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Finance Staffing Agencies
Small business loans, factoring and investors.

3 Ways to Finance Staffing Agencies

January 13, 2016

finance-staffing-agenciesWhether your staffing agency is starting up or growing, sufficient and steady cash flow is needed. Here is a list of 3 ways to finance staffing agencies.

1. Small Business Loans

Business loans are a common way for companies to get capital. When you go to a bank, you will need to apply, qualify and get approved for a specific amount. Sometimes it can take a few months after approval to actually get the cash you need. Since you also have a limit on the amount you were approved for, it might be difficult to get more cash in the future because it creates debt on your balance sheet. The funding is secured by your corporate assets – and sometimes even your personal assets. Monthly interest is paid usually with a rate of around 3 to 5 percent.

2. Factoring and Payroll Funding

Factoring and payroll funding is becoming a more common way to finance staffing agencies. There are several benefits for staffing agency factoring.

  • Grows With Your Business
    Factoring your invoices will give you the ability to have a consistent supply of cash that actually grows as your staffing agency grows. When you land a new client or contract, more working capital becomes available to meet the needs of your growing staffing agency.
  • Paid Same-Day
    Instead of waiting for 30, 60 or even 90 days to get paid, factoring with TCI can get you paid up to 95 percent on the invoices we receive within 24 hours or less. Once your customer pays the invoice, we will pay you the remaining 5 percent, minus a small factoring fee – as little as 0.5 percent.
  • Bridges the Gap
    It is hard to fill the gap from when you need to pay your employees and bills and when your customers pay you. Factoring can bridge the gap by paying you on your invoices within 24 hours or less.
  • No Debt
    Unlike a business loan, factoring does not create debt on your balance sheet.
  • Credit
    If a bank has said no to you in the past because of your credit, it might be time to consider factoring. TCI looks at the credit of your customers, rather than your credit.
  • Back-Office Support
    As an added service, TCI offers award-winning customer service and back-office support at no extra cost including accounts receivable management, collection services, credit analysis, and risk assessment.

3. Investors

Many times when people are looking for investors, they think to ask friends and family first. Although they might be willing to invest, it is always good to think twice, maybe even three or four times about this. It can be difficult when money comes between friends and family – especially if your business doesn’t go as planned. You can also look into angel investors. Angel investors are professionals who are willing to invest money in your business. In return, they will want some type of profit sharing, a percentage of the company, or their money paid back with interest. The good news is you will have the cash for your business to grow it, but the bad news is that most likely you will be giving up a percentage of your business.

If you decide to go the route of getting investors, make sure you have something good to present to gain their interest. In this article from entrepreneur.com, it explains five of the worst mistakes entrepreneurs make when pitching to angel investors.

  1. You don’t explain what problem the business solves.
  2. You offer too many facts and numbers.
  3. You tout sales forecasts.
  4. You’re too attached to your business plan.
  5. You discuss ownership stakes.

Whether you decide a business loan, factoring or investors is the right way to finance your staffing agency, make sure to do your research and weigh out all of your options. If you have questions about factoring for staffing agencies, contact TCI Business Capital or call 800-707-4845.

 
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