[Finance1]

did you say 6 week deal? thats not a merchant cash advance, thats a payday loan outfit! and if the merchant took that, what does that say about the health of that business or the health of their business acumen! wow...the business owners can say no to all of this but so many sign the contracts anyways. sounds like predatory lending to me though if they are doing 40% over 6 weeks on top of an existing advance. but, funder could say- "hey, they accepted the contract anyways"....do you have a non compete in your contract language, if so, both stacker and merchant breached contract...

We had a small discussion about Pearl over on the mca forum board. Yea, the merchant used terrible judgement but we had already said no to a renewal. It was too early. So he went out shopping. Was promised all these great things and then when it came time to sign the offer was terrible. He needed the money and Pearl blew his phone up to sign and that's what he did. That's Pearl's angle. Preying on merchants who are desperate and already have a cash advance that isn't eligible for a renewal. How else could you get someone to sign a 1.40 / 6 week deal? Just find the most desperate who aren't eligible for a regular cash advance for any number of reasons and sign em on up.

My problem is how Pearl markets themselves. They are pushing the stacking angle with iso's. They tell all their iso's exactly how to do it and Pearl knows darn well that all MCA companies have clauses in their contracts forbidding stacking. It's that part that bothers me the most. It's greed in its worst form. Knowingly violating existing receivables contracts and pushing terrible offers. I remember some iso rep from Pearl was calling us a couple times a week to try and fund our turndowns. I asked about the whole stacking thing and the rep went on about how great it is and it's a way to get paid when clients have an advance balance that's too high to be renewed. I asked about the impacts of a stacked deal that could cause a merchant to be denied for a renewal because of breach of contract. And was quickly told how smart Pearl was. They figure out when the merchant would be eligible for renewal and structure the deal to be "inside of that window". Then I asked about when the mca company sees the ACH from pearl on the bank statement that they will still know there was a stacked deal even if it's already paid off. The guy at Pearl said it was MY job to explain to the merchant that they will need a clean bank statement before they can renew. I couldn't get over how slimy they were. I never sent them a single deal.

There are other stackers out there like Wide and I've talked to the owner Dave before. Total different class of company. Dave doesn't take on excessive risk and makes sure that he feels the company can repay without hurting the bottom line too much. Pearl doesn't give a crap about bottom line or helping anybody. It's pure bottom feeding greed.

[UCSource]

I know at least 6 companies who stack heavily and make their business out of it. While it is tough to deal with on the lenders side I think all parties involved need to take responsibility from the merchant who accepts, to the broker who brings it there to the lender who stacks it. Usually 3 people take a part. I will tell you Pearl DOES NOT stack every company like most stacking companies do. Guys like Wide, FSC, WGF, TBB,etc... all stack and one isn't different than the next. I have a merchant on ACH right now paying 40% slow due to bouncing payments because they took Wide Lending Groups funds. I guess my point is this is happening a lot and the only way to really deal with it is to educate ISO's and Merchants, maybe put something extra in the funding agreements. I deal with it too and it's an obstacle for sure but it's one that we are dealing with and fairing out ok thankfully.

[Chambo]

Some companies who stack use the approach of total gross funding. I.E. merchant ABC (in their eyes) qualifies for a max of $50,000. Funding Company Y only gave them $20,000, so there is room to add $30,000.

Now the folks out there who simply add for the sake of adding and pocketing quick cash, that's another issue entirely. One, alas, that will only be reigned in with litigation. Every funder should put a clause in their contract about what causes breach and what doesn't. However, there is inherently nothing illegal amount a merchant looking for more money. Simply because funder X's parameters aren't met, doesn't mean funder Y's aren't. The question arises "does the second deal impede upon the first deal?" If the second debit causes collection issues on the first, well, then you have a problem.

[Finance1]

The question arises "does the second deal impede upon the first deal?" If the second debit causes collection issues on the first, well, then you have a problem.

Very good post. I'll pulled the last statement because that is really the only thing that matters right? We've only been stacked (that we know of) once and it is a collection problem. If there are others in our portfolio that are stacked but aren't missing a beat then we don't really care. It's an ethics thing. The merchant that we're having problems with was not a strong candidate on any level. Pearl figured they could get in and get out but as I recently found out, they aren't getting out. Merchant shut them off and is having a lawyer look at it for usary. He's still paying us and has apologized but damage has been done regardless. Remittance is way off and now Pearl is blowing him up with threat of litigation and judgments. With my luck they win their suit and freeze his bank and we get screwed anyway.

As others have said, it's pretty much something we have to deal with from time to time. There is money to be made in stacking and companies will do it. They should put their money where their mouth is though. If they really believe a merchant can handle both debts then just pay off the advance in place. LOL

[Chambo]

Very good post. I'll pulled the last statement because that is really the only thing that matters right? We've only been stacked (that we know of) once and it is a collection problem. If there are others in our portfolio that are stacked but aren't missing a beat then we don't really care. It's an ethics thing. The merchant that we're having problems with was not a strong candidate on any level. Pearl figured they could get in and get out but as I recently found out, they aren't getting out. Merchant shut them off and is having a lawyer look at it for usary. He's still paying us and has apologized but damage has been done regardless. Remittance is way off and now Pearl is blowing him up with threat of litigation and judgments. With my luck they win their suit and freeze his bank and we get screwed anyway.

As others have said, it's pretty much something we have to deal with from time to time. There is money to be made in stacking and companies will do it. They should put their money where their mouth is though. If they really believe a merchant can handle both debts then just pay off the advance in place. LOL

The ironic part is, try stacking on one of the companies listed who are known to stack and watch them start screaming and wailing and accusing

[AndyYSCISOdept]

I 100% agree with you Chambo. The main issue is that there are people who stack without regard for anything except the money it puts in their pockets. And while I agree that there are 3 parties involved, if the reps stop pushing these deals and the funders stop stacking it would allow funders to give better offers because they wouldnt underwrite in fear of being stacked on and causing an unforseen default. You can't underwrite properly and give merchants the money they deserve because one (the UWers) must expect to be stacked on and put their funds at risk. The only one who wins is the broker.

[c4get]

Wide is the worst , they pay the least then they pay 1/2 on renewal ... they really are without resrvation the worst out there .