HN we are generally talking smaller dollar size and its consumer lending "loans" not cash flow factoring services to which GE or the like have to conduct a full credit assessment of the consumer under NCCP requirements.
There is a difference, similar yes but not the same.
FC know they are entering agreement with a SB due to a BIG invoice to which they are duly compensated not only by a % of the ticketed invoice but by share issuance (albeit now states that the shares issuance will stop).
I guess my summation or question is, is the vetting process as prudent given FC has more incentive than normal to fund the invoice? In fact I'd question if there is any reliance on FC to conduct any real assessment at all.
With all due respect I think the way in which this has been positioned is somewhat a stroke of genius to get fast numbers, I have no real issue with it per se, but question if its sustainable.
For example a hairdresser to pay $5000 upfront is possibly out of reach for most of them, so my best guess is that majority of these clients are using the monthly payment option, and why wouldn't you.
However, I just wonder what happens when a client cant pay, does FC have any underlying agreement with BIG to be compensated for any loss incurred? One could say this is already happening and a yes by proof of share issuance?
To further explain, if I have an agreement with FC to refer them customers, im duly compensated via a referral agreement. I have agreements now with several factoring type companies. No one just hands over clients without a payment for the referral.
In this case here however it is alleged there is no payment made. In fact FC also get or have received shares in the underlying invoiced company. Why?
The only reason why this would be is that FC have agreed to fund any invoice sent to them via BIG (with no real assessment) and in turn BIG receive no payment, and must compensate for any losses via share issuance, or not even losses, but must issue shares anyway, losses or not?
If this is not the case, then why is BIG not receiving compensation for referring customers, is it for the love of it? No.
I see a lot of the advertised SB are cafes and hairdressers, they are possibly the most vulnerable SB you can ever imagine.
Because of the non payment, I bet FC and BIG have any agreement that any losses must be covered by BIG. BIG have the agreement with FC and the SB is simply the conduit between the two.
I could be wrong but it walks and talks like a duck from where i'm sitting.
Please don't take this as me not believing in the company, proof is they are receiving increased cash receipts, I can't simply ignore that, and can see the attraction of the stock, or I wouldn't be here questioning it, but am I the only one finding it hard to comprehend that BIG receive no compensation for referring customers to a "third party" and take no risk either?
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