Community-based Factoring Companies and Small Business Lending
At a time when small businesses are suffering from a credit crunch, "niche" financial institutions increasingly are filling the void left by more traditional sources of financing, such as commercial banks. In this working paper, authors Dimitri B. Papadimitriou, Ronnie J. Phillips, and L. Randall Wray argue that among the most important of these niche players are community-based factor companies, which are rapidly expanding beyond their traditional customer base in the apparel and textile industry to finance a broad range of firms in everything from electronics to health care. Moreover, because factors are becoming an increasingly important source of financing for small and start-up businesses, the authors propose that factors be encouraged to play a broader role in financing firms in distressed communities. In some cases community-based factors should be eligible for funding and assistance under the administration's new community development financial institutions legislation. In addition, investment by banks in these factors should count toward compliance with the proposed new regulations for the Community Reinvestment Act.
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References listed on IDEAS
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- Dimitri B. Papadimitriou & Ronnie J. Phillips & L. Randall Wray, "undated". "A Path to Community Development, The Community Reinvestment Act, Lending Discrimination, and the Role of Community Development Banks," Economics Public Policy Brief Archive 6, Levy Economics Institute. Full references (including those not matched with items on IDEAS)
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