The private security business can fluctuate considerably from season to season and from contract to contract. In some cases, businesses may require added funds to hire the personnel necessary to take on larger contracts. Acquiring these additional financial resources can be a challenge for security companies, especially if these firms have already taken out a number of traditional loans, have had credit problems in the past or have little or no financial history upon which to base a lending application. For these companies, accounts receivable (A/R) lending arrangements can provide a real lifeline in the competitive private security industry. These alternative loans are a solid option for companies that cannot obtain sufficient funding through traditional avenues to meet their ongoing financial means.
A/R loans and lines of credit use a different set of criteria than traditional loans. Instead of making a determination based on the credit history of the borrower, the length of time the company has been in business or the current financial statements and tax records of the business, A/R lenders look at the creditworthiness of the firms with which the borrower does business. This alternative approach can allow even companies that have had serious credit difficulties in the past to obtain added funds to maintain operations and take on new staff. By presenting outstanding invoices as collateral for A/R loans and lines of credit, security firms can enjoy added flexibility in managing their financial responsibilities and can take on new clients without stress over cash flow shortfalls.
In most cases, security firms must present only a limited amount of paperwork and financial information to be approved for A/R lending. Companies must be based in the U.S., must have at least one year in the private security industry and must deliver sufficient invoices to cover the amount to be borrowed, the fees assessed by the A/R company and a profit margin. Many alternative lending companies provide fast approvals and disbursements for their loans, making them a valuable resource for security firms in need of immediate funding to meet staffing needs.
Lending companies like Commerce Commercial Credit can usually return a decision on A/R loans and lines of credit within one business day. Funding for these lending arrangements is also rapid; most loans are funded within three to five business days. By opting for these alternative loans, private security firms can meet their payroll requirements and expand their client base in this highly competitive industry.