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From their FAQ: Is Even a lender? No, Even is not a lender and Even does not provide loans. yet the Article claims that: "....On bad weeks, when users fall sh

From their FAQ: Is Even a lender? No, Even is not a lender and Even does not provide loans. yet the Article claims that: "....On bad weeks, when users fall short, they still get their salary, thanks to past surpluses or to interest-free credit from Even." Interest-free Credit == Loan right? What am I missing

sukilot 11y ago
Maybe they take it as an advance against payroll (direct deposit) and explicitly eat the risk of a user losing their job and never repaying a week. So it wouldn't be a debt.
thaumasiotes 11y ago
There's a legal difference between "loan", the legal transaction, and "loan", the economic transaction. My sister had an internship once at a South American company that bought receivables. In that country (probably Brazil), loans were illegal. A receivable is a promise of payment in the future according to some schedule. So this company would buy receivables at less than full value from companies (or individuals, I guess) who wanted the money immediately. Obviously, that's a loan (technically, it also assigns responsibility for collecting payment to the owner of the receivable). But despite being like a loan in all other ways, it has the key difference of not being illegal. I suspect something similar is going on here.
- idoh 11y ago
  What your sister did is called factoring: http://en.wikipedia.org/wiki/Factoring_(finance) http://en.wikipedia.org/wiki/Factoring_(finance) It is a thing in the US as well. Retailers and construction companies do it. I was looking into it for apps e.g. advance money against IAPs or ad revenue. It doesn't look like there is demand for it.
  - thaumasiotes 11y ago
    Here are some relevant selections from wikipedia: > Factoring is not the same as invoice discounting > Factoring is the sale of receivables, whereas invoice discounting is a borrowing that involves the use of the accounts receivable assets as collateral for the loan > However, in some other markets, such as the UK, invoice discounting is considered to be a form of factoring > Invoice Discounting is sometimes referred to as Discreet Factoring as it is essentially the same product as Factoring (That last quote is from the page on invoice discounting) None of that indicates to me that there's any difference at all, other than (possibly, but not necessarily) the name, between selling your accounts or borrowing against them. They're both loans, identically structured. There's no demand for this euphemistic product in new US markets because we already have finance. Oh, another quote from the factoring page: > in other industries, however, such as textiles or apparel, for example, financially sound companies factor their accounts simply because this is the historic method of financing
    - IkmoIkmo 11y ago
      > None of that indicates to me that there's any difference at all Really? There's a big difference in terms of structuring, risk, ownership etc. When you sell the receivables, your risk is gone. Whether your customer ends up paying or not is no longer your concern. Whether he pays two months late, is no longer your concern. Whether his company goes bankrupt, or he flees the country, is not a concern. You got paid, your financial relationship with your customer just ended. You have no obligations or responsibilities. You need not sue him, chase him, you need not collect payment. That's NOT a loan. You just sold your receivable to a collecting company. In reality, you didn't borrow money, you SOLD a loan that in essence your customer had with you, but now has with someone else. When you borrow money, you simply borrowed money. It changed NOTHING about the fact that you still haven't gotten paid. You're still at risk of a customer not paying, you still need to chase him, maybe even sue him. You still haven't actually earned any money. All you did was increase your risk by borrowing money that you have to pay back even if you don't end up getting paid in the end. The former is a sale of your risk, the latter is a loan. They're not the same and not at all identically structured. In fact in one way they're completely opposite. What is preferable depends. The former carries less risk, but the discount is higher than the interest you tend to pay. For example to sell a 30-day receivable might cost you 3%, which is a lot of money compared to the <1% you pay to borrow money for 30 days, especially with some collateral (which reduces your interest rates as the risk with collateral is lower, but doesn't absolve you from your debt if the collateral ends up being worthless!). So these are two different products with different cost/benefit rates, one offloads a lot of risk and alleviates cash flow issues at a high price, the other doesn't really reduce risk but alleviates cash flow problems at a relatively low price.
URSpider94 11y ago
They don't charge interest on their advances. I believe that's what they mean.

sukilot 11y ago

Maybe they take it as an advance against payroll (direct deposit) and explicitly eat the risk of a user losing their job and never repaying a week. So it wouldn't be a debt.

thaumasiotes 11y ago

There's a legal difference between "loan", the legal transaction, and "loan", the economic transaction. My sister had an internship once at a South American company that bought receivables. In that country (probably Brazil), loans were illegal. A receivable is a promise of payment in the future according to some schedule. So this company would buy receivables at less than full value from companies (or individuals, I guess) who wanted the money immediately. Obviously, that's a loan (technically, it also assigns responsibility for collecting payment to the owner of the receivable). But despite being like a loan in all other ways, it has the key difference of not being illegal. I suspect something similar is going on here.

idoh 11y ago
What your sister did is called factoring: http://en.wikipedia.org/wiki/Factoring_(finance) http://en.wikipedia.org/wiki/Factoring_(finance) It is a thing in the US as well. Retailers and construction companies do it. I was looking into it for apps e.g. advance money against IAPs or ad revenue. It doesn't look like there is demand for it.
- thaumasiotes 11y ago
  Here are some relevant selections from wikipedia: > Factoring is not the same as invoice discounting > Factoring is the sale of receivables, whereas invoice discounting is a borrowing that involves the use of the accounts receivable assets as collateral for the loan > However, in some other markets, such as the UK, invoice discounting is considered to be a form of factoring > Invoice Discounting is sometimes referred to as Discreet Factoring as it is essentially the same product as Factoring (That last quote is from the page on invoice discounting) None of that indicates to me that there's any difference at all, other than (possibly, but not necessarily) the name, between selling your accounts or borrowing against them. They're both loans, identically structured. There's no demand for this euphemistic product in new US markets because we already have finance. Oh, another quote from the factoring page: > in other industries, however, such as textiles or apparel, for example, financially sound companies factor their accounts simply because this is the historic method of financing
  - IkmoIkmo 11y ago
    > None of that indicates to me that there's any difference at all Really? There's a big difference in terms of structuring, risk, ownership etc. When you sell the receivables, your risk is gone. Whether your customer ends up paying or not is no longer your concern. Whether he pays two months late, is no longer your concern. Whether his company goes bankrupt, or he flees the country, is not a concern. You got paid, your financial relationship with your customer just ended. You have no obligations or responsibilities. You need not sue him, chase him, you need not collect payment. That's NOT a loan. You just sold your receivable to a collecting company. In reality, you didn't borrow money, you SOLD a loan that in essence your customer had with you, but now has with someone else. When you borrow money, you simply borrowed money. It changed NOTHING about the fact that you still haven't gotten paid. You're still at risk of a customer not paying, you still need to chase him, maybe even sue him. You still haven't actually earned any money. All you did was increase your risk by borrowing money that you have to pay back even if you don't end up getting paid in the end. The former is a sale of your risk, the latter is a loan. They're not the same and not at all identically structured. In fact in one way they're completely opposite. What is preferable depends. The former carries less risk, but the discount is higher than the interest you tend to pay. For example to sell a 30-day receivable might cost you 3%, which is a lot of money compared to the <1% you pay to borrow money for 30 days, especially with some collateral (which reduces your interest rates as the risk with collateral is lower, but doesn't absolve you from your debt if the collateral ends up being worthless!). So these are two different products with different cost/benefit rates, one offloads a lot of risk and alleviates cash flow issues at a high price, the other doesn't really reduce risk but alleviates cash flow problems at a relatively low price.

URSpider94 11y ago

They don't charge interest on their advances. I believe that's what they mean.