[Finance1]

I think the longer turns are simply part of a natural progression in the industry. And a really good one at that. I got in to this business 3.5 years ago. I've been in the origination and underwriting of mortgage and commercial loans field since 1999. Risk based pricing is deep rooted in both of the fields I've worked in. Why wouldn't it be in this space?

When I first came into this business I was really surprised that no premium price stuff existed. "750 score and $10k average dailies? That's awesome! Here's a 1.38/6. Have a nice day!" Before we started funding we worked the iso angle for a while. We generated plenty of high credit/high quality statement apps but there was no products to present. OnDeck had their big toe in it but they too only liked to go 1.20/6. They said they did 12 months but lets be honest, how many 1.30/12s actually got funded in 2010? heh.

There was simply too big of a gap between traditional and alternative lending with nothing in between. It was either bank financing or 1.20 - 1.38/6 deals. That's a massive spread and there was plenty of demand from quality business owners but no product to present. ARF probably had the closest thing but they we're pretty picky back then. Not sure how they are now.

18-24 months deals can be properly underwritten and funded with enough margin to make the machine run smoothly. Banged up businesses aren't getting those terms nor should they. However, the product is a nice fit and there is a big pool of quality businesses who are underserved. Banks are never going back to "the way it was" and even when they were pretty loose there was STILL plenty of demand for MCAs.

In the last 2 months we've brokered a handful of $100-200k deals in the 12-18 month range with terms that a good credit business owner could swallow. These folks are not stackers or desperate renewers. They had specific needs for the money. To them, it was viewed as a one off transaction and I doubt there will be performance problems unless something goes very wrong down the road. Unforeseen time bombs can't be underwritten anyways. It's just part of the game.

IMO- 12-24 month deals for the right applicants can be a very successful and well performing product and capture a market share that didn't exist a few years ago. That middle ground between bankable and 6 month deals in the 1.30's is a big slice of the pie but it's not something that should be done carelessly for obvious reasons.