[jotucker1983]

I just have never understood the high risk asset-based lending model.

The merchant is required to put up high priced, valuable, assets such as real estate, cars, jewelry, artwork, etc. They get an approval for let's say 50% LTV, but the cost/payback cycle they are provided with, is very similar to or worse than, a merchant cash advance.

So a guy is going to put his house on the line for a 6 month deal with a 1.35 - 1.45 factor? I just don't understand how that transaction makes any sense whatsoever.

The "argument" used for an MCA is that it's unsecured, thus, if the business fails the MCA firm takes the risk. This helps to "justify" the higher costs.

But what is the "argument" that you use to justify the costs, when the guy's house is on the line, and he's still paying a 6 month 1.35 - 1.45 factor?