When the solution is a problem.In Alan Hughes' story, "Blown Away By Katrina" (November 2005), he describes the widespread doubt among many black business owners that they will actually be able to obtain contract/vendor opportunities in the rebuilding process. He references President Bush's Sept. 75 address to the nation from New Orleans New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded in which he declared that it would be policy that minority businesses and small businesses benefit from what is emerging as the largest public works public works pl.n. Construction projects, such as highways or dams, financed by public funds and constructed by a government for the benefit or use of the general public. Noun 1. project to American history. But a number of the small businesses in question are not able to meet the credit standards Credit Standards The guidelines a company follows to determine whether a credit applicant is creditworthy. required by most traditional lenders and their government agency regulators. Using conventional approaches, it could take years before many small businesses qualify for some form of financing that would enable them to take advantage of a government or general contractor A general contractor is an organization or individual that contracts with another organization or individual (the owner) for the construction of a building, road or any other execution of work or facility. opportunity! An alternative option that is already succeeding is the factoring of invoices and receivables. Factoring has been in use as a financing format by construction contractors and subcontractors for about 15 years. Factoring is not a loan. A factor buys the invoice An itemized statement or written account of goods sent to a purchaser or consignee by a vendor that indicates the quantity and price of each piece of merchandise shipped. A consular invoice is one used in foreign trade. that was generated by the small business vendor and offered to the contractor or government agency. The factor advances--often within five to Io business days--as much as 70% of the value of an invoice in cash, aster verifying it with the organization making payment. This enables the vendor to buy materials, hire workers, and carry out the work on deadline. The factor then collects on the invoice and pays the contractor the difference less factoring bees and expenses. The factor is not necessarily interested in whether or not a business is a high credit risk, nor is the factor concerned about whether a minority-owned enterprise is involved. The factor is often used to provide cash on an emergency basis. Certainly, factoring costs more than traditional banking. But what good are the attractive low rates that banks offer if the process is going to require many weeks, even months, and carry the likelihood that the applicant will be rejected, factoring is a streamlined answer to this issue that can circumvent cir·cum·vent tr.v. cir·cum·vent·ed, cir·cum·vent·ing, cir·cum·vents 1. To surround (an enemy, for example); enclose or entrap. 2. To go around; bypass: circumvented the city. bureaucracy and enable small businesses to stay focused on the work they need to perform. Craig Sheinker New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. Dfrankproduetion@aol.com |
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