Whether your staffing agency has been around only a few months or has existed for years, keeping it afloat in a volatile business environment can be a challenge. Fortunately, you have several good options to get the financial backing your staffing agency needs to move forward and continue placing candidates. Here are four options that may work in your situation.
A business loan is the first place many companies turn for financing. If your company qualifies, you may be able to get a Small Business Administration loan. Underwriting any loan can take weeks or even months, and some loan types require collateral that a staffing agency may not have. Still, it’s worth checking. If your business has a good credit rating, a secured or unsecured business loan can help you meet some or all of your financing needs.
Merchant Cash Advance
A merchant cash advance can provide your company with a fixed cash injection in exchange for part of your future sales. To qualify, you will probably need to be in business at least six months and have a personal credit score as the business owner of 500 or more. No collateral is required for this funding, so qualifying is easier than for some business loans. If your company is a startup agency, a merchant cash advance usually isn’t an option.
Accounts Receivable Financing
Another type of staff agency business financing is a merchant cash advance. It involves selling past invoices at a discount to a financial services provider in exchange for cash. When the invoices are eventually collected, all proceeds go to that company instead of yours. Also called factoring, this option can fill cash flow gaps, sell off processing and collections hassles, and help you finance growth or seasonal demands. You also get rid of default risks with this method of staff agency business financing.
Private or Angel Investor
A friend or family member might be willing to invest in your business to help it succeed. You may also find an angel investor—an unrelated private party who will contribute to your business. Private and angel investors should understand that your business could fail, and their contributions could be lost. It’s best to have a carefully considered contract in place with anyone who contributes cash, stocks, or other valuable items to your business.
Financing any business can be tricky, but it’s often possible to find one or more viable solutions. With the right financial backing when you need it, you can help others find meaningful work and contribute to the nation’s economy while eventually making a nice profit for yourself as well.