Different Factoring Question

That's a great question, Bill. Do you think they put some kind of lein on your credit report? When was the last time you checked yours?

Were you required to sign a personal guarantee. How do you get a credit report under your business name? Can you get one free every year for your business?

Maybe there is some other report not commonly known about. I know many don't realize that insurance companies run a report similar to a credit report. This report rates your risk based on credit, claims and insurance continuance.

I'm lots of help. I asked more questions and offered no answers.

 

Factoring is unregulated there is nothing special that is required to start a factoring company.

Typically you will not get a release until all debt is cleared up if you change from one factoring company to another the new factoring company will purchase all the debt from the old factoring company.
If you want to make a switch make sure you want to do it because this is an absolute nightmare to go thru because the new company typically will call your customers to verfiy the outstanding balance and could leave you in limbo and not get any funding for a few days the new company is not going to extend financing until the old one releases you and the old one is not going to give you anymore because you are not using them anymore.

 

I should have thought about the UCC filing. I've had those before. In some cases they are required to be filed with the Secratary of State and some cases they are filed with the County Recorder. I can't remember what decides the filing location. Either way they are public records that a search can easily find.

 

Since a factoring company loans money, I would believe they are regulated by the Usury Laws and Rates for their state of operation. There are also Federal Usury Laws.

Since these are the same regulations governing payday and car title loans, IMHO almost anything goes.

Check out UsuryLaw dot Com. This will give you some ideas and get your research started.

 

Factoring company's are not loaning money,they are purchasing something at a discount. There are filing requirements in some states to do this.

 

Actually the difference in pay day loans and such is that factoring companies are business to business, and most usury laws are for personal, not business lending. With a large and cheap enough line of credit, it would be easy to start a factoring company. Big money to be made for sure, but it takes big money to start.

 

You will have a lot of money out in credit checks at the start.(unless you are going to try and use "industry" DTP) You are going to need to be licensed to pull those credit reports from any of the big 3. With recourse you will also be paying(or charging) for UCC filing. One non pay can eat up the gross profit 30-40 loads factored.