[Karen37a]

Percentage of gross sales is only one part of the equation. Average daily balance is a more useful indicator in determining a merchant's ability to afford an advance. What good is giving an advance where monthly debt service is 15% of gross sales if he only shows an average daily balance of $100 and has 1 or 2 NSFs per month? He clearly can't afford the advance. Conversely, I've seen merchants easily handle payments that eat up 30% of monthly gross because his average daily balances are very high. Each merchant's situation is different. Some merchants are financially astute and responsible. Some are one bad month away from insolvency. Therefore, there are no cookie cutter, one size fits all underwriting rules.

Good underwriters take a holistic approach and look at the whole picture when deciding the maximum approval amount. The 15% rule is only a guideline based on historical performance of similar merchants in a funder's portfolio, not a hard and fast rule. The broker's job is to ask the right questions, learn the actual profit margins and find out if the merchant can really afford the advance.

Are you going to lobby for this? Turn this into a law?


You might be too young to remember school house rock ( again i memorize everything)


Singing...Well Im just a bill, yes Im only a bill and Im sitting here on capital hill , well now im stuck in the white house where i am waiting on line with all the other bills for the President to sign and if he signs me then ill be a Law oh yea I hope and I pray that he will but today I am only a Bill

https://www.youtube.com/watch?v=tyeJ55o3El0