There’s a Small Business Debt Crisis in the US

Anna Murray
Trading Politics
Published in
5 min readDec 23, 2019

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Q: What shady corner of finance will destroy the economy this time?

A: Factors

Never heard of a “factor”?

Before 2008, had you ever heard of subprime mortgage-backed securities? Collateralized debt obligations? Credit default swaps?

Simply put, a “factor” is a pay-day lender for small businesses. Factoring has burgeoned in the last decade and is poised to bring down the economy in 2020.

Say you’re a small business and you run into a cash-flow problem. Your clients owe you $200,000, but they are slow to pay. Your payroll is due.

Prior to 2008, a small business would tap its line of credit from a bank. But after the meltdown, banks pulled back on so-called risky lending.

I run a small business. One day in 2009 our banker showed up and told us our line of credit was going to be cut in half. No negotiation. Take it or leave it.

Consider yourselves lucky, he said. He’d left the last guy in tears when he pulled his line altogether.

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Anna Murray
Trading Politics

Tech expert, novelist, and essay writer with an ticklish funny bone. My novel, “Greedy Heart,” is First Best Book Finalist in the VIVIAN Awards.