How to Consolidate Business Debt - -

How to Consolidate Business Debt - -

How to Consolidate Business Debt - -

Posted: 13 Oct 2020 06:32 AM PDT

[unable to retrieve full-text content]How to Consolidate Business Debt -

Business CUSO Shows Agility in Pandemic - Credit Union Times

Posted: 12 Oct 2020 03:00 PM PDT

Joe Sweeney, CEO of Eagle's Catch Joe Sweeney, CEO of Eagle's Catch, a tilapia farm in Ellsworth, Iowa. (Photo credit: Eagle's Catch)

A Nevada CUSO dedicated to enhancing businesses in rural and underserved areas has helped resurrect textile jobs in the Mississippi Delta and allowed an Iowa fish farm to swim through the cash strains of the pandemic.

Greater Nevada Credit Union of Carson City ($1.3 billion in assets, 76,338 members) launched Greater Commercial Lending in 2017 to help member credit unions offer commercial loans, including federally guaranteed loans through the USDA and Small Business Administration.

GCL typically brokers the loans, allowing local credit unions to originate them. GCL bundles and sells the guaranteed loans to investors, and retains servicing rights. It also organizes participations in conventional commercial loans among interested credit unions and community banks.

The Reno-based CUSO has a network of lenders that includes 10 credit unions with $9 billion in assets and 645,201 members from Kalamazoo, Mich., to Baton Rouge, La.

The CUSO is simply doing what CUSOs were designed to do: Use concentrations of expertise to share more widely in the credit union movement.

But, like many CUSOs, GCL was confronted with conditions that were neither typical nor simple after the World Health Organization declared COVID-19 a pandemic on March 11.

Jeremy Gilpin

EVP Jeremy Gilpin said the vast amount of dollars for most of the government pandemic loans were originated by big banks, but credit unions and community banks served the most vulnerable businesses.

"Where we put our dollars as credit unions and community banks – that's the story," he said. "We put them into underserved communities, rural communities where the big banks wouldn't go."

Gilpin has closed and serviced more than $900 million in loans in the past 20 years. He came to Greater Nevada in 2013 to start its commercial loan division, which is now the nation's largest USDA business lender.

Gilpin grew up in Parsons, Kansas, where its population that tops 10,000 makes it the biggest city in Labette County. His father was an engineer in a nearby munitions plant and his mother was a schoolteacher. His grandparents on both sides farmed in the southeast Kansas area.

Growing up, he learned how the loss of factories or other businesses can devastate rural areas. Gilpin is a past chair of The National Rural Lenders Association, an organization that partners with USDA national directors and political leaders to ensure rural communities maintain access to viable financing options.

Gilpin said GCL measures success not just by loan production, but by the number of jobs created or saved. "We're about protecting underserved and rural communities. That is my passion."

GCL finds a local credit union or community bank and offers it a chance to participate in the loan. "So the credit union has a premium off that loan," he said. "It helps the credit union, it helps its bottom line and it helps the community financial institution from being swallowed up as well."

GCL sells all of its federally guaranteed loans to investors from life insurance companies to hedge funds, and shares $75 million a year in premiums with rural credit unions and community banks.

For conventional commercial loans without federal guarantees, GCL organizes participations.

"It's helping small, local credit unions and community banks bolster their balance sheets so they can continue to provide the services that these rural communities desire," he said. "We help them remain in that community and continue to be a vital part of that community."

While GCL doesn't hold loans on its books, it retains servicing rights for most of its loans. Its servicing pool has risen from $282 million in its first year to $1.3 billion in September.

"We are the back office for all of these credit unions and community banks," Gilpin said. "It's all held on credit union and community bank balance sheets."

GCL regularly serves about 20 credit unions and community banks, and has a network of 120 investors that buy its guaranteed paper.

USDA commercial lending criteria are broad, and GCL has shepherded loans for sewer lines, fiber optics, hospitals, schools, fire stations, auto part manufacturers, greenhouses and restaurants. "We do everything," Gilpin noted.

One of GCL's early clients was Eagle's Catch in Ellsworth, Iowa. GCL funded a $10 million loan with a USDA guarantee to help build a farm to raise tilapia fish to be sold live to restaurants.

Workers at Vidalia Mills in Vidalia, La. Workers at Vidalia Mills in Vidalia, La. (Photo credit: Vidalia Mills)

Another was Vidalia Denim, which announced plans in 2018 to build a cotton mill in a former 900,000-square-foot distribution facility abandoned by Fruit of the Loom in 2017 as it moved its operations to Mexico.

Vidalia Denim's plan is to use local cotton on new ring-spinning frames and weave the yarn on 46-year-old Draper X3 shuttle looms recovered from Cone Mills' White Oak plant in Greensboro, N.C., as it shut down after 112 years.

Financing for the plant a mile from the banks of the Mississippi River included a $25 million USDA-guaranteed commercial loan to purchase, renovate and equip the mill. The loan was brokered by GCL and originated by Jefferson Financial Federal Credit Union of Metairie, La. ($891.6 million in assets, 52,728 members).

In addition, Greater Nevada originated a $5 million SBA loan for other equipment and working capital.

Then came the coronavirus. After March 11, credit unions across the country started shutting down branches. While some workers were idled, others soon became incredibly busy.

GCL switched to making Paycheck Protection Program (PPP) loans for small businesses. The program was part of the CARES Act approved by Congress and signed by President Trump on March 27, but details were sketchy before the SBA started accepting applications from approved lenders on Friday, April 3.

GCL, like most lenders, planned to start accepting applications the following Monday, but Gilpin and his bosses made an on-the-spot decision to start taking applications by noon Friday after getting a call from a distressed business owner.

It was like turning on a fire hose.

GCL went from having about 25 employees at the end of March to 125 workers in two weeks by borrowing employees from other CUSOs whose workers might normally be working on, say, auto loans or commercial loans, which dried up in the early weeks of the pandemic.

"It was definitely a labor of love because we were so manual in the process. It was 20- and 22-hour days for us, seven days a week," he said. "Close to the end of the first round, I had a contractor come to my house, and we stayed up 48 hours straight inputting this."

Still, GCL had 800 applications in the pipeline on April 14, when the program's $349 billion was exhausted. "That was heartbreaking," he said.

Another $320 billion was approved for PPP loans on April 24, with the SBA to begin taking applications on April 27.

Gilpin said he spent those three days before the second round working with a software company to automate the application process, while GCL employees called all the applicants who didn't get approved in the first round to tell them their applications would be processed.

"When we opened up the second round, we were able to get an authorization every 10 minutes," he said.

From April 3 through the end of PPP lending on Aug. 8, GCL helped 5,901 businesses across the country obtain $583 million in PPP loans supporting 61,000 jobs. That included more than $137 million supporting 17,296 jobs at 2,100 companies in Nevada – 25% of all PPP loans in Nevada.

Later in April, Gilpin turned to another part of the CARES Act, which had earmarked $1 billion for a USDA loan guarantee program. He helped write a white paper for the Rural Lenders Roundtable outlining how the USDA's pandemic loan program could work to provide working capital for businesses struggling because of the pandemic.

The USDA adopted the recommendations with additions of its own by early July. The resulting USDA Business and Industry CARES Act loans were designed to help rural businesses prevent, prepare for or respond to the effects of the coronavirus pandemic. The program provides a working capital line of credit drawn on a monthly basis for 12 months, based on the company's monthly cash-flow needs.

"What we're doing is stopping the initial bleeding by providing recapitalization for stabilization," he said. "We're already seeing a lot of recovery from most of these companies."

Among the first round of recipients was Eagle's Catch, the Iowa tilapia farm that GCL helped launch in 2018.

With the first wave of shutdowns in March, its cash flow dwindled. Shipments came to a halt for about a week while the company still had to maintain enough workers to keep the facility clean and the fish healthy.

Eagle's Catch did get a PPP loan of about $100,000 to $150,000 to cover payroll. Another source of help came from a USDA deferment program. In the wake of the pandemic, the USDA offered six months of deferment of ­principal and interest on any current loans carrying a USDA guarantee. Eagle's Catch was able to use that against its 2018 loan to preserve more working capital.

Then the tide turned. Restaurants couldn't get fish from China because of supply chain disruptions caused by the pandemic.

"Their only option was the nation's largest tilapia farm," Gilpin said. "They went from a complete shutdown to a rocket."

But despite the help from the PPP loan and USDA deferments, strong fundamentals and great prospects, Eagle's Catch still needed cash.

Those conditions made it an ideal target for a USDA pandemic loan. GCL brokered a $2.3 million loan for Eagle's Catch to increase capacity and hire more workers.

This year, GCL has submitted more than $300 million in CARES Act loans, supporting businesses through the crisis.

"It's a side of COVID we don't hear about: This pandemic is killing businesses that otherwise would be successful," Gilpin said.

9 steps to help you improve cash flow in your small business -

Posted: 13 Oct 2020 03:41 AM PDT

 Tackling late payments can help improve cash flow

Tackling late payments can help improve cash flow

One of the most important factors for any business is to maintain a steady flow of incomings and outgoings. As a business owner, you'll quickly learn that any short-term disruptions could cause longer term problems.

Cash flow problems can sometimes happen, and if you do encounter them, there are some steps you can take to try and achieve a balance again. Keep reading for some basic guidance on how to improve cash flow.

Please note, this should be taken as high-level guidance only and is not financial advice. If you have concerns about cash flow issues, consider contacting an advisor.

9 steps to better cash flow


Knowing when money is going to come into your business, where it's from and when it's going to go out is important. Creating a detailed forecast can really help your business to manage cash flow.

Once you've done this, ensure that it's working as well in practice as it did in theory. Make sure your forecast is aligned with your actual figures at the end of each month. And, if necessary, re-forecast. Completing these checks regularly can help you spot issues in advance, identify inefficiencies or see something that was overlooked in the first place – and ideally give you time to take relevant action. And perhaps if things are working out better than expected, you could decide how to best use, invest or save your increased profits.

Want to know more about cash flow forecasting?

Speed up receiving payments

Sometimes receiving money into your account can take a little longer than expected. On a small scale this can be manageable, but if you're encountering problems with receiving payments regularly on a larger scale, you may want to think about what you can do to speed things up.

Evaluate payment terms

If you're struggling to get paid on time, it might be wise to rethink the terms of payment you're giving your customers. Some simple ways of doing this are:

  • Shortening your payment terms. For example, from 30 days to 14
  • Including 'Due Upon Receipt' on your invoices (instead of 'Payment Due Within 30 Days', for example)
  • Depending on your customer/industry, request a percentage of the payment before you start any work or deliver anything

Online invoicing

Some accounting software can automatically send out invoices for both regular or ad hoc payments, as soon as they're due, and prompt customers automatically if a payment is overdue1.

If expenses are a part of your usual invoices, you could speed up the process by attaching digital copies of the receipts along with the bill.

Accepting online payments

If it's appropriate to your type of business, consider providing a function that allows your customers to pay you securely online. Online payments are convenient, you could increase sales and, in turn, improve cash flow by cutting out the lengthy delay involved with sending out invoices and waiting for payment to be received.

Careful use of credit

Business loans, overdrafts, credit cards or another line of credit could help with any issues with your cash flow. Having a safety net will help put your mind at ease should you have an unexpected bill, a purchase that you need to pay for, or a customer who's late with their payment. Make sure you consider different types of credit that are available, as some are relatively expensive and not appropriate for long term borrowing e.g. credit cards.

Checking customer credit history

Depending on the nature of your business, it may be wise to check who you're doing business with before delivering goods or providing services without securing payment up front. If you're concerned over customers defaulting on payments, there are some proactive measures you can take to minimise this risk:

  • Use business credit checking agencies: For large orders, it may be worth paying for a credit report on the customer, so that you have a good idea of how safe it is to do business with them. There are a few websites that offer this:
  • Experian
  • Equifax
  • Creditsafe
  • Graydon
  • TransUnion
  • Consumer credit reports: If you're working with a small business, run by a sole owner, checking their personal credit rating could help give you an insight into how likely the business is likely to pay promptly. The three main agencies for consumer credit reports are Experian, Equifax and TransUnion.

Get contact information

Make sure you're getting full contact information about the person placing an order with you as well as the name, phone number and email address of the person in the accounts department who will be responsible for paying you. That way you can chase up payment more effectively.

Cost cutting

Although having one supplier can sometimes be convenient, shopping around for the best deals can help save you money. Your main supplier could have the best price on an office photocopier, but you could find a better deal on ink and paper elsewhere. And, why not check out comparison sites to ensure that your business is getting a competitive deal on the energy it uses? Some Business accounts even offer cashback, which could help you save that little bit extra on stock purchases. Find out more about cashback offers at the bottom of this page.

A healthy cash flow is critical to any business. Careful planning from the start will give you a better chance of success, but if you do encounter problems, we hope the steps in our guide will help give your cash flow a boost.

Want access to more handy business guides? Our friends over at Cashplus have a Community Site that is filled with insightful information. Or perhaps you're still on the lookout for a Business Current Account! Pay bills, track spending, and connect to online accounting software for real-time updates and account management. Smart, simple and fast current accounts for freelancers, start ups and small businesses. And to add to all those excellent features, they're even offering cashback on card purchases.

Click here to find out more about the Cashplus business current account and apply.

Read more

Five things to remember when cash flow forecasting for your business


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