Invoice Factoring May be Better than New ARC Interest Free Loans

The new American Recovery Capital (ARC) program will allow companies to take out interest-free loans and is the government's effort to help get small businesses back on track and assist the economy. However there are other strategies that many small businesses, including microbusinesses, are using including invoice factoring.

Available to businesses as of June 2009, ARC was signed by President Barack Obama in February of 2009. The program's intent is for businesses to pay down debt in order to recover from the current recession. Established under the American Recovery and Reinvestment Act (ARRA). Basically, the ARC allows small businesses to take out interest-free loans of $35,000, 100 percent backed by the Small Business Administration (SBA). They do not have to pay the loan back for one year.

A microbusinesses is a company with fewer than 5 employees, and these are the businesses that are economic downturn. Many of these smaller businesses have already discovered tactics like accounts receivable factoring, to help start and sustain theior business.

Many of America's business owners are just hoping they can make it through this tough time. The ARC program is intending to give entrepreneurs the breathing room needed so they can pay their bills, and keep employees. But the reality is that many businesses could use invoice factoring to do the same thing, without having to pay any loans back to anyone.

The typically lean operating style of a microbusiness makes it easier for them to survive, Among the many trends, it is those people who get laid off that tend to start small microbusinesses during economic downturns. They need cash in hand to make ends meet, so for the a growth spurt of new single-person businesses. Referred to by the Census bureau as "nonemployer" firms, these companies have no paid employees other than the business owner(s).

Rather than getting an ARC loan, or waiting for 30, 60 or 90 days for your clients invoice's to be paid, invoice factoring is often most used when times are tough like today. No matter whether your company is a moicrobusiness or a regular small business with more than five employees, factoring is an excellent way to keep cash on hand.

Providing short-term working capitol, invoice factoring is an extremely fast way to turn your receivables into cash. Why wait 30, 60, or sometimes even 90 days for invoices to be paid when IFG will look at your customers' credit and can pay you the majority of what's owed to you within as little as 24 hours.

A stressful economy typically leads to a wave of small business innovations because there is a need to improve productivity. Often times companies come up with unique ways to survive, and this usually means increasing what their customers perceive as a value add.

Small businesses must also focus on managing cash flow and costs. During times like this, small businesses re-evaluate their priorities, trying to pinpoint problems and goals so that they can revise their service offerings and product lines.

While researching and redesigning in-house programs, products and service offerings, small businesses still nees cash. That's why so many small businesses have discovered the concept of accounts receivable factoring, also knows as invoice factoring. Standard factoring has been around for more than 4,000 years. This one financial strategy alone can help a small business grow and survive a recession, and there will be no ARC loan to pay back.