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This is an interesting take on what it means to be a direct lender. To summarize, almost all financial institutions lend money that is not ‘their money,’ it is their customer’s deposits. This is why they are able to …

Recent data shows that SBA lending in Southern California is up about 50% over the same period last year and dollar volume of these loans has nearly doubled. This appears to be good news for small business and supports the notion that the economic stimulus enacted in 2009 reached the right hands.

However this good news does not paint a complete picture.

When talking with prospective clients, a common question comes up; ‘What kind of interest rate do you charge?’ This seems like an obvious question when seeking any form of financing but factoring is an exception.

Factoring fees are fundamentally different from interest rates. Factoring amounts to a discounted purchase of an invoice (or a package of invoices). This means that the fee the factor takes will be based on the face value of the invoices for which the factor provided funding.

For example

A recent survey of business owners by the NFIB has gotten a lot of attention. It showed that small business owners are pessimistic about the current state of the economy. Other data suggests that small business lending is down (This article is exceptional, please read) due to the expiration of stimulus measures that offered 90 percent guarantees on SBA loans. Although there may be new legislation to return guarantees to 90 percent, it may take some time before it becomes effective. There are also talks of a double dip recession that could undo the recovery process and send us into another recession.

With the current uncertainty, managing business risk is of utmost importance.