Spongetech Delivery Systems Inc (fka SPNGQ)

[pantherj]

Precisely correct ... and concisely explained!

Company A uses a factor that charges 4.67% and the arrangment is for $30,000 for one month.

Compnay B borrows $30,000 from a bank at the annualized rate of 8%, but for only one month.

Company A's cost to do the factoring arrangement for one month would be $1,401.

Company B's cost to do the bank loan for one month would be only $200.

Therefore your wonderful Factoring arrangement is costing the company about 7 times more than what a decent company would pay a bank for borrowing the same amount for a month.

thanks for playing.