 16th at various times. Contest winners will receive casino chips, get their picture taken, and receive free publicity on PRN’s social media and blogging sites. If you are attending the conference, be sure to stop by!

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    With years of experience in the healthcare industry, PRN Funding has a precise understanding of the unique challenges within the private duty and homecare industry.  PRN Funding offers financial resources to these companies by purchasing their accounts receivable–a process known as ‘factoring,’ which provides the cash needed to sustain and grow a healthcare business.

    Gas Rather than Electric Grid Might be the Future of America’s Power

    In the wake of Hurricane Sandy and the massive power outages that followed, many are wondering whether the current electric power grid in America is a sustainable way to supply power to the country.

    In a recent Forbes article, the author discusses how the current energy grid is increasingly fragile, and rather than fix it for trillions of dollars, we should consider converting to a natural gas power grid. He cites the 2003 blackouts and Hurricane Sandy as evidence that the so-called “smart grid” was not designed to survive strong winds, storm surges, or debris from storms and other inclement weather. The costs to fix the current system would be massive.

    Rather than fix the current system, the author suggest we use a “compelling alternative”- the U.S. natural gas pipeline network. The advantages of a natural gas grid would be that it could transport natural gas to and from any location in the 48 states with over 90% efficiency, and wouldn’t be as susceptible to natural disasters. For the full article, see here: Natural Gas: America’s Future Electric Grid?

    Alternatives to Bank Loans

    In a recent article in The New York Times entitled “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”, author Ian Mount points out that alternatives to bank loans are on the rise in today’s rocky small business economy. He gives several examples of non-traditional financing options, of which this blog will discuss three: asset-based lending (factoring), lease-back lending, and cash advances.

    Asset-Based Lending: Also known as factoring, this options refers to the process by which businesses sell their receivables to a factoring company. They then get 80-90% of the cash back immediately and the rest after customer repayment, less a percentage fee. This option is best for business-to-business companies that cannot wait for payment, and the cost is usually 4-5% monthly with an effective annual interest rate is typically between 18-30%.

    Lease-Back: This refers to when a company sells its property, plant, and/or equipment, and simultaneously leases it back for cash. It is best for companies with valuable plant or equipment that are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of equipment.

    Cash-Advances: Cash advances take place when a company receives an advance sum from a lender and pay them back with percentages of their monthly card receipts until the loan plus a predetermined rate is repaid. This financing method is best for retailers and restaurants with limited financing options, and the cost is usually 20% and up.

    All three are viable financing options for companies rejected by banks, or looking for fast cash alternatives. See the original article “When Banks Won’t Lend, There Are Alternatives, Though Often Expensive”.

    How to Reduce Small Business Costs

    According to a recent post on About.com’s Small Business Information page, reducing costs in small business doesn’t have to be a headache. The article points out 10 simple steps small businesses can use to make smart choices about where their funds go and ultimately improve the bottom line.

    1. Use Technology

    Use teleconference and online payment tools to reduce travel and paper costs

    2. Ditch Your Landline

    Cell phones, VoIP, or virtual phone lines can be a better less expensive option

    3. Go Paperless

    The cost of ink, mailing, and postage adds up

    4. Start Marketing Your Business Online

    Use low cost, fast-paced, high-result Internet marketing

    5. Reduce Credit Card Debt

    This will help with long term business management

    6. Create and Stick to a Business Budget

    Keep yourself on track by outlining costs beforehand

    7. Explore Alternative Places for Business

    If possible, exploring a coworking or home based business can be beneficial

    8. Cut Back on Software

    Some software goes unused, so don’t bother with anything you don’t need

    9. Buy Refurbished Equipment

    Refurbished equipment can be just as good as new, at a fraction of the price

    10. Look Into Bartering

    Exchanging your goods or services for others means no cash changes hands

    Exploring these options can mean all the difference to a small business. Make smart decisions in the outset, and your business will benefit in the long run.

    Check out the original article  How to Reduce Small Business Costs.

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