Community-Based Factoring Companies and Small Business Lending

Jerome Levy Economics Institute Working Paper No. 108

35 Pages Posted: 13 Nov 1998

See all articles by Dimitri B. Papadimitriou

Dimitri B. Papadimitriou

Bard College - Levy Economics Institute

Ronnie J. Phillips

Colorado State University

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: April 1994

Abstract

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.

JEL Classification: G21, G28

Suggested Citation

Papadimitriou, Dimitri B. and Phillips, Ronnie J. and Wray, L. Randall, Community-Based Factoring Companies and Small Business Lending (April 1994). Jerome Levy Economics Institute Working Paper No. 108, Available at SSRN: https://ssrn.com/abstract=133148 or http://dx.doi.org/10.2139/ssrn.133148

Dimitri B. Papadimitriou (Contact Author)

Bard College - Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758 7711 (Phone)
845-758 9424 (Fax)

Ronnie J. Phillips

Colorado State University ( email )

Fort Collins, CO 80523-1771
United States

HOME PAGE: http://www.ronniejphillips.com

L. Randall Wray

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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