We get calls regularly from owners of agencies seeking growth capital to purchase new technology, hire additional staff, upgrade their operational infrastructure, and so on. Neighborhood banks and other lending institutions have curtailed their lending activity, particularly for cash flow/people intensive businesses such as collection agencies, because agencies live and breathe month-to-month on 30 day performance-based and easily-terminated contracts with few exceptions.
Historically, many collection agencies were initially self-funded by owner/founder investments or from family and friends, and growth was financed through cash flows generated from the business. As the business expanded, the owner would establish a small working line of credit with a local bank that would grow over time with the company. Bank financing is a lot less available today, so if you are in need of capital to grow, here are some alternate financing sources to consider:
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