Minority Small Business Factor Financing
Cash Flow Funding for Minority Business Owners
According to the 2020 Annual Business Survey, over 18% of US-based businesses are minority-owned. Minorities have great ideas for innovation but frequently lack the working capital support to obtain business financing. As evidenced by the New York Fed report in 2021: black-owned businesses received 43% of the PPP Loan funding they sought. Compared to white-owned companies receiving 79% of the funding they sought.
Obstacles to securing traditional loans cause minority business owners away from obtaining debt financing. Many business owners do not understand that there is an alternative form of business funding without going through conventional financial institutions.
Bankers Factoring turns minority-owned businesses’ unpaid accounts receivables (A/R) into fast working capital. Factoring Financing injects immediate cash flow into your business by selling your outstanding invoices. We allow minority-owned business owners to bypass the 30, 60, or 90-day wait to receive customer payments.
Factoring financing is a proven way to finance businesses without taking on balance sheet debt and reducing your credit risk. If your Minority Business Enterprise (MBE) is struggling to fund operations, contact our MBE Factoring Financing team to develop a cash flow financing plan.
Why does my minority-owned business need factoring financing?
Many entrepreneurs invest money into their startups or seek funding from friends and families. This method can help bootstrap the business initially. Still, as your MBE grows and acquires commercial clients, you need to expand your financing.
Factoring financing is unlike traditional loans. There is no monthly note payment in factoring agreements. Minority business owners sell Bankers Factoring their unpaid invoices and provide two cash advances – it is that simple.
Common reasons why our minority business owners need cash flow funding:
- Bank loan denial. Read our article, “How to Obtain Financing After Bank Loan Denial.”
- Poor credit history
- Need cash funding fast
- Poor cash flow to pay weekly bills
- Struggling to make payroll
- Limited cash reserves which limit the ability to acquire new customers
- The monthly burn rate is higher than projected
If your small minority-owned business can relate to these issues, complete our online funding application to begin the fast financing process.
What is factoring financing for MBE?
Factoring financing, commonly called invoice factoring, is a form of business funding for the not yet bankable MBE. The transaction is effortless – the MBE agrees to sell their unpaid invoices to Bankers Factoring in exchange for a cash advance.
Minority-owned businesses receive funding in two payments in a factoring agreement:
- An initial cash advance of up to 93% of the total unpaid AR value
- A final cash disbursement of the remaining open balance less our small factoring fee starting at .95%
Invoice factoring provides a consistent source of cash flow for MBEs with slow-paying customers. If your small minority-owned business is extending credit terms without adequate financing, we can help. Factoring financing removes the burden of waiting months for customer payments.
Minority Business Funding Program
Invoice factoring helps overcome obstacles in obtaining business funding for minority business owners. Bankers Factoring and our private network provide funding to minority small businesses. If your company has received a minority designation, our MBE Factoring Financing team can help you secure business funding.
To be considered a minority owner, your business needs to be at least 51% owned and operated by any of the following:
- Black or African American
- Native American/Pacific Islander
How does my business use invoice factoring?
Factoring financing provides a quick form of capital injection for your MBE business. Your business is funding the same day as your factoring agreement approval. This means we directly transfer up to 93% of your unpaid AR balance upon approval.
Bankers Factoring MBE business funding program offers a flexible financing facility to grow your business. Invoice factoring proceeds can be used for business expenses. It is typical for factoring financing to support payroll funding. Staffing and payroll are some of the highest costs for employers, and having consistent cash helps retain staff.
Typical uses of business funding:
- Payroll funding
- Increase staffing
- General business expenses
- Sales and Marketing
- Weekly payables
Advantages of MBE Factoring Financing
Businesses lacking sufficient cash flow will face difficult decisions about continuing the business. Without working capital, any company will inevitably close its doors. Factoring financing provides minority-owned businesses with a cash flow facility to fund operations.
When businesses lack adequate cash flow, they cannot execute growth plans. For example, suppose a company cannot manage its cash flow to meet payroll. In that case, it will not be able to acquire new customers without additional financing.
Factoring financing is a business funding program that helps MBEs grow by not having weekly cash flow shortages. Invoice factoring is a fast-financing solution geared for the not-yet bankable minority business owner.
- Fast approval and funding process can be completed within one to two weeks. Compared to the months it takes for bank loans.
- Eliminates the day’s sales outstanding (DSO) or the wait from delivering your goods and services to receiving customer payment.
- Available working capital can be used to execute business development plans such as increased staffing or marketing campaigns.
- The not-yet bankable minority-owned business qualifies for business financing. Poor credit business owners can qualify for invoice factoring financing.
Bankers Factoring Minority Business Financing
Bankers Factoring is proud to serve the under-served communities and minority businesses lacking business financing options. Factoring financing provides an alternative source of business funding for MBEs that does not require taking out a loan. Invoice factoring for minority businesses turns unpaid AR invoices into same-day working capital. We help minority business owners remove cash flow gaps in the operating cycles. By injecting working capital into your business, it can take on new customers and achieve new levels of growth. Bankers Factoring is honored to help small minority businesses secure fast working capital while we take on the credit risk.
The added value of Bankers Factoring minority business financing is our AR protection. We offer non-recourse minority factoring, which protects business owners from customer bankruptcy, insolvency, or protracted slow-pay. With Bankers Factoring, we provide cash flow funding and take on the credit risk for our MBE clients.