The renegotiation of trade agreements and/or the use of tariffs could result in consumer prices for goods and services increasing dramatically. Unfortunately, this would probably have a greater negative effect on poorer Americans than on richer Americans. It will be interesting to see if there will be a role for wage subsidies, tax credits and retraining programs for those Americans who will have seen their jobs displaced by automation or globalization. Whatever scenario plays out, small and medium sized businesses which offer products or services directly to consumers will have to provide ever increasing creative financing for their customers, as consumer prices are bound to increase as tariffs are employed and as trade agreements are negotiated.
In order to compete businesses will have to be able to offer financing not only for their customers with excellent credit ratings, but also for their customers with subprime credit scores.
Assisting “the forgotten man and woman,” a chief message of the Trump presidential campaign can best be realized by promoting faster economic growth. In order to achieve this, there must be tax reform that includes not only lowering the corporate tax rate, but expanding the earned-income tax credit.
Many “mom and pop” businesses today, do provide financing for their customers; however, it is “mom and pop” who actually extend financing to their customers. “Mom and pop” inadvertently become a lending institution tying up their own capital and thereby limiting their possibility for meaningful growth. There is a better alternative.
Instead of carrying notes themselves, “mom and pop” can sell their consumer contracts (retail installment contracts) and so generate an increased cash flow for themselves in this very competitive market. That is to say there is a way for small and medium-sized businesses to not only offer consumer financing, but to offer it to “the forgotten man and woman” with credit scores, in some instances as low as 600-620.
Access Funding Center, Inc. provides a consulting service whereby small and medium sized businesses anywhere in the United States can sell their consumer receivables (consumer notes) after providing financing for their prime and subprime customers. By selling their consumer notes, businesses that provide products or services to customers, don’t have to become a funding source themselves. Instead they are able to free up their capital and do whatever it is that they do best in order to improve their profitability.
The improvement of a business’ cash flow environment through consumer receivable financing, and thus the resulting profitability is crucial, because through the last ten years, we have witnessed the worst recession since the Great Depression. In addition we have seen government spending and taxation, as well as a massive expansion of federal regulation on commerce. These last ten years have also marked one of the weakest recoveries ever measured by GDP growth.
In the meanwhile,wage growth among the least affluent of Americans has remained stationary while the labor-force participation remains close to an all time low among prime working age individuals. The real GDP growth has been sabotaged somewhere between 1% and 2% in recent years. This is far below its post war, pre-crisis movement of 3%.
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