[CO1]

http://online.wsj.com/article/SB1000...LEFTTopStories

[CO1]

P1-BM412_HEDGEL_D_20130722180931.jpg Check this out.

[cashguy]

Wow really good article

[MCNetwork]

If these hedge funds start entering the MCA space and charge 10-16% APRs, they'll wipe all of our current funders out! How do I become an ISO for these guys? More importantly, how can they afford to pay me a decent commission?

[Duvdevan]

Hedge Funds might invest in the industry, but they are unlikely to enter this industry directly. This is really small potatoes for them. The average hedge Fund controls $5 - $15 billion in assets. Doesn't make sense for them.

[MCNetwork]

If merchants know they have access to quick funds at 10-16% per year, you'll see a lot more activity. If the hedge funds can organize themselves properly, they can make a big dent in small business alternative funding. With over 12,000,000 small businesses out there, $5-$15B can be absorbed pretty quickly.

[Chambo]

If these hedge funds start entering the MCA space and charge 10-16% APRs, they'll wipe all of our current funders out! How do I become an ISO for these guys? More importantly, how can they afford to pay me a decent commission?

They already ARE in the industry and many of them ARE charging those rates to the MCA's you deal with

[Chambo]

Hedge Funds might invest in the industry, but they are unlikely to enter this industry directly. This is really small potatoes for them. The average hedge Fund controls $5 - $15 billion in assets. Doesn't make sense for them.

They would rather lend the money to the MCA's then have to implement the infrastructure to be a direct funder

[CO1]

Well Goldmen Sachs is one of them. .

[Gini Co]

Not relevant to our industry.

1.) SME's or what they refer to as 'small businesses' are not on the same order of magnitude as the merchants that we deal with in this business. Think small corporations, like MCA Funding companies, and lending 10's of million per loan. Not restaurants and auto repair, ect.
2.) They are talking exclusively about secured lending. Nothing is secured in this space.

Apples and oranges, not even close. Unless you're talking about the availability of hedge fund money to MCA funders...of course that's been around forever.

[MCAVeteran]

Agreed on above- funders have already been borrowing from hedgies like Goldman, fortress, brown brothers, etc for years. The cost of capital they lend at to mcas and the covenants they put in contracts are tough- if you can't get your funds to deploy at a low cost it will be challenging to offer competitive terms rates and pay commissions to brokers after defaults/overhead costs are factored in-

[Finance1]

Asset based lending has zero interest in lending to our typical clients. A "small" business to Wall St starts @ 10M/yr in sales and even those are considered tiny. Asset based lending barely starts @ $500k and that is considered tiny as well in the grand scheme.

No hedge fund, asset based lender, or bank has any interest whatsoever in flipping the local burger joint $30k or acme auto repair $100k.

[Capital Stack]

Finace1 your correct, although ABS also covers A/R financing , Equipment Lending and Hard Money Real Estate

[Finance1]

Finace1 your correct, although ABS also covers A/R financing , Equipment Lending and Hard Money Real Estate

Absolutely. Luckily 90% of the folks who apply for advances and ach programs really have no other outlets for cash. It's either us or nobody. I don't think that's going to change in the next decade.

Hard money real estate is a time sucking waste for a cash iso. They always looks so pretty at first with a nice $5k commission but then after chasing paper for a month or 2 the whole deal blows up from some land mine somewhere.

Equipment lending on the other hand is something we've had some success brokering. One of the barriers of entry is that equipment lenders have no appetite signing up cash brokers with no experience. The best advice I can give a cash iso is to get set up with a 2 man lease broker shop who's hooked up with all the important ones like time payment, dakota, direct capital, etc. Just do a 50/50 com split and let the pros handle it. A lot of times you can still score a cash advance or ach with the same client. Cash in hand to a business owner is like crack to a junkie more often than not.

I have an arrangement with CIT for SBA stuff. They handle everything and we get 1 point IF it funds. About 1 in 10 fund at best. Every cash iso should get set up with a direct SBA lender that simply wants the referral/meet and greet and then pays you.

There are plenty of broker friendly AR/PO funders out there. Bibby is one of the better ones because they will do smaller deals and have also been around a long time.

[funding pro]

Many equipment leasing companies will not take broker business after the hits they have taken through the recession. Last I spoke with someone at DCC, they do not take broker business. Dakota and TPC do and much like the cash space, you will find some want A paper, some want B paper and others want the crap.

[CO1]

http://www.abladvisor.com/news/2863/...ve-competition I wanted to share this as well.

[vmccapital.com]

At the end of every MCA lenders yellow brick road is a Hedge Fund, the money has to come from somewhere unless it's bank line and good luck with the MCA model.