Choosing the Right Lending Partner for Staffing Agencies: Boosting Financial Stability and Growth
Staffing companies face new challenges as the industry adjusts to revised growth projections. After experiencing robust growth of 33% in 2021 and 17% in 2022, economic forecasters anticipate a 3% decrease in overall growth by the end of this year. However, looking ahead to 2024, analysts are expecting the staffing industry to return to moderate growth, with revenue estimated to increase by 2%, according to a recent SIA report.
Maintaining financial stability and preparing for growth in a tight market has become the new norm. Staffing companies eyeing expansion in 2024 must be prepared for rapid scalability to outperform the competition. A stable and flexible financial foundation is critical for aligning operations with evolving new business requirements. Partnering with a trusted financing provider committed to aiding your growth and knowledgeable in the staffing industry can provide a significant competitive advantage.
In this article, we’ll explore how to select the right lender to support your staffing agency’s financial stability and fuel its growth in 2024 and beyond.
What to look for in a lender?
In short, when choosing a lender, focus on their commitment and capability. Is the lender genuinely committed to helping your agency grow? Do they have the knowledge, experience, and resources required to ensure your business has the necessary working capital when you need it? Industry-recognized leaders in alternative lending are best positioned to provide fast, flexible funding options and the essential support staffing companies need to pursue new opportunities confidently.
To better answer what to look for and how to choose the right lender, eCapital, one of the nation’s fastest-growing alternative financing companies, spoke with a leading staffing firm approaching its 40th year in business.
This staffing and recruiting agency operates in 43 states from 12 locations and supports anywhere from 2,200 to 3,500 W2 contingent employees weekly. Their remarkable growth strategy, driven by organic and strategic acquisitions, has them on track to reach $250 million in revenue within two years. The agency has been a client of eCapital for over two years. Here are some of the insights the CEO shared on their decision-making process in choosing the right lender to fuel their growth:
A commitment to your success
A lender should be more than a financial provider – they should be a true partner invested in your success. Their expertise, resources and financial backing should be readily available to ensure your business can navigate emerging challenges, pursue new opportunities, and support acquisitions. Reliable alternative lenders specializing in the staffing industry offer flexible payroll funding solutions based on invoice factoring and asset-based lending arrangements.
For this staffing and recruiting agency, having their lender committed and dedicated to ongoing success is essential to the relationship. “Our relationship with eCapital is more than just business, it’s a partnership.” The agency’s CEO elaborated with an example, “… when we take on new customers, it would not be unusual for our CFO to call our contact at eCapital and say, ‘Hey… we’re looking to bring on, for example, a major aerospace company. The prospect is telling us their payment terms are in 60 days, but the spreads are very high, the margins are high, and we probably can do $10 million with them in the next six months. Do you have an appetite for that, and will you need to put a limit on it? ‘In this case, after doing their research, eCapital responded, ‘They’re a big company. I don’t think we have to worry about them from a payment issue, so you can just take them under the traditional terms that we fall under and we’re good to go.
The agency emphasized the importance of commitment in the relationship, saying, “I also found eCapital to be very accessible, and their team is genuinely interested in our success. I’ve called from my cell phone many times, and I visit them often in Atlanta whenever I’m there for work. We get together and strategize about the business.”
Being committed to client success is a hallmark of a reliable lender. During the two years this staffing and recruiting agency has been working with eCapital, constant communication and a shared drive to succeed have built a trust-based relationship. “And I would unequivocally tell you that eCapital has done everything they said they were going to do.” The knowledge, creativity, and unwavering support from the eCapital team have played a vital role in the agency’s accelerated growth and continued success.
Reliable funding depends on the lender’s capabilities
As critical as trust and commitment to success are, a lender’s true value is determined by the extent of credit they can provide. Each industry faces unique challenges and barriers to success. Choosing a lender that understands your business model and recognizes the industry-specific risks is essential to crafting viable solutions to complex financing issues that may hinder dependable financing. Lender knowledge and expertise are critical for fast, flexible, and reliable business financing.
The agency had much to say about eCapital’s knowledge of the staffing industry. “What sets eCapital apart is their understanding of our business and industry. They have proven themselves to be incredibly supportive, offering valuable insights and creative solutions to meet our needs.” The CEO continued, “From day one, eCapital’s entire team knew what we were doing and clearly got it. For example, eCapital set the terms of our agency’s lending deal to align with our customer profiles, many of whom are large Fortune 500 companies.” He added, “And I feel this enabled us to grow our existing customers even more than we could have with a traditional bank.
The agency’s CEO concluded this thought by stating, “I don’t think I will ever go back to a relationship with a lender who doesn’t know our industry. There are too many peculiarities in every industry that makes them unique. eCapital has a lot of knowledge about the staffing industry and as a result, can help us be a better company and make better financial decisions through that knowledge.”
But lender knowledge and expertise to overcome barriers is only half the equation; having the financial resources to support large deals is equally essential to fund complex deals reliably. eCapital is an innovative alternative lender with the flexibility to manage difficult financial challenges and the resources to fund multimillion-dollar facilities.
This staffing agency has leaned heavily on eCapital’s assessments of growth opportunities, “They will give us an honest evaluation of the deal and they will give us a straight-up answer. We can or we cannot do the deal. And if we can, here’s how we would do it. Here’s how it would look, and here’s how we’ll help you with it. If we can’t, here’s how you should do it. Here’s what you might want to do. Oh, and by the way, we might have a third party that might come in and help you with that.”
- Growth projections for the staffing industry have been adjusted downwards.
- Maintaining financial stability and preparing for growth in a tight market has become the new norm.
- Partnering with a trusted financing provider can provide a significant competitive advantage.
- A discussion with the CEO of a rapidly growing staffing and recruiting agency’ reveals why they chose to partner with eCapital.
For staffing companies needing reliable business financing, it’s essential to understand that the best alternative lenders for the staffing industry possess unique expertise and can fulfill specific needs with greater ease than traditional banks. The agency’s business leader continued, “What I’m seeing is the traditional banks are looking at every deal with a high degree of scrutiny and I don’t think they have the flexibility in their deals or their deal structure to accommodate a company like ours.” He added, “So, I think there’s an opportunity for companies like eCapital to capitalize on the market conditions right now. You go to an eCapital, and you realize … you might need some flexibility, and if a company can provide a level of security and flexibility, it’s a win, win situation. Certainly, it has been for a company like ours.”
eCapital has funded over $36 billion to more than 30,000 clients, each with its own set of challenges to overcome and goals to meet. This agency’s CEO summed up his appreciation for eCapital’s support, “… with the support of eCapital, we’ve been able to double the size of the company in the last five years.”
Lender support is essential to maintain financial stability and position your company for growth in today’s tightening market. Be sure to research your options well and choose a trustworthy lender. To get the whole story, read the full customer interview with the CEO of one of the industry’s leading recruiting and staffing agencies.
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.