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Weathering the Storm: Banks Continue to Tighten Amid Losses

Unless you live under a rock, you have probably noticed that there is a banking crisis. Banks are continuing to struggle with multibillion-dollar losses in real estate and are continuing to tighten-up on all forms of credit. In a recent New York Times article (‘Worried Banks Sharply Reduce Business Loans’), the Federal Reserve reported that new commercial loans have seen the largest drop since 2001.

This classic “credit crunch” is leaving many businesses with the feeling that they are without a mechanism for growth. What’s more, this could leave already cash strapped businesses out in the cold.

Financial planning in today’s economic climate is the key to ensure your cash flow is healthy. Problems can be avoided with proper planning with your accountant or CPA and implementing an immediate review of internal costs. What savings can be made? Do staff numbers need to be cut? Moreover, run credit checks on customers or clients who may be a bad risk and review whether it’s worth keeping them.

Fore many businesses, the factoring of accounts receivable can be a healthy way to “weather the storm” without incurring debt. The process is simple and straight forward; and in many cases, less expensive than a traditional bank loan.  Click here to find out more about Invoice Factoring

If you run out of cash before you run out of month you’re in trouble; do it month after month and you’re out of business. Remember: Cash is king. The management of it is the secret to success.

Small Business Optimism

If you spend enough time following the news, it’s enough to make you wonder if small business can survive. Granted, things like the falling housing market and soaring gas prices are certainly real problems for everyone.

However, when you hear about some corporate-type whining that they had to give up their Starbucks because the economy’s so bad, the line between real problems and a shortage of common sense becomes pretty blurry. So, is the sky really falling? According to a recent study, small business owners say no.

The study, which surveyed more than 700 small business owners with 100 or fewer employees, found that 90% said they see opportunity under current economic conditions and 75% said they expect their business to grow.

Nearly half of those surveyed said the economy levels the playing field between small business and their corporate counterparts, and 65% said they have had experience leading their business through a tough economy. 63% of those surveyed say it’s about customer retention, and others say it’s maintaining good cash flow, which is a big part of what drives small businesses and allows them to do well in any economy.

Small businesses are able to fair better in an economic downturn because they think fast. They are in a better position to move very quickly in terms of how they align their resources. That’s just the way they’re used to doing it, in good times and bad. It all goes back to the passion they have for their business and their customers.

In spite of where the economy is currently headed, America’s entrepreneurial spirit has never been stronger. People are going to see that, as small businesses continue to grow and are a more important part of the economy, it will boost entrepreneurship even more.

Marketing in a Slow Economy

In tough economic times it is important to think beyond the current downturn and start thinking of creative ways to attract more attention to your company’s products or services.

There seems to be a little less to go around these days as business owners carefully choose where they are spending. This can be an opportunity rather than a problem. Simply do what others won’t. When everyone else in your market is cutting back and expressing their grief over the economy and lagging sales, you should increase your advertising.

Unfortunately, for some business owners, cutting back on advertising dollars is the first knee-jerk reaction that is employed. In difficult economic times, getting your product or service in front of prospective customers becomes increasingly important, if not vital.  Here’s just a few simple things that can have an impact:

Contact all your former customers – Make up any excuse to call them, but call them.  They may not need you now, but they may know someone who does. Ask for referrals.

Network – Take advantage of any opportunity to get in front of a group of people to talk about what you do best.  Give your business card to everyone you meet.

Offer specials or generous payment terms – There’s nothing like a discount or extended payment terms to entice customers.  But don’t worry, if you use Charter Capital’s FactorLine, offering generous terms (as long as 60 days) will have little effect on your cash flow.

Re-valuate your current advertising strategy – Make sure you’re reaching your customer base, and don’t underestimate the power of the Internet.  Sometimes a shift from traditional advertising to on-line advertising can have a dramatic effect.

People have a lot of things on their minds these days and it’s possible that your product or service is not among their top concerns right now, whether it should be or not. You should recognize opportunities to place solutions in their paths that will capture their attention, impress them, and bring them to your door.

Small Businesses Can Face Economic Downturns With Confidence

Dealing with an uncertain economy is never easy, especially for small businesses. Unlike their larger counterparts, small businesses rarely have the resources to monitor and take corrective action for every trend and issue. And even those owners who have weathered numerous business cycles may be faced with new circumstances that confound their otherwise successful instincts and knowledge.

While there is no crystal ball that accurately predicts the future, small business owners can take a number of steps that will help their enterprises endure the worst of times, and position them for success when conditions inevitably improve.

In the face of the ongoing credit crunch, consider an alternative to borrowing funds from a commercial bank. – Consider a funding line from Charter Capital, a preferred provider of accounts receivable factoring services. Charter Capital has vast experience in economic cycles, and can advise you on issues specific to your business and industry. It may be helpful to arrange for an invoice factoring or funding line. You may not need it for several months or at all. But if a lag in cash flow occurs, you will have a ready source of bridge money in place.

Make sure you have good relations with your vendors. – You may find it necessary to renegotiate terms, but overdue bills and inconsistent payment practices will not help your position. What’s more, your vendors may be experiencing financial difficulties as well. Any flexibility will hinge on whether they perceive you as a reliable partner, or a risk. A factoring or funding line from Charter Capital will help establish you as a reliable partner.

Similarly, keep a close watch on your receivables. – Follow up with whoever owes your company money and make sure they are meeting their terms. Be firm when dealing problem accounts, but also be willing to negotiate where appropriate. It may take only a matter of months for a struggling customer to become a highly stable source of income. If you can accommodate such situations without adversely affecting your company’s financial position, everybody wins. A factoring or funding line from Charter Capital will give you the freedom to extend even more generous payment terms to your valuable customers.

Step up your marketing efforts. – Many businesses mistakenly see marketing as a luxury when money is tight. The truth is that this is the time you need marketing most. Along with reassuring your current customers that you are still there to serve them, marketing can help you reach new markets that will sustain your business now, and facilitate its growth in the future. A factoring or funding line from Charter Capital will give you peace of mind to accelerate your marketing effort knowing that you have the cash flow to support your increase in sales.

Make sure expenditures can be justified, and that they contribute to the financial health of your business. – You may find it necessary to redirect money to areas that will enhance business performance. If you carry an inventory of products, check the accuracy of your records and procedures to prevent losses. Do not feel pressured to hold down sales for lack of inventory. A factoring or funding line from Charter Capital will give you freedom to invest in even more inventory than you might otherwise be able to afford.

Review your operations and expenses on a regular basis. – If you monitor your profitability on a monthly basis, it’s a good idea to do it weekly or biweekly during slow economic times. Likewise, you should review your business plan more often. Monthly or quarterly reviews will make it easier for you to make adjustments and keep your business on track. A factoring or funding line from Charter Capital will give you a certain amount of flexibility in meeting your cash obligations. Obtain cash to negotiate prompt pay discounts with your vendors. Meeting your payroll and payroll tax obligations on a timely basis will most certainly save you additional expense.

Smaller Lenders Feeling Squeeze Of Credit Crunch

The Wall Street Journal: “Smaller Lenders Feeling Squeeze Of Credit Crunch

Invoice Factoring from Charter Capital is your Alternative when lenders say “No”

As banks continue to “tighten up” their lending practices due to continued pressure from federal and state bank examiners, small business owners are finding in increasingly difficult to secure the financing they need to grow their business.

The Difference Factoring Makes
An increasingly popular way that small business owners secure capital for their growing business is factoring. Invoice factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company like Charter Capital. You immediately get the money from Charter Capital and we collect on the invoices.

It is important for small business owners to know that factoring is not a loan and will not show up as debt on the company’s balance sheet.

With factoring, you are free from many of the restrictions placed upon your business by traditional bank financing such as loans or lines of credit. Most importantly, with factoring, you are free to grow without having to give up equity or control of your business. This is because factoring your Accounts Receivable is technically the sale of an asset, and the funding you receive from us is not debt, but a cash asset.

In today’s competitive marketplace, getting debt-free funding in the form of factoring can give businesses the edge they need to succeed.

Fallout From Credit Crunch Creates Another One

Source: Washington Post | Tuesday, November 20, 2007

The credit crunch is back.

After improving in September and early October, markets in a wide variety of debt — including for home mortgages, consumer loans, and corporate buyouts — have sharply deteriorated in recent weeks. Investors view much of this debt as riskier than they did even at the height of the August credit crisis and are requiring higher interest rates as compensation.

While markets are behaving in a more orderly fashion than they were in August, many on Wall Street fear that the situation will get worse before it gets better. “This is just dragging on longer,” said Axel Merk, a portfolio manager for Merk Hard Currency Fund. “We’re very early in this.”

Economists increasingly worry that banks are suffering such massive losses that they will be forced to cut back their lending to consumers and businesses. That would slow the economy, much as the savings and loan crisis did in the early 1990s. Yesterday, an analyst predicted that Citigroup, the world’s biggest financial services company, would suffer another $15 billion in losses in the coming six months from its exposure to exotic types of debt.

That prediction, along with fresh negative data about the housing market, drove the Dow Jones industrial average down 218 points, or 1.7 percent. Financial markets are pointing to a strong possibility of even more bad news.

For example, futures markets indicate that there is a 20 percent chance that the Federal Reserve will cut interest rates by half a percentage point or more at its next policy meeting Dec. 11, even though it is widely understood that the central bank would do so only if there were highly negative economic news between now and then. An index measuring the cost of insuring against credit losses on 125 financially sound companies reached an all-time high yesterday. And the market for securities backed by commercial real estate loans, which had been little affected through the August crunch, is showing strain.

In August, as investors concluded that defaults on U.S. mortgage loans would cause massive losses, worldwide markets for a variety of complicated securities all but shut down. But what is happening now is different. The markets are working reasonably well, with transactions taking place. But investors have had time to digest just how great the losses may be, and how widely the impact may ripple, and they do not like what they see.

The direct losses from mortgage foreclosures will be about $400 billion, economists at Goldman Sachs estimated in a report last week. If that were the extent of the losses, the financial system could easily absorb them. But because of the way banks and other institutions work, the losses could spread far more widely.

Banks are required to keep capital on hand so they can weather losses. The mortgage-related losses are cutting into their capital and thus could cause a commensurate drop in how much they can loan. Taking into account that “multiplier” effect, the mortgage problems could reduce by $2 trillion the credit available to consumers and businesses, Goldman estimated in the report.

“The implications are that it will be harder for ordinary people to get loans,” said Jan Hatzius, chief economist at the investment firm. “That’s true not just in mortgage land but also for consumer loans, for corporate loans, for commercial real estate.”

There are tentative signs that credit is becoming less available. In October, 28 percent of senior loan officers surveyed by the Federal Reserve said their banks had tightened lending standards for consumer loans; 2 percent had loosened them.

If banks severely curtail lending, the situation could mirror that of nearly 20 years ago, when bad loans in commercial real estate and other sectors led to massive losses by savings and loans. They then cut back on lending, a major cause of the 1990 recession. But Hatzius notes that such a dire situation could be avoided if the institutions affected raise more capital through other means.

Parts of the market for packages of loans are functioning reasonably well; almost none were in August. Now buyers and sellers are both at the table. However, investors have concluded that many debt securities are riskier than they thought then, and they are requiring higher interest rates as compensation.

And it’s not only in the troubled home mortgage sector. For example, packages of high-quality loans for office buildings and other commercial properties had interest rates 0.7 percentage points higher than comparable Treasury bonds earlier this year, according to a Morgan Stanley index for commercial mortgage-backed securities.

During the August credit crunch, that premium rose to 1.5 percentage points before dropping in September and early October. But yesterday, investors required an interest rate premium of 1.7 percentage points to take on the risk of lending for commercial real estate.

“People are looking at things and saying, ‘Hey, I’m going to price the market according to what I expect will happen, not what I currently see happening,’ ” said Alan Todd, head of commercial mortgage-backed securities at J.P. Morgan, who noted that delinquencies on commercial mortgages are starting to pick up from historic lows.

Another example of the spreading sense of worry: Wall Street is closely watching the rash of bad news from bond insurers, who guaranteed complicated securities that are now going bad in portfolios across the globe.

“Will they be able to pay up on the claims as these defaults and foreclosures roll in on the underlying mortgages?” said Ed Rombach, senior derivatives analyst at Thomson Financial. “If they can’t, there’s going to be hell to pay. It’s going to lead to a whole new round of downgrades of these securities. Those downgrades will lead to a whole new round of write-offs for Citigroup and investment banks and commercial banks and hedge funds.”

Yesterday, insurance giant Swiss Reinsurance took a $1 billion write-down of losses on complicated securities tied to home mortgages, another example of how the problems tied to the U.S. housing market have spread widely and unpredictably — and of how companies are still coming to terms with the scope of the losses.

Economists speak of “tail risks,” meaning events that are unlikely to happen but would cause major disturbances if they did. And in recent weeks, many analysts think that the likelihood of these risks, while low, has risen.

Laurence H. Meyer, a former Federal Reserve governor, described three such risks in a note to clients of his forecasting firm, Macroeconomic Advisers. A major financial institution could fail or come close to failing. Government-sponsored housing-finance companies Fannie Mae and Freddie Mac could find they are more exposed to the mortgage problems than investors have factored into their stock and bond prices. And the market could lose faith in the companies that insure debt against credit losses.

“The general point is that the current circumstances are marked by sizable loses on credit positions, with no one quite sure of what the eventual magnitude of those losses will be or where they are located,” Meyer wrote. “That raises the possibility of financial markets becoming more turbulent.”

Charter Capital Joins the Houston Hispanic Chamber of Commerce

Charter Capital is pleased to announce acceptance of its membership to the Houston Hispanic Chamber of Commerce.

HOUSTON, TX – November 7, 2007 – Charter Capital, recognized as one of the most flexible providers of working capital to small and mid-sized businesses, announced today acceptance of its membership to the Houston Hispanic Chamber of Commerce.

This affiliation will provide Charter Capital with even greater opportunity to help shape the landscape of Houston’s small business community. Hispanic-owned businesses are one of the fastest growing business groups in Houston, and one of the most financially underserved, as well.

“It is without a doubt that the Houston Hispanic Chamber of Commerce is central to Hispanic business and cultural affairs and we are glad to give our support,” says Keith Mabe, Director of Operations for Charter Capital.

“By working with the Houston Hispanic Chamber of Commerce we are inspired by true professionals that are dedicated in their perseverance of success for Hispanic business owners and the community at large.” Mr. Mabe added.

Headquartered in Houston, Texas, Charter Capital ( provides working capital funding via a process commonly referred to as “factoring of accounts receivable”, asset-based lending, and cash flow solutions for businesses nation-wide including: freight delivery and transportation, repair, maintenance and inspection service providers, consulting firms, most other service providers, staffing firms, distributors, wholesalers and manufacturers. Charter Capital also serves business in Dallas, TX; San Antonio, TX; Austin, TX; Atlanta, GA; Albuquerque, NM; Phoenix, AZ; Nashville, TN; Indianapolis, IN; Oklahoma City, OK; and cities nationwide.


Visa Press Release Shows Optimistic Outlook for the Future of Small Business

New Quarterly Report from Visa – Small Business Spend Insights – Provides Data-Driven Perspective on Small Business Confidence and Outlook

Small Businesses Optimistic on Future Revenue and Profits but Concerned About Rising Costs of Energy, Healthcare and Taxes

Visa Press Release- June 6, 2007

A new small business spending report released today by Visa USA indicates that, while small businesses remain relatively bullish about revenue growth, increasing expenditures on energy, healthcare and taxes are pressing concerns for small business owners. The report, titled “Visa Small Business Spend Insights,” will be published quarterly and provides a comprehensive view of the U.S. small business climate by combining a poll of U.S. small businesses with the most current Visa spending data on small business cards.

“More than most, small business owners are susceptible to the effects of rising costs and fluctuations in the economy. As such, they need to hedge against spending increases and economic uncertainty by making smart IT investment decisions and utilizing cash management tools such as payment cards,” said Wayne Best, senior vice president, Business and Economic Analysis, Visa USA.

Small Business Spending Outlook
The report identified the following four key spending areas that are currently of top concern among small businesses:


  • 75 percent of the small business owners surveyed believe that energy spending will increase over the next six months.
  • The average spend per transaction on Visa Business cards for energy-related expenditures increased 18 percent for the 12 months ending February 2007.


  • 34 percent of respondents expressed concern that cost of health care insurance will increase over the next six months, with this concern being the highest among small businesses with two or more employees.
  • The average spending on Visa Business cards on healthcare-related expenditures increased 17 percent for the 12 months ending February 2007.


  • 20 percent of respondents expressed concern about rising taxes in the next six months.
    The average spending on Visa Business cards on tax preparation services and tax payments increased by 80 percent for the 12 months ending February 2007.
  • Purchases for tax payments and tax preparation have an average spend per transaction that is three times the size of the average purchase for all Visa Business card transactions.

Attracting Customers

  • 22 percent of small businesses surveyed expressed concerns about attracting new customers over the next six months
  • The average spending on Visa Business cards for advertising, management consultants/public relations, publishing and related expenses increased by 56 percent for the 12 months ending February 2007, twice the growth rate of expenditures in all categories.

Small Business Profit & Loss Overview
The report results indicate that the future outlook for both small business revenue and profits is positive based on the following key findings:

  • Nearly half (45 percent) of small business owners surveyed expected an increase in revenues over the next six months, compared with only 11 percent who expected a revenue decrease over the same period.
  • 39 percent of small business owners surveyed expected an increase in profits over the next six months, compared with 19 percent who expected lower profits over the same period.
  • In terms of cash flow, only 17 percent of those surveyed expect that they will need to borrow more money in the next six months, while just 18 percent expect to have issues collecting payment in the same timeframe.

“Visa, as a leading provider of small business payment products and processor of financial transactions, has a unique window into the spending habits of U.S. small businesses,” said Raghav Lal, senior vice president, small business, Visa USA. “By comparing small business attitudes with current Visa spending, we can provide insights into small business confidence and outlook. This analysis enables Visa and our member financial institutions to deliver small businesses with payment solutions tailored more closely to their needs.”

For more information on Visa Small Business Solutions or to view the complete Visa Small Business Insights newsletter, go to

About Small Business Spend Insights
Visa Small Business Spend Insights is a quarterly survey to monitor the relative economic confidence of small businesses with $50,000 – $25,000,000 in annual revenue. More than 600 small businesses are included in the quarterly survey.

About Visa USA
Visa USA is a leading payments brand and the nation’s largest payments system, enabling banks to provide their consumer and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance and security of Visa payments for all stakeholders – financial institutions, cardholders and merchants. In the United States, more than 521 million Visa-branded cards have been issued by our 13,320 financial institution customers.

Visa products generated nearly $1.8 trillion in total volume in the United States through March 2007 and enjoy unsurpassed acceptance around the globe. For more information, visit

“Rapid Response” Business Unit Formed to Provide Invoice Factoring Services to Small Businesses

In a recent press release Charter Capital increases it’s funding capacity aimed at providing for the urgent financing needs of small businesses.

Charter Capital formed a special businesses unit designed to provide invoice factoring services to underserved small businesses. The Rapid Response Business Unit expands our commitment to diversity as well as satisfying the financial needs of many underserved businesses.

Many Latino-owned businesses in the U.S. are expected to increase in the coming years and is expected to produce more than $465 billion in total revenues. According to the most recent U.S. Census Bureau projections, by 2050 Latinos will make up nearly a quarter of the U.S. population.

New Website Provides Comprehensive Online Guide to Factoring

Charter Capital Expands its Internet Presence with the Introduction of its Redesigned Web Site.

HOUSTON, TX – May 18, 2007 – Charter Capital, recognized as one of the most flexible providers of working capital and related financial services to small and mid-sized businesses, announced today it has launched

The new website project was headed by Mr. Keith Mabe, Director of Operations for Charter Capital. Mr. Mabe has had extensive experience with web development, especially in the area of content based websites. “We, at Charter Capital, feel that the updated layout and increased content will increase awareness of our service offerings,” said Mr. Mabe.

Headquartered in Houston, Texas, Charter Capital ( provides working capital funding via a process commonly referred to as “factoring of accounts receivable”, asset-based lending, and cash flow solutions for businesses nation-wide including: freight delivery and transportation, repair, maintenance and inspection service providers, consulting firms, most other service providers, staffing firms, distributors, wholesalers and manufacturers. Charter Capital also serves business in Dallas, TX; San Antonio, TX; Austin, TX; Atlanta, GA; Albuquerque, NM; Phoenix, AZ; Nashville, TN; Indianapolis, IN; Oklahoma City, OK; and cities nationwide.