Something notable is going on in the factoring world. Yesterday I was approached by someone purporting to represent a group of investors with $200 million to invest in structure settlement factoring deals. Needless to say I quickly issued my rebuff.
Here's the kicker, the investors are looking for a 12% return on investment ("ROI"). Holy crap! If that is what the group of investors are expecting how lousy a deal is it going to be for the person who desperately needs cash and has exhausted other valid alternatives?
A few weeks ago I wrote about the 7.75%-9% discount rates that are now available from certain sources for those who have a valid need to raise cash by selling their structured settlement payment rights. The source of information concerning the lower rates states that there is plenty of money to fund factoring deals at the lower rates as investors on that side are flocking to quality.
- What does this mean for the big budget factoring advertisers?
- Will they continue to prey on the unwary and desperate who fail to shop?
- Will their rates be forced lower as lower cost producers develop capacities to compete on a volume basis?
- If these companies cannot rein in their overhead are more credit downgrades afoot?
Is the factoring company squeeze is on?
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