Newspaper article The Florida Times Union

Banks Factoring into Success of Small Businesses

Newspaper article The Florida Times Union

Banks Factoring into Success of Small Businesses

Article excerpt

Jacksonville-based Barnett Banks Inc. is joining a handful of

local banks that offer factoring services to help their small

business customers grow.

Factoring is when a lender advances money to a business based

on what the business has billed its customers. Banks typically

prefer to lend money based on the assets of the business or the

business owner, rather than on billings.

That can be a problem for businesses trying to expand that have

good customers but not much in the way of assets they can use as

collateral for a loan, said John Logan , Barnett's director of

asset-based lending.

Under Barnett's CashPlus program, Barnett purchases a company's

account receivables. Payment amounts are based on the face value

of the company's receivables, less a discount. The discount

varies depending on the credit-worthiness of the customer being

billed and how long Barnett anticipates it will take to get


Barnett is responsible for collecting the receivables. If a

receivable becomes uncollectable, the business still keeps the

cash Barnett paid for that receivable.

"By speeding up a company's cash flow, CashPlus makes it easier

to meet ongoing operating expenses such as payroll, debt

repayment or retirement plan funding," said Logan.

Barnett's factoring product is aimed at businesses that need a

credit line of $50,000 and above, said Logan.

Other local banks that offer various factoring programs include

NationsBank , First Guaranty Bank and Trust , and SouthTrust

Bank . First Union National Bank of Florida factors invoices

from governmental entities.

Entrepreneur Magazine in its July issue cited

Jacksonville-based First Union National Bank of Florida as being

"the top micro loan lender" to Florida businesses in 1995.

Using Small Business Administration data, the magazine reported

First Union had $446.5 million micro loans on its books in June

1995. The No. 2 bank cited was NationsBank, with $169.9 million.

The SBA data was based on reports, called "call reports,"

turned into regulators by banks. …

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