In the first quarter of 2017, five of the US’s largest banks actually deposited more money in the Fed ($12.9 billion) than they lent ($9.1 billion). Here is a link to the statistic: https://www.forbes.com/sites/greatspeculations/2017/06/13/loan-to-deposit-ratios-for-largest-u-s-banks-show-signs-of-recovery-in-q1/#18d8772412f4
Phil Gramm, former Chairman of the Senate Banking Committee, wrote an article on this back in 2015. The article still holds true today and in fact the Banking Industry’s loan to deposit ratio continues to decline much to the demise of the health of small businesses across our great country. The article, Dodd-Frank’s Nasty Double Whammy, can be found here: http://www.aei.org/publication/dodd-franks-nasty-double-whammy/
The article also states that, according to FDIC, 1,341 commercial banks have disappeared since 2010 and only two new banks have been chartered. Gramm goes on to say that the greatest employment growth in banking is for compliance officers needed to deal with Dodd-Frank regulations.
Verdict: It isn’t getting any easier for small and medium sized businesses to find working capital through the banking community.
That’s where companies like Pendleton Capital Group may be able to help. We have been engaged in Invoice Factoring and Trade Finance (i.e., PO Financing), along with other creative working capital facilities, for over a decade. The Invoice Factoring Industry is responsible for more than $3 trillion in worldwide business activity. With the continuing failure of the banking community to address business’ working capital needs, that number will likely rise in the future.
Here are five ways we create innovative methods for small business to finance their business:
- Advancing of funds against approved invoices.
- Purchase Order Finance. Advancing of funds against approved PO’s.
- Inventory Loans. Advancing of funds against approved inventory value.
- Merchant Cash Advance (Refinance). Refinancing of onerous online loans.
- Cash Flow Loans. Advancing of funds against anticipated cash flow.
Legions of companies need cash flow assistance and can’t get it from the banking community. Companies in need of growth capital should consider Invoice Factoring and Trade Finance (PO Financing) or a combination, if appropriate, of any of the above five options as a means to foster growth.
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Mr. Cox is Managing Principal with Pendleton Capital Group, Inc. – a factoring and trade financing company headquartered in Houston, TX. PCG provides professional “best in class practices” Factoring and Trade Financing and other small business services. His office is in Houston, TX, and he can be reached for additional information or consultation at adam@pendletoncapitalgroup.com or 713-808-9746. The company’s website can be accessed at www.pendletoncapitalgroup.com
