[Crypto Q]

Hello,

The writing is all over the wall...

1. Retail closings are through the roof.
2. Student loan debt is at $1.2 trillion.
3. Auto loan defaults are skyrocketing.
4. Avg family is $16,000 in CC debt.
5. Residential real estate is overvalued.
6. The FED is set to unwind it's balance sheet.
7. But, when you turn on the TV "everything is great!"

That said, a lot of you guys have tons more experience than I do and as I prepare myself and family for the next down (recession) cycle I was curious to know how things panned out last time in this space in particular. I would imagine that there will be other opportunities outside of MCA to capitalize on the next down cycle... Nonetheless, should I expect more applications and fewer approvals? Is this one of those industry that thrives through down cycles? Or should I expect business as usual?

[Karen37a]

Hello,

The writing is all over the wall...

1. Retail closings are through the roof.
2. Student loan debt is at $1.2 trillion.
3. Auto loan defaults are skyrocketing.
4. Avg family is $16,000 in CC debt.
5. Residential real estate is overvalued.
6. The FED is set to unwind it's balance sheet.
7. But, when you turn on the TV "everything is great!"

That said, a lot of you guys have tons more experience than I do and as I prepare myself and family for the next down (recession) cycle I was curious to know how things panned out last time in this space in particular. I would imagine that there will be other opportunities outside of MCA to capitalize on the next down cycle... Nonetheless, should I expect more applications and fewer approvals? Is this one of those industry that thrives through down cycles? Or should I expect business as usual?

Residential Real Estate is not overvalued.


The Hardest lesson people have to learn in Financial Services ( and some never learn it ever) is that when you are reporting the news they are reporting on what happened in the past.....results of past years and qtrs. And when people warn of the impending doom( before it happens)...people laugh at them.

Day late and a Dollar short.

The future events or qtrs won't be reported until way after the results and that is usually when smart money has cashed out..


Buy into the lows ...Sell into the highs...you must buy what people are selling and sell what people are buying...doesn't make you popular going against public opinion all the time.


What I see happening is interest rates going up and growth in the usa from trade tariffs corrections,money coming back in to the us and business, bankruptcy from some...making way for the new kids in town and new money ready to take over their spot.

Top Brokers with a positive attitude will swing with the times and make or continue to make a lot of money. Some people will never be coachable, some will change, new ones appear who are coachable some not coachable and they make the same mistakes that people have been making for decades.

We have become a debt society so in the end...people will always need cash advances and loans.


( pick up 1000 shares you will be glad you did ...joke lol)

*** this is not a buy sell hold reccomendation..you must be an acreddited investor

[Karen37a]

This is how people get caught up in crypto mania or tulip mania or the dot-com bubble or real estate bubble

You can tell mc v ...I am coming to him with the mustard and the relish

[Crypto Q]

Residential Real Estate is not overvalued.


The Hardest lesson people have to learn in Financial Services ( and some never learn it ever) is that when you are reporting the news they are reporting on what happened in the past.....results of past years and qtrs. And when people warn of the impending doom( before it happens)...people laugh at them.

Day late and a Dollar short.

The future events or qtrs won't be reported until way after the results and that is usually when smart money has cashed out..


Buy into the lows ...Sell into the highs...you must buy what people are selling and sell what people are buying...doesn't make you popular going against public opinion all the time.


What I see happening is interest rates going up and growth in the usa from trade tariffs corrections,money coming back in to the us and business, bankruptcy from some...making way for the new kids in town and new money ready to take over their spot.

Top Brokers with a positive attitude will swing with the times and make or continue to make a lot of money. Some people will never be coachable, some will change, new ones appear who are coachable some not coachable and they make the same mistakes that people have been making for decades.

We have become a debt society so in the end...people will always need cash advances and loans.


( pick up 1000 shares you will be glad you did ...joke lol)

*** this is not a buy sell hold reccomendation..you must be an acreddited investor

Let's go point by point...

Real Estate: See this Google search - https://www.google.com/search?q=real...hrome&ie=UTF-8

Recessions: Generally speaking, they move in 10 year cycles. There are bubbles everywhere, including the $600 TRILLION derivatives bubble. $600 trillion does not even exist. Furthermore, this smells a lot like 2006/7 when the news said things were amazing and the economy was strong. We have 40 million + on food stamps (more than 10% of the US population), yet unemployment is 4.1%, really? Furthermore, we are in a "bind" as it relates to geo-politics. Iran just stopped using USD. Russia has a "warm relationship" with Syria and Iran and pledges to help defend those countries if attacked. China also has business ties with Russia. In short, as demand for the USD wanes.... not good.

CryptoCurrency: CryptoCurrency was created as a means to address the woes we went through last time. That aside, Mt. Gox trustees set to sell another 160,000 worth of BTC which will further push prices down. I will not be surprised to see a $3,000 BTC before we rip and roar to new ATH's in Q4. I'll be using extreme leverage to buy all the coin I can get my hands on - personally. This is NOT investment advice. I'll likely end up broke, homeless, and drug addicted so please do not do what I will be doing. This is a cycle that consistently repeats itself. BTC is hammered in the early part of the year, then reaches ATH's by years' end. Furthermore, history does have a way of repeating itself. History is not a crystal ball but should not be ignored.

Top Brokers: Top brokers should be sitting with a nice amount of cash, physical gold, and crypto while maintaining 750+ FICO scores to gobble up assets at rock bottom prices when the stuff hits the fan. I'll be ready to use my "fake internet money" windfalls coupled with great credit to buy up all the physical property (real estate) I can get my hands on as the distress will be real.

I'm not sure how much effort and energy you put into studying things outside of this industry, like history, economics, blockchain technology, etc. But, it may be wise to invest the time these things. You lead with "real estate is not overvalued" - that says to me you're less than informed and you should ask yourself what else you may be wrong about.

Thanks for your response.

[Karen37a]

Let's go point by point...

Real Estate: See this Google search - https://www.google.com/search?q=real...hrome&ie=UTF-8

Recessions: Generally speaking, they move in 10 year cycles. There are bubbles everywhere, including the $600 TRILLION derivatives bubble. $600 trillion does not even exist. Furthermore, this smells a lot like 2006/7 when the news said things were amazing and the economy was strong. We have 40 million + on food stamps (more than 10% of the US population), yet unemployment is 4.1%, really? Furthermore, we are in a "bind" as it relates to geo-politics. Iran just stopped using USD. Russia has a "warm relationship" with Syria and Iran and pledges to help defend those countries if attacked. China also has business ties with Russia. In short, as demand for the USD wanes.... not good.

CryptoCurrency: CryptoCurrency was created as a means to address the woes we went through last time. That aside, Mt. Gox trustees set to sell another 160,000 worth of BTC which will further push prices down. I will not be surprised to see a $3,000 BTC before we rip and roar to new ATH's in Q4. I'll be using extreme leverage to buy all the coin I can get my hands on - personally. This is NOT investment advice. I'll likely end up broke, homeless, and drug addicted so please do not do what I will be doing. This is a cycle that consistently repeats itself. BTC is hammered in the early part of the year, then reaches ATH's by years' end. Furthermore, history does have a way of repeating itself. History is not a crystal ball but should not be ignored.

Top Brokers: Top brokers should be sitting with a nice amount of cash, physical gold, and crypto while maintaining 750+ FICO scores to gobble up assets at rock bottom prices when the stuff hits the fan. I'll be ready to use my "fake internet money" windfalls coupled with great credit to buy up all the physical property (real estate) I can get my hands on as the distress will be real.

I'm not sure how much effort and energy you put into studying things outside of this industry, like history, economics, blockchain technology, etc. But, it may be wise to invest the time these things. You lead with "real estate is not overvalued" - that says to me you're less than informed and you should ask yourself what else you may be wrong about.

Thanks for your response.

Good luck. See you at the top or the bottom


ps. this was a lead in to pitch crypto crap...bad lead in you closed too fast...close on the 3rd comment or contact to not seem so obvious to skilled sales people.


For brokers watching ...this is an example of the grab um by the P* trump close and then the slap degrade talk down to someone ( dont know anything about blockchain or other industries) that some of you do to merchants with big $$$

Its kinda funny if it didnt keep happening over and over like groundhogs day...this is how the merchants feel with the phone calls.

[Karen37a]

https://www.bloomberg.com/news/artic...oenaed-by-cftc

Regulators subpoenas Bitfinex and Tether


The article explains what I explained to you ...what I "thought" was happening months ago.

guess i know a little something about something

[Crypto Q]

Good luck. See you at the top or the bottom


ps. this was a lead in to pitch crypto crap...bad lead in you closed too fast...close on the 3rd comment or contact to not seem so obvious to skilled sales people.


For brokers watching ...this is an example of the grab um by the P* trump close and then the slap degrade talk down to someone ( dont know anything about blockchain or other industries) that some of you do to merchants with big $$$

Its kinda funny if it didnt keep happening over and over like groundhogs day...this is how the merchants feel with the phone calls.

Karen,

I didn't come here to disrespect anyone. I didn't com here to talk down to anyone. I didn't come here to degrade anyone. Please do not use the gender card here as this has nothing to do with gender. You made baseless assertions and I simply offered to give more perspective.

Additionally, I didn't come here to pitch anyone anything. I don't have anything to sell anyone. What I do with my time and my money is my business. People have their own beliefs and I don't make any money from trying to change your beliefs or others' beliefs. However, I do make money brokering merchant cash advance deals so let's get back on track... Again, I am seeking advice from the elders in the community so as to help be better prepared for the next economic downturn. These thing are important because knowing if I should ramp up my marketing spend, throttle down, look to certain SIC codes, etc. would be helpful. If you were around last time and can offer and advice on this subject in particular, please chime in. Let's just ignore the crypto stuff and pretend like my name is "MCA Q" here - is that ok with you, Karen?

[WestCoastFunding]

Crypto, Karen sucked you in. You fell for the banana in the tailpipe.

[wize111]

economy cycle ms 1.jpg

[WestCoastFunding]

As for getting back to your original question (what to expect during a downturn). So I started brokering traditional facilities in the lower-middle market back in the early-mid 2000s. When the recession hit, and the economy came to a sudden-stop, all lending basically stopped for a while - except with MCAs. Companies that would normally be seeking $5M revolvers were settling for $500k MCAs.

So during a downturn I expect “larger” small businesses that would normally look to traditional options to move over to MCAs. At the same time a downturn will kill off all those companies that are barely making it.

My suggestion: brokers who only speak MCA language are going to fight harder and harder for the $10k 1.49 over 80 day type deals, but brokers who know all types of financing will be well-positioned to take advantage of the influx of better quality merchants transitioning from conventional options to A paper MCAs.

I think.

[Karen37a]

I'm not sure how much effort and energy you put into studying things outside of this industry, like history, economics, blockchain technology, etc. But, it may be wise to invest the time these things. You lead with "real estate is not overvalued" - that says to me you're less than informed and you should ask yourself what else you may be wrong about.

Ok I accept your explanation of it. No harm no foul.

I didnt suck anyone into anything as West coast explained. I was giving my true opinion on things

dont mention seo or west coast wont like you...another tip

Back in the day 3 years ago he was telling me I didnt understand "new lead technology or computers /seo"...so old dogs can learn new tricks

[Crypto Q]

As for getting back to your original question (what to expect during a downturn). So I started brokering traditional facilities in the lower-middle market back in the early-mid 2000s. When the recession hit, and the economy came to a sudden-stop, all lending basically stopped for a while - except with MCAs. Companies that would normally be seeking $5M revolvers were settling for $500k MCAs.

So during a downturn I expect “larger” small businesses that would normally look to traditional options to move over to MCAs. At the same time a downturn will kill off all those companies that are barely making it.

My suggestion: brokers who only speak MCA language are going to fight harder and harder for the $10k 1.49 over 80 day type deals, but brokers who know all types of financing will be well-positioned to take advantage of the influx of better quality merchants transitioning from conventional options to A paper MCAs.

I think.

This is gold. Thanks for sharing!

[Karen37a]

This is gold. Thanks for sharing!

yes it is. so someone like me who entered wall st in the 80's and was an investment banker raising capital( boiler room movies too)...then loans, building teams...wow I am in the right place at the right time!!

[Karen37a]

How do you last 30 years

By doing the right thing for the Funders/Lenders, merchants and your team( and yourself)...which most will never do

West dont worry about competition...ethics, morals and the cream always rises to the top

[Chambo]

As for getting back to your original question (what to expect during a downturn). So I started brokering traditional facilities in the lower-middle market back in the early-mid 2000s. When the recession hit, and the economy came to a sudden-stop, all lending basically stopped for a while - except with MCAs. Companies that would normally be seeking $5M revolvers were settling for $500k MCAs.

So during a downturn I expect “larger” small businesses that would normally look to traditional options to move over to MCAs. At the same time a downturn will kill off all those companies that are barely making it.

My suggestion: brokers who only speak MCA language are going to fight harder and harder for the $10k 1.49 over 80 day type deals, but brokers who know all types of financing will be well-positioned to take advantage of the influx of better quality merchants transitioning from conventional options to A paper MCAs.

I think.

Correct...during late 2007, 2008, when we are all hit with housing bubble and the recession hit, the MCA world became quite tough. Deals that one can easily fund now are declined. We didn't stack back then, but these 3,4,5+position deals? Good luck with those! Expect to see more defaults and lower approvals....but as West Coast mentioned, those who know their product, know how to navigate around situations, and actually kept up good relations with funders, instead fo screwing and stacking on them, will still make money.

Might be a much needed cleaning house era in this industry

[Karen37a]

We have already hit bottom unless one other company drags their partners down with them( double bottom) ...who cares they do not listen nor care.

The sales will get loose and the few left will have a field day. Each person just has to carve out their own small piece of the pie.

People will get rich, doesn't matter if it's a bull market or bear market; while some stand on the sidelines explaining why it cant be done.Then when you do it they say you are lucky or it took no skill.

Cycles

[Sean Cash]

The last recession was particularly extreme, but here's what happened. Several funders died overnight because the banks or hedge funds pulled their lines out of fear. So even if a company's underwriting is sound and their track record is good, the reliance on a single or too few capital sources will be the killer.

So unless funders are funding purely out of their own equity, they need several reliable funding sources. Once a recession hits, everything changes. A capital source (if nervous) will go through your agreement with a fine tooth comb to find an area where you are in "breach" and pull your line or cancel your arrangement.

Funders who were lenient on arrangements they had with ISOs will look to enforce those ISO agreements to the letter. Your ISO agreement may say that you are liable to share in the legal fees or litigation costs the funder incurs with your merchants. Maybe you've never had to pay them. Those costs (or whatever else the funder can find to suddenly start enforcing) can be charged against any owed commissions or renewal commissions.

Basically a recession is more than just tightened credit. There's a snowball effect where everybody starts to make sure they're totally protected from everyone else. That puts a strain across the board and the entire chain slows down. All of the niceties and special exceptions go away. It's every man for themselves.

[Karen37a]

The last recession was particularly extreme, but here's what happened. Several funders died overnight because the banks or hedge funds pulled their lines out of fear. So even if a company's underwriting is sound and their track record is good, the reliance on a single or too few capital sources will be the killer.

So unless funders are funding purely out of their own equity, they need several reliable funding sources. Once a recession hits, everything changes. A capital source (if nervous) will go through your agreement with a fine tooth comb to find an area where you are in "breach" and pull your line or cancel your arrangement.

Funders who were lenient on arrangements they had with ISOs will look to enforce those ISO agreements to the letter. Your ISO agreement may say that you are liable to share in the legal fees or litigation costs the funder incurs with your merchants. Maybe you've never had to pay them. Those costs (or whatever else the funder can find to suddenly start enforcing) can be charged against any owed commissions or renewal commissions.

Basically a recession is more than just tightened credit. There's a snowball effect where everybody starts to make sure they're totally protected from everyone else. That puts a strain across the board and the entire chain slows down. All of the niceties and special exceptions go away. It's every man for themselves.

Yes this is partially true when you take credit lines from banks that have covenants on them and you break them with too many defaults and not disclosing..or disclosing and they pull it.

When you reciove money from hedge funds ....or accredited investors...they know they can lose every dime and their is no recourse unless its fraud.

Thats why investment bankers are valuable and their friends...not so much banks

[Kevin Henry-Seacoast]

The last recession was particularly extreme, but here's what happened. Several funders died overnight because the banks or hedge funds pulled their lines out of fear. So even if a company's underwriting is sound and their track record is good, the reliance on a single or too few capital sources will be the killer.

So unless funders are funding purely out of their own equity, they need several reliable funding sources. Once a recession hits, everything changes. A capital source (if nervous) will go through your agreement with a fine tooth comb to find an area where you are in "breach" and pull your line or cancel your arrangement.

Funders who were lenient on arrangements they had with ISOs will look to enforce those ISO agreements to the letter. Your ISO agreement may say that you are liable to share in the legal fees or litigation costs the funder incurs with your merchants. Maybe you've never had to pay them. Those costs (or whatever else the funder can find to suddenly start enforcing) can be charged against any owed commissions or renewal commissions.

Basically a recession is more than just tightened credit. There's a snowball effect where everybody starts to make sure they're totally protected from everyone else. That puts a strain across the board and the entire chain slows down. All of the niceties and special exceptions go away. It's every man for themselves.

Many alternative lenders had lines that were funded by hedge funds that were pulled as hedge funds were liquidating left and right. In 2008 I was an investment banker and secured an equity partner for a factoring company because there was little to no debt to be found. They are still in the deal today and doing quite well.
Everyone thought thought the recession would be great for alternative lenders because the bank were closed. What many did not realize is the alternative lenders were funded by lines from bank and hedge funds that disappeared. Many alternative lender's client disappeared as well. Many alternative lenders were forced to fund deals with equity.
I have 5 deals on my desk right now that are a result o a large money center bank or factoring company realizing they were too loose with controls or advance rates and when the company hiccuped they quickly hit the panic button and asked the client to seek a new lender.

Banks are much quicker to ask a client to leave now that back in 2009 and 2010. Many of them have trimmed their workout groups to bear bones and do not have the man or woman power to workout a lot of problem credits simultaneously.

Best,

Kevin

[Karen37a]

When you have a bunch of stockbrokers/investments bankers/hedge funds who only raised capital for a living for decades...those are the ones you want to be friends with

again...not banks with restrictions of use

to each their own though

Most cant get strangers to take a loan from them, 1 day before bankruptcy; let alone get them to send them 1 million etc.

People live and learn.

[Karen37a]

Sean I am not sure if you realize that some of the guys that are my friends who were on here had/have 2-10 Billions assets under management

[Chambo]

Sean I am not sure if you realize that some of the guys that are my friends who were on here had/have 2-10 Billions assets under management

doesn't mean they want to risk it when they see default rates going up. Sean and I worked through THIS industry (not a different financial product) during the last big hit and so we can both speak from experience and not speculation/conjecture.

In fact, I think in 2007-8, Sean was still UW'ing for our former associates on 31st st back then. Maybe he had already made the leap to sales....either way

[Karen37a]

doesn't mean they want to risk it when they see default rates going up. Sean and I worked through THIS industry (not a different financial product) during the last big hit and so we can both speak from experience and not speculation/conjecture.

In fact, I think in 2007-8, Sean was still UW'ing for our former associates on 31st st back then. Maybe he had already made the leap to sales....either way

Do you realize some stockbrokers worked in boiler rooms and sold "air"

And these are my friends and they are giving it to ME...i told them to hold off until the crash

[Karen37a]

Anyone who raised capital as a stockbroker or hedge fund will not have a hard time getting money for cash advances ...they just want it back plus 20%

Which means you have to watch what you do with the money...renew, renew, renew...dont live off if and have huge default ratios


** I guess thats another reason why I dont stack...and renew.renew...hold 1st position only...proof of concept

[Sean Cash]

doesn't mean they want to risk it when they see default rates going up. Sean and I worked through THIS industry (not a different financial product) during the last big hit and so we can both speak from experience and not speculation/conjecture.

In fact, I think in 2007-8, Sean was still UW'ing for our former associates on 31st st back then. Maybe he had already made the leap to sales....either way

I was indeed still underwriting in '07 and '08. Chambo knows. People get nervous, doesn't matter how much assets are under management. A diversified investor base or a strong balance sheet is important. I watched several competitors go kapoof overnight because their lines got pulled. That affected everyone including ISOs who then had to find new funders to work with.

And in a recession some funders aren't going to be as aggressive in trying to sign up all those scrambling ISOs especially if they were ISOs for companies that were put out of business.

By 2009 I was in sales and I can't remember the exact number and maybe I'm exaggerating a bit but I think at one point I had something like 100 straight deals declined in a row. It was brutal.