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Turned Down By Big Banks, Small Firms Turn To Purchase Order Financing

• iamelgringo 17y ago
  Okay, two things: But his money doesn’t come cheap. It’s typically 3.5 percent for the first 30 days, and 1.25 percent for every 10 days after that, an annualized percentage north of 40 percent. Most loans, he says, are repaid within 60 days. Holy Crap! 40% annualized percentage rate. That's extortion. But, Last year, Hartsko lent roughly $150 million, compared with $84 million in 2008 and $60 million the year before that, he said. He estimates that the company will lend about $240 million this year. Profit, he says, was in the “high six figures” in 2009. He's making a high six figure profit ( or < $1 million ) on $150 million of lending, but charging an annual percentage of %40 on what he's lent, something doesn't add up.
  • aaronblohowiak 17y ago
    Hmm, I think you might be oversimplifying it. If most loans are repaid very quickly, it would drastically reduce the profitability of the lend. So, lending out 1 million dollars 150 times consecutively in one year could be doable, you'd never hit the higher interest rates, and you'd still be able to claim you lent 150M dollars.
  • ahi 17y ago
    He might have lent $20 million 12 times to get a total of $240m. 40% apr on 20m is 8m. 5% of the deals go bad which probably eats up a lot of the interest. And who knows what he pays himself and employees.