Challenging Credit Market Pushes Companies To 'Get Creative' When Seeking Working Capital

Online, January 19, 2011 (Newswire.com) - Hennessey Capital LLC, a Michigan based specialty finance company providing working capital to small and mid-sized businesses, urges borrowers, especially those with new business opportunities, to be resourceful when confronted with the challenges of today's improving but restrictive credit market.

Because of constrained credit conditions, companies have to think beyond traditional lending options to finance their businesses, according to Mike Semanco, President of Hennessey Capital.

"Although traditional credit markets have shown signs of life, small businesses and young companies are particularly limited in today's market for two key reasons," Mr. Semanco says. "They do not have enough financial history to meet traditional lending parameters and their access to non-traditional sources and potential investors is limited."

How does a company counteract roadblocks to secure financing? Mr. Semanco advises small businesses be persistent and consider a variety of options:

1.) Negotiate preferred payment terms with your customers.
Don't be afraid to ask for down payments, progress payments, and shortened accounts receivable terms. Chances are your clients are doing the same with their customers.

2.) Look at micro loan programs and seed funds, including state-funded programs, to help with growth financing.
Although these programs usually loan $50,000 or less, they can make a big difference to a young, growing business. This capital can help jumpstart your project and provide access to larger investment matching in the future.

3.) Communicate with your banker, customers and professional advisors.
Young companies are often undercapitalized, creating stress when new business opportunities arise. Don't hesitate to contact people in your network to see if they know of any alternatives to traditional funding sources. Many times, banks cannot solve the entire funding solution so they will partner with commercial finance companies that provide factoring, PO financing and asset-based lines of credit to complement their loan programs. In today's market, many SBA lenders are taking this approach.

"There is light at the end of the credit tunnel. Companies may just have to look down the road not previously taken to find it," Mr. Semanco concludes.

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