Funding Options for Staffing Agencies
When you own or run a staffing agency, you are likely to see more need for skilled individuals by your clients and fewer skilled employees on your rolls. This is because many workers with the right skills, education and certifications have found permanent positions through your agency while other workers have seasonal cycle of employment and unemployment. There are ways to combat this such as offering training and incentives, but the question quickly becomes about funding. If you are not getting paid to place skilled workers, then you will not have the right funding to build those skills up in the workforce and may struggle to pay your bills.
Bank and SBA Loans
The first place most companies look for working capital and other funding is often bank loans or loan programs through the Small Business Administration. These options may have regulations determining how the funding is used, such as an SBA loan for real estate, so it is good to know these requirements before you apply. Bank and SBA loans are generally long-term financing options with monthly repayment schedules and rely on your business credit history for approval.
Unsecured and Bank Lines of Credit
A staffing agency can make use of lines of credit to hire staff and cover expenses while waiting for loans to be approved. These lines can be secured, using assets as collateral, or unsecured and need to be paid back only when used. Bank lines of credit will generally be secured with business assets and have a lower interest rate than unsecured lines, but it can sometimes be easier to get an unsecured line if you do not have many assets. Since you can pay off and reuse these lines, they are considered revolving credit and can be used when you need a quick way to finance a project or to weather a seasonal slump.
Factoring and Advances
Factoring, accounts receivables financing and merchant cash advances are all good ways to get quick cash for hiring new talent or for paying seasonal bills. These methods rely more on your current and projected invoices than on your credit history and are usually approved within days of applying. Since these are all advances and not loans, the amount you can get will depend on the invoices you factor or your projected credit card sales.
A staffing agency can see the same seasonal ups and downs that their clients do and still have the same bills to pay. Finding the right financing options to help your agency grow, retain the best talent and weather the seasonal storms will largely depend on your growth goals, credit history and needs.