Denny,

Cost is a relative term in business as you know. If you have a contract that you cannot fulfill due to lack of funds the negative impact of failing is severe. Depending on the track record of the borrower, creditworthiness of the customers, and volume/commitment of the funding: we charge mid teens interest. Is this higher than Libor? yes, will it allow our clients to remain profitable and grow? yes as well. The days of factoring being the lender of last resort are history. When I consider a company for our portfolio if I see that we are in a good money going after bad situation, I will not bring them on. There are factors who do specialize in this business. It's a specialty and I can't speak to their practices or pricing.

Generally we will finance our clients invoicing. We do risk analysis and hope to spread the credit of some good accounts, not so good and marginal. We do not simply turn down anything that is not AAA as a rule. It is much more sophisticated than that and our clients rely on the access to capital based on a thorough knowledge of proper credit research.

Regarding current conditions in the factoring industry - we are in our zenith. Never before have I seen standard access to capital being withheld across the board. In my mind the factoring community has a responsibility in this market to keep small businesses from going under and helping them continue their growth until more favorable lending conditions return.

I hope this clarifies our misunderstanding.

Respectfully,

Gary



>Gary,
>I notice you didn't take any specific umbrage with my post
>mentioning the costs associated with factoring, or the weak
>position message it sends out, or the only wanting to take the
>AAA accounts.
>
>As much as I'm loath to do it, I'm going to contact a
>factoring company or two and see what current conditions
>are...I don't want to give false impressions if the factoring
>market has changed and I wasn't aware of it. I'll let you
>know...
>Denny