Commercial Factor Q&A: Tania Daniel Previews IFA Conference’s Legal Panel

At this year’s IFA Annual Conference, Tania Daniel, managing director of ENGS Commercial Capital, will be moderating a panel focusing on the current legal issues within the factoring industry as well as those that will affect it in the future. In an exclusive Q&A with Commercial Factor, Daniel provided some insight into the legal side of factoring and discussed how ENGS has fared over the last 12 months. 

From your perspective, what are some of the most pressing legal issues facing the factoring community today? 

Tania Daniel: The most pressing legal issue facing the factoring industry is the implication of disclosures under Dodd-Frank Section 1071. The American Factoring Association (AFA) has been successful in helping the Consumed Financial Protection Burea to understand why factors should be excluded, but that regulation is still being drafted, so the outcome is unknown.

Meanwhile, states such as California, New York and Connecticut have already adopted disclosures, which means other states could follow. The AFA is now considering proactive solutions on the federal level, such as a uniform federal disclosure law which would override varying state-to-state requirements. Keeping up with various state disclosures could be extremely difficult for most factors to manage. I highly encourage all IFA members to get involved with the AFA to help protect our industry from this and other legislation aimed at commercial financing transactions.

Has the COVID-19 pandemic created any new legal challenges for the industry, whether due to new lending programs or anything else? If so, what are they and why are they important to consider?

Daniel: The biggest legal challenge I see happening as a result of COVID-19 related lending programs such as an Economic Injury Disaster Loan is the filing of UCC’s by the Small Business Administration and a factor’s ability to quickly obtain a subordination. Subordinations in general can be time consuming, but when the subordinating lender is the federal government, it can really complicate and slow down the process, which could impact the ability to execute on new business opportunities.

Speaking about the panel itself, what are you hoping attendees will get out of it?

Daniel: We are in a rapidly changing environment with issues and challenges that didn’t exist a year ago, so I hope attendees will learn something new that can help them avoid any pitfalls. We have a talented legal panel that has put together very relevant topics to discuss in a fun Q&A format that will engage the attendees and allow for thoughtful discussions. It will be a great opportunity to learn from each other and I am excited to be a part of this panel.

How has ENGS’ factoring business performed during the last 12 months? How have you and your team adapted to the pandemic environment? 

Daniel: ENGS’ factoring business has grown quite a bit over the last 12 months. By leveraging the benefits of being a Mitsubishi HC Capital company, we have been able to respond to some unique opportunities that required larger facility sizes and lower cost of funds, as well as launch a floor plan finance solution and develop new strategic partnerships. Our team has stayed focused and done an amazing job of walking alongside our prospects, clients and partners throughout the pandemic while also navigating the challenges of pivoting between remote and in-office work environments.

ENGS was named a top workplace by Energage for 2021. Why do you think ENGS deserved this award and how has it remained a great workplace in the new work environment created by the pandemic?

Daniel: The top workplace award reflects our team’s commitment to the organization, our clients and each other. Team chemistry is critical to creating the optimal workplace and that can be difficult to uphold in a remote work environment. However, our team has done an outstanding job of helping each other and encouraging one another personally and professionally throughout 2021. It is the team’s contributions to creating and upholding our culture that earned ENGS the award.

What is your outlook for the overall factoring industry during the rest of 2021? 

Daniel: As the country begins to reopen, I am confident that businesses will need the sort of flexible working capital that factoring provides, but I think we are still in for a wild ride in 2021. Things like additional rounds of the Paycheck Protection Program and new strains of COVID-19 are out of our control and could continue to cause ups and downs in our industry. I believe that the end result will be positive for factoring, especially as banks begin to exit underperforming clients, but I think we may not begin to see the bulk of the opportunities until 2022.