Thanks very much for the explanation. Very thorough. One question though. How realistic are these fees you have used for the different types. For example the purchase order financing we had a 7% fee on $9000 for basically what was a 6 week loan. Annualised that works out well over 90%. Is that really how much it costs? Because that’s very expensive. The first resource non recourse was even more. Considering these are collateralised in some sense why are they so expensive ?
Hamza the industry in which you are operating is going to greatly affect the risks the lender/factor are willing to take. You will see much higher fees for extended pay terms & higher risk industries. Furthermore, how much volume you expect to run through your financing program will serve as leverage negotiate lower rates (9k over 6 weeks has very low opportunity in lender's eyes). Certainly shop the market, but consider the recourse and liabilites incurred upon you, the client, in the fine print when offered that mouth-watering rate you seek.
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Excellent presentation
Thank you! Cheers!
Learned more of financing in 25 min than any other videos out there. Thanks a lot. Please do more of these.
Thanks for watching!
Inventory financing requires more clarity to be honest.
Thanks man
Thanks very much for the explanation. Very thorough.
One question though. How realistic are these fees you have used for the different types. For example the purchase order financing we had a 7% fee on $9000 for basically what was a 6 week loan. Annualised that works out well over 90%. Is that really how much it costs? Because that’s very expensive. The first resource non recourse was even more. Considering these are collateralised in some sense why are they so expensive ?
Hamza the industry in which you are operating is going to greatly affect the risks the lender/factor are willing to take. You will see much higher fees for extended pay terms & higher risk industries. Furthermore, how much volume you expect to run through your financing program will serve as leverage negotiate lower rates (9k over 6 weeks has very low opportunity in lender's eyes). Certainly shop the market, but consider the recourse and liabilites incurred upon you, the client, in the fine print when offered that mouth-watering rate you seek.
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Useful video