[lendinghand]

I need a lender that will allow a 42% owner sign for an advance. His partners don't have the balls. Pm me if you're a direct lender and you can structure this deal. This business averages $250k/month in revenue.

[sigmundpannu]

Search bar works well to get answers much faster when topics are covered dozens of times, but try LoanMe and Can capital.

[Zach]

CAN
Windset

[Paul]

Thank you very much Zach for the plug....unfortunately we changed our ownership requirement Nov 2015. We currently require 66% to consider.

[nrh1lp]

I believe loanMe only requires a 25% ownership if they are in the right state

[biggr]

why would a majority owner allow a minority owner to sign anything related to the business????... Sounds funky to me...

[FUNd]

why would a majority owner allow a minority owner to sign anything related to the business????... Sounds funky to me...

First day?

[lendinghand]

You make assumptions...not smart in this business!

There are more than one owner. The owner that is willing to sign has 42%, which is the largest stake. The other owners has 10% and lower.

[lendinghand]

Funny guy!

[FUNd]

You make assumptions...not smart in this business!

There are more than one owner. The owner that is willing to sign has 42%, which is the largest stake. The other owners has 10% and lower.

And?

[Chambo]

You make assumptions...not smart in this business!

There are more than one owner. The owner that is willing to sign has 42%, which is the largest stake. The other owners has 10% and lower.

and if 51% ownership comes back and says "We Never Authorized this!"....then what?

[FUNd]

and if 51% ownership comes back and says "We Never Authorized this!"....then what?

Ask CAN Capital, they should know.

[Sean Cash]

It doesn't matter what % they are really so long as they have the authority to bind the company. That's something that must be underwritten.

[bdshaw]

As a lender I was considered prudent to be skeptical of flip answers to serious questions.
The argument that the minority stakeholders don't have the courage to sign is too simplistic. I would think if there's a disagreement over entering into the agreement a lender is looking at potential future headaches they don't need. Even if the signor is authorized the warning flags are there.
I would pass.
Bob

[FUNd]

As a lender I was considered prudent to be skeptical of flip answers to serious questions.
The argument that the minority stakeholders don't have the courage to sign is too simplistic. I would think if there's a disagreement over entering into the agreement a lender is looking at potential future headaches they don't need. Even if the signor is authorized the warning flags are there.
I would pass.
Bob

Bob, with all due respect, the largest direct lender in the space only requires 5% ownership. This whole argument is null. It's obviously been addressed by legal at the highest levels.

[bdshaw]

FUNd, you are absolutely correct.

[CreditGuy]

Bob, with all due respect, the largest direct lender in the space only requires 5% ownership. This whole argument is null. It's obviously been addressed by legal at the highest levels.

Being addressed by legal and being defensible are often mutually exclusive. There are plenty of times when our attorney says one thing and then we weigh the potential legal risk against the business needs and decide that the risks are outweighed by the benefits. CAN has probably done the same calculus. For a lender their size, if a few contracts get thrown out in court due to majority ownership disputing the debt and its benefit to the borrowing entity, that doesn't hurt them any more than a default. It simply gets baked into their loss rate over time. I would also add that CAN is originating high quality paper, so the likelihood of default and subsequent litigation that would open them up to such claims is smaller than a Yellowstone or Pearl type shop where the collection and litigation strategy is more important to earnings/capital preservation.

Also, CAN is no longer the largest direct lender in the space.

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[FUNd]

Being addressed by legal and being defensible are often mutually exclusive. There are plenty of times when our attorney says one thing and then we weigh the potential legal risk against the business needs and decide that the risks are outweighed by the benefits. CAN has probably done the same calculus. For a lender their size, if a few contracts get thrown out in court due to majority ownership disputing the debt and its benefit to the borrowing entity, that doesn't hurt them any more than a default. It simply gets baked into their loss rate over time. I would also add that CAN is originating high quality paper, so the likelihood of default and subsequent litigation that would open them up to such claims is smaller than a Yellowstone or Pearl type shop where the collection and litigation strategy is more important to earnings/capital preservation.

Also, CAN is no longer the largest direct lender in the space.

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I don't think anyone was disputing any of this, and I appreciate the analysis. I think I was simplifying it down to the fact that it seems like a large percentage of people selling this product or in charge of an ISO don't even understand the basic fundamentals of underwriting criteria. It's shocking. The fact that this is even a debate is sad. I can only imagine the slew of lies and misleading information merchants are told by novice hacks in call centers costing jobs, financial ruin, and undue stress on merchants and the sector as a whole.

Let's not play semantics either, CAN is a huge player.

[ADiamond]

I need a lender that will allow a 42% owner sign for an advance. His partners don't have the balls. Pm me if you're a direct lender and you can structure this deal. This business averages $250k/month in revenue.

lendinghand

we will consider the deal so long as the minority owner has the authority to take on debt for the company under the business operating agreement, and have it notarized by the majority owner.

if you are interested in seeing what we can offer, please PM me.

[PatrickMTKT]

All of these percentage ownership issues are irrelevant when dealing with a general C-corp. In a C-Corp, the CEO, even with zero ownership can engage in loan contract so long as he has the power issued from the board(board resolution).

[FUNd]

All of these percentage ownership issues are irrelevant when dealing with a general C-corp. In a C-Corp, the CEO, even with zero ownership can engage in loan contract so long as he has the power issued from the board(board resolution).

Irrelevant to whom? You? Every lender in the space has ownership percentage requirements, so yes, this is extremely relevant.

[PatrickMTKT]

FUNd:
I take it that you have very little knowledge about corporate laws. I specifically mentioned about C-Corp. Here is a corporate law 101 for you:

In a C-Corp, the shareholders have no right to sign anything. The shareholders can elect board members; and the board, as a whole, can hire officers, such as CEO, CFO, etc. The board gives resolution(power) to the officers to perform day to day operational tasks for the company, such as seeking for finances.

If a C-Corp is to ever take on any financing, the contract will be either signed by the CEO or CFO. Shareholders or Board Members CANNOT sign in these type of contracts.


Of course in this MCA world, most of the business entities are sole-prop, LLC or S-Corp, which tie directly with the owners.

[FUNd]

FUNd:
I take it that you have very little knowledge about corporate laws. I specifically mentioned about C-Corp. Here is a corporate law 101 for you:

In a C-Corp, the shareholders have no right to sign anything. The shareholders can elect board members; and the board, as a whole, can hire officers, such as CEO, CFO, etc. The board gives resolution(power) to the officers to perform day to day operational tasks for the company, such as seeking for finances.

If a C-Corp is to ever take on any financing, the contract will be either signed by the CEO or CFO. Shareholders or Board Members CANNOT sign in these type of contracts.


Of course in this MCA world, most of the business entities are sole-prop, LLC or S-Corp, which tie directly with the owners.

Are you kidding? I see C-corps every day. I don't need in-depth knowledge of "corporate laws", this is a forum for MCA, and I know what my underwriters want, and that's ownership percentage. So it matters, whether you think it should or not.