Coming to the Defense of Asset-Based Lending

Asset-based lending nationwide is a $200-billion-plus industry designed for those businesses that primarily do not qualify for conventional bank financing (“Earnings and Growth Bring More Options for Borrowing,” May 16).

Accounts receivable financing is a loan secured by invoices submitted from a sale of a product or a service where 30-day terms or longer are given. Loan advances can range up to 95% of the invoices’ face value.

All finance companies making these types of loans are licensed as commercial lenders and are regulated by the state in which they reside. In unusual cases it’s possible that the effective interest rates could approach the numbers you cite, but no one who is a licensed lender is pocketing 30% of any company’s total revenue.

The borrower using this type of financing is usually undercapitalized, is fast growing or has had significant financial deterioration and can’t wait to collect its receivables to pay its bills, payrolls and taxes.

If it were not for the service my industry offers, our country would be in a worse depression than the last one. To compare this business to underworld practices is malicious.

Edward Sands

President

Alpha Business Loans Inc.

City of Industry