Fallout, Opportunity, Acceleration.

3 min readMar 13, 2023


The recent failure of Silicon Valley Bank (SVB) has sent shockwaves through the banking industry, with many banks now tightening their credit policies in response. Many banks have become more cautious and are now taking a closer look at the creditworthiness of borrowers and are requiring more collateral or guarantees before extending credit.

This tightening of credit policies can have a significant impact on small businesses and minority-owned businesses which often rely heavily on bank loans to finance their operations and growth, and a lack of credit can hinder their ability to raise capital and expand.

Failures like SVB, First Republic (FRC), Signature Bank (SBNY), and Silvergate (SI), have raised concerns about the impact of such failures on the broader economy, particularly during a recession.

While no industry can be considered completely recession-proof, secured finance can be considered relatively more recession-resistant than some other industries. This is because secured finance typically involves loans that are backed by collateral, such as real estate, equipment, receivables, or other business assets, which can help reduce the risk of default.

Additionally, during a recession, demand for secured finance may actually increase as businesses and individuals look for ways to access capital to weather the economic downturn.

That being said, even in the secured finance industry, there can be some exposure to risk during a recession. For example, if the value of the collateral backing a loan declines significantly, it may not be sufficient to cover the outstanding debt in the event of default. Additionally, some sectors within the secured finance industry may be more vulnerable to economic downturns than others, depending on the nature of the loans and the types of collateral involved.

Invoice factoring is a type of secured finance that can be considered relatively recession-proof. This is because invoice factoring involves the purchase of accounts receivable, which are invoices that a business has issued to its customers but have not yet been paid for. When a business sells its accounts receivable to a factoring company, it receives immediate cash, which can help improve its cash flow and working capital.

During an economic downturn, businesses may face challenges in collecting payments from their customers, which can impact their cash flow and ability to operate. In this environment, invoice factoring can be an attractive option for businesses that need to access capital quickly, without having to go through the traditional loan approval process.

In fact, the demand for invoice factoring tends to increase during a recession, as more businesses seek to sell their accounts receivable to generate cash. This can create opportunities for factoring companies to expand their customer base and increase their revenues.

One reason why invoice factoring can be considered relatively recession-proof is that it is based on the creditworthiness of a business’s customers, rather than the financial health of the business itself. Factoring companies typically evaluate the creditworthiness of a business’s customers before purchasing its accounts receivable, which helps to reduce the risk of default.

Additionally, invoice factoring is secured finance, which means that the factoring company takes ownership of the accounts receivable and assumes the risk of non-payment. This provides a level of protection for the business that has sold its accounts receivable, as it does not have to worry about collecting payments from its customers.

Of course, there are still risks associated with invoice factoring, even during a recession. For example, if a business’s customers experience financial difficulties and are unable to pay their invoices, the factoring company may not be able to collect the full amount owed, which can impact its profitability.

Overall, while no industry can be considered completely recession-proof, invoice factoring can be a relatively stable business during an economic downturn. By providing businesses with a way to access cash quickly and reducing their exposure to the risks of non-payment, invoice factoring can play an important role in helping businesses weather the storm of a recession.

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