All Breva model figures are estimates built from Georgia’s owndata. Methodology and sources disclosed at the end of this post. Not financialor legal advice.

Sincethis is my first post to this blog, I’ll give you a little context on where I’mcoming from. I have over 25 years of experience in financial technology andfinancial services, so my posts will tend to run through a capital-access lens.

Here’sa perspective that should not be controversial: what people and organizationswant from financial services is service. Not product. Not a brochure. A serviceis a helpful act: people want help with their money, help saving it, helpmaking more of it, help accessing it when they need it most.

Mostdon’t get it.

J.D.Power’s 2025 U.S. Small Business Banking Satisfaction Study found that 61% ofsmall businesses received financial advice from their primary bank, and yet theindustry’s customer satisfaction score sits at 716 out of 1,000. That’s a C. Wecan do better.

Whenbusiness owners don’t have access to helpful financial services and fairlypriced capital, it isn’t that bad decisions get made. It’s that the choicebecomes which bad option is the least bad one. When that plays out at scale,across thousands of firms, the economy bears the cost.

What Does Overpriced Credit Actually Cost Georgia?

Afew months ago, the Responsible Business Lending Coalition shared an analysisof what the lack of fair credit access costs Illinois small businesses. Thefigure was striking.

Ilive in Georgia. So I wanted to understand what it costs here, built fromGeorgia’s own data.

Breva’sresearch team built an estimate from the ground up: Georgia’s actualemployer-firm counts, observed adoption rates for high-cost credit products amongsmall businesses, and the documented spread between those products’ effectiverates and what fairly priced bank credit would cost.

Theresult: an estimated $470 million per year in overcharges to Georgia smallbusinesses. The defensible corridor runs $260 million to $760 million.

Twoindependent calculation methods (a product-by-product bottom-up build and aprevalence-times-per-firm approach) land within $40 million of each other. Thatconvergence from different inputs adds meaningful confidence to the estimate.

Thisis not a rounding error. It is a structural cost embedded in how smallbusinesses in this state access capital.

How Much More Are Businesses Actually Paying?

“Overpricedcredit” is not a vague complaint. It has a specific definition: the premium abusiness pays on a high-cost product over what a fairly priced bank line or SBAloan would cost. Here’s what that spread looks like:

Credit   Product

Effective   Rate

Fair-Credit   Benchmark

Bank line of  credit

6.3%–11.5%  APR

(this is the  benchmark)

SBA 7(a) loan

~6%–13% APR

(this is the  benchmark)

Invoice  factoring

12%–60%+  annualized

vs. ~10% bank  AR line

Non-bank  equipment finance

15%–40% APR

vs. 7%–10%  bank rate

Online /  fintech term loan

25%–60%+ APR

vs. ~10%  benchmark

Merchant cash  advance (MCA)

40%–350%+ APR

vs. ~10%  benchmark

Constructionfirms sit at the high end of the factoring range. Factors charge 3%–6% per30-day cycle on construction invoices, compared to the economy-wide averagenear 2.5%, which annualizes to 36%–72% APR depending on how quickly the GCpays.

A$75,000 MCA at a 1.3 factor rate costs roughly $22,500 in fees. The samecapital at a fair ~10% rate costs about $2,500. That’s a $20,000 overcharge ona single advance. Many firms take more than one a year.

Fora small contractor, that is the entire margin on a project. Gone before thenext job starts.

InJanuary 2025, the New York Attorney General secured a $1.065 billion judgmentagainst an MCA provider whose contracts carried rates up to 820% APR. Thisisn’t an anomaly. It is the far end of a spectrum that starts with productsmany small businesses treat as routine financing.

Who Is Carrying This Cost?

Roughly30%–33% of U.S. small businesses now use some form of alternative finance, upfrom about 18% in 2016. About 29% of financing applicants now go to online orfintech lenders. Of those, 60% report higher-than-expected borrowing costs.

Thebusinesses carrying the heaviest exposure are not reckless operators. They aremicro-firms, under 10 employees and under $500K in revenue, that cannot getapproved by a bank and have no other option. Georgia has 199,431 small employerfirms. The bulk of them fall into that category.

Underthe moderate scenario, the $470 million overcharge touches roughly 28,000Georgia firms at an average annual cost of about $15,000 per firm. Some pay farmore.

Why Does Construction Carry Double the Burden?

Georgia’sconstruction sector is 21,158 small employer firms, 161,509 workers, and $10.5billion in small-business payroll. That’s approximately 10.6% of Georgia’ssmall employer firms.

Itbears an estimated 21% of the state’s total credit overcharge, roughly $100million per year.

That2x intensity is not random. It is the direct product of how constructionfinance works:

•      Retainage:10% of contract value held for monthsafter work is complete, creating a permanent capital gap that contractors mustbridge.

•      Paycycles: 50–95 days from work completionto payment is standard. Every day is a day of working capital a firm has tofinance.

•      Pay-when-paidclauses: GCs routinely pass paymenttiming risk downstream to subs, who have the least capacity to absorb it.

•      Bankaccess gap: Construction firms areapproved far more readily by alternative lenders than by large banks, whichpushes them into higher-cost products at higher rates. Invoice factoring runs3%–6% per cycle for construction, versus the economy-wide average near 2.5%.

Atan estimated $12,000 average annual overcharge per affected firm, against thinmargins and project-by-project cash cycles, $100 million compounding year overyear is a sector-level headwind. Not a firm-level problem.

What Overpriced Credit Does to the Failure Rate

High-costcredit rarely closes a business in one shot. It creates and compounds thecash-flow stress that tips otherwise-viable firms into closure.

Thedata on the mechanism is consistent across multiple sources:

•      A U.S.Bank/SCORE study attributes approximately 82% of small-business failures tocash-flow problems.

•      TheFederal Reserve’s 2025 Small Business Credit Survey found that in 2024, 44% ofsmall businesses had a cash-flow problem severe enough to miss payments.

•      A 2024Opportunity Fund study found that 58% of businesses that took an MCA reportedcash-flow difficulties caused directly by the repayment structure itself.

Applythose rates to Georgia’s firm base:

Step

Metric

Value

GA small  employer firms

Census SUSB  2022

199,431

Annual  employer-firm exit rate

BLS Business  Employment Dynamics

~9%

Employer  failures per year

~17,949

Cash-flow-related  failures

SCORE / US  Bank (82%)

~14,718

Credit-attributable  failures (moderate)

Breva model  (15% attribution)

~2,208 / year

Average jobs  per firm

GA-specific

9.06

Jobs at  risk per year

~20,004

10-year  cumulative job impact

~200,000

The15% credit attribution is deliberately conservative. When more than half of MCAusers report that the repayment structure itself caused their cash-flowdistress, attributing 15% of all cash-flow failures to high-cost credit is acautious read, not an aggressive one.

What Financial Readiness Actually Changes

Accessto fairly priced credit does not require a contractor to become a banker. Itrequires becoming financially visible: knowing your pay-app cycle, documentingyour performance history, and building the kind of track record that opens thedoor to SBA 7(a) programs, bank lines, or CDFI financing at 6%–13% instead of40%–350%.

Thatis the core of the work-to-cash problem: the gap between completing work andgetting paid, and between financing that gap with expensive capital and nothaving to.

Startwith the benchmark. The Pay-AppBenchmark at benchmark.breva.aiis a free assessment that shows how your pay-app cycle compares to otherGeorgia contractors. It takes about 10 minutes and identifies specificallywhere you’re losing time and capital in your billing cycle.

Godeeper with BuildForward™. Forsubcontractors who want a structured path to financial readiness, BuildForward™ is Breva’s 10-week financial-operations accelerator. Theprogram covers cash-flow management, pay-app performance, and the financialposture lenders and GCs actually require. The first cohort is forming now.Learn more at buildforward.breva.ai.

Sources

•      U.S.Census Bureau, Statistics of U.S. Businesses (SUSB) 2022

•      SBAOffice of Advocacy, 2025 Georgia Small Business Profile

•      FederalReserve, 2025 Small Business Credit Survey (Report on Employer Firms)

•      Bureauof Labor Statistics, Business Employment Dynamics

•      SCORE/ U.S. Bank (Jessie Hagen), cash-flow failure attribution

•      OpportunityFund (2024), MCA repayment and cash-flow distress

•      NewYork Attorney General, Yellowstone Capital judgment, January 2025

•      J.D.Power, 2025 U.S. Small Business Banking Satisfaction Study

•      ResponsibleBusiness Lending Coalition, Illinois credit-overcharge analysis

•      SMBcompass,Invoice Factoring Rates Explained (2024–2025)

•      SolutionScout, Best Construction Factoring Companies (2025)

•      Breva.aiResearch Team, The Hidden Cost of Overpriced Credit: A Georgia Estimate (2026).Methodology and source documentation available at research@breva.ai.

All Breva model outputs are estimates for research and policyillustration. Actual costs vary by firm, product mix, and market conditions.This post is not financial or legal advice. Analysis date: 2026.

Frequently Asked Questions

What is overpriced credit for small businesses?

Overpricedcredit is the premium small businesses pay on high-cost financing products,such as merchant cash advances, invoice factoring, and non-bank term loans,over what fairly priced bank credit or an SBA loan would cost for the samecapital.

How much does overpriced credit cost Georgia small businesses per year?

Breva’sGeorgia analysis estimates approximately $470 million per year under themoderate scenario, with a defensible corridor of $260 million to $760 million.These are modeled estimates built from Georgia-specific firm counts andobserved product adoption rates.

Why do construction firms pay more for credit than other industries?

Retainage(10% of contract value held post-completion), 50–95 day payment cycles, andpay-when-paid contract structures create structural capital gaps. These pushconstruction firms toward alternative lenders at higher effective rates thanthe economy-wide average.

How many Georgia small businesses fail because of overpriced credit?

Underthe moderate scenario, Breva’s model attributes approximately 2,208employer-firm failures per year to credit costs, representing 15% ofcash-flow-related failures, which themselves account for roughly 82% of allfirm exits.

What can a contractor do to access fairly priced credit?

Buildingfinancial visibility is the first step: understanding your pay-app performanceand closing the gap between where you are and what bank or CDFI underwritingrequires. A free starting point is the Pay-App Benchmark at benchmark.breva.ai. Subcontractors looking for a more structured path canlearn about the BuildForward™ accelerator at buildforward.breva.ai.

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