Tight credit markets lead to new ISO, MLS financing options
The persistent weak economic conditions haven’t been easy for business owners, especially those in the small to midsize range, including many ISOs and merchant level salespeople (MLSs). Banks have tightened credit standards, so even the strongest companies have been forced to seek new funding alternatives. This article explores resources available to ISOs and MLSs looking for capital to meet their own business needs. A prior article, “Financing options proliferate in payments sphere,” The Green Sheet, May 14, 2012, issue 12:05:01, focused on financing options ISOs and MLSs can offer their clients.
Several years into what is often called the Great Recession, financing and other cash-flow issues continue to plague small businesses throughout the nation, according to a new report from the National Small Business Association. Among small business owners contacted for the 2012 Small Business Access to Capital Survey, 43 percent reported they have needed funds at least once in the past few years but couldn’t find any willing sources.
“Not only have small-business owners been unable to find new credit over the last four years, nearly a third had their existing credit slashed, and one in 10 had their loans called in early,” said NSBA President and Chief Executive Officer Todd McCracken. Forty-four percent said credit card issuers were tightening the screws, too, in terms of interest rates and fees, according to the survey.
McCracken said one result of this is that more than a quarter of respondent businesses had changed financial institutions within the past four years, many opting to join credit unions or work with small community banks. Interestingly, 13 percent reported using prepaid card programs to achieve their financing goals; 1 percent said they had turned to payday lenders.