A staffing company can be a very profitable business, especially now that the demand for temporary workers is increasing in North America. In Canada, more than 2 million people comprised the temporary workforce in 2012; temporary work grew by 14.2% from 2009 to 2012 while permanent work only grew by 3.8% during that same period.
In the US, the percentage of temporary workers grew from a1.3% in 2009 to 2.1% in October of 2014, representing 2.9 million workers.
But this increase in demand for temporary workers is also increasing the need for more staffing company funding. Staffing agencies need to keep on recruiting new workers and they also need to pay them on time.
And here’s where staffing direct lenders can help.
Pros of Direct Lenders
A direct lender is a funding source that lends its own money to you directly. There are no middlemen or brokers involved in the deal. For example, you can approach a bank for a loan, or hammer a deal with a factor for factoring services which can get you the money you need faster.
There are several advantages to this approach. For one, direct lenders offer a sort of a one-stop shop for your funding. You negotiate the terms of the loan or the funding directly with the funding provider. You therefore can also gauge the reliability of the source. Banks, for example, are regulated by government agencies, while you also have personal connections to family and friends who are willing to loan you money for your business.
Without any middlemen, you may also get the funding you need for a lower fee.
Disadvantages of Direct Lenders
There are also several problems that you will encounter when dealing with direct lenders. One is that you have to judge the suitability of the arrangements yourself. You will need to approach several lenders to find the best services and terms, and you may not have a wide selection of options to choose from. In contrast, a broker can help you find the best source of funding that matches your needs, and they know a whole lot more financing programs and sources.
The time you will save when dealing with a broker is also something you need to consider. The broker can lead you to lenders which are more likely to grant you your funding instead of having to waste weeks or months on an application that is likely to get rejected anyway.
Finally, the broker can also help you get a more favorable loan rate from a bank or negotiate to lower a factor’s fees.
It’s all up to you whether or not you should approach staffing direct lenders on your own. Just bear in mind that for a staffing company, time is of the essence, and payroll needs are waiting at the end of each week. A broker may be worth their fees if they can arrange for the funding you need ASAP and save you all the hassle of looking for financiers on your own.