[ADiamond]

4 positions, I wasn't the third or fourth, my underwriting is solid - none the less I am sure (positive, actually) the Reps/ISO's double funded this lady four positions, banged her out for 10% PSF's on top of 10%+ commissions - and now what, I have to lower my payment just to avoid the threat of receiving an r08 stop payment? Because of other idiots and their ethics or lack thereof? I don't blame the industry completely, obviously there is ignorance on her part, but god damn it's just really pathetic.

Good Afternoon A-----

This is J---- O----- and I need some advice. I am in a mess with all these merchant cash advance loans. I really blame the companies for giving them to me when they should have seen I could not keep up with this (almost $500) daily payout. I don't know if your company can just put me on a lower payment or maybe do a monthly payment for me. I just can't keep this up. My account is in the negative as we speak and I know some payments will be returned tomorrow. I don't know what else to do. Can you advise me of anything I can do except to just stop the payments myself which I do not want to do.

Thanks
J----- O-----

[WhoisKingsley]

I know we partnered with you guys so I am sure you have outlets to handle this. It's pretty sad honestly. We assist merchant in desperate times when there is limited options for them and some brokers just take advantage when the merchant isn't 100% knowledgeable of what they are getting into. Everyone knows that you can't just stop at one advance- you ultimately get another and another. I know a company that does consolidations. Let me know if you want the info.

[J.Celifarco]

I know stacking is becoming more and more the norm in the industry but if it continues to snowball with 3rd and 4th and however many more positions people want to go we are eventually not going to have an industry.
Life was easier before stacking 1 position you want to fund the deal you pay off the balance

[JSL23]

I know stacking is becoming more and more the norm in the industry but if it continues to snowball with 3rd and 4th and however many more positions people want to go we are eventually not going to have an industry.
Life was easier before stacking 1 position you want to fund the deal you pay off the balance

I feel for the Merchant, but ultimately nobody put a gun to their head and made them take the 4th/5th advance.

My thoughts on stacking is that it can be done responsibly; 2nd position: No problem, 3rd position: Depends on the situation, 4th position or beyond: NO!!! Excessive to say the least. And let's be honest; how much commission can you really earn from a 5th position?! Just try to consolidate or do a Refi a little bit further down the line. Tell the Merchant they are going to be in bad shape. Many will actually respect you MORE for turning down their business and remember you when things go back to normal and turn to you to get them funded.

In the end though, it is ultimately their choice.

[J.Celifarco]

I feel for the Merchant, but ultimately nobody put a gun to their head and made them take the 4th/5th advance.

My thoughts on stacking is that it can be done responsibly; 2nd position: No problem, 3rd position: Depends on the situation, 4th position or beyond: NO!!! Excessive to say the least. And let's be honest; how much commission can you really earn from a 5th position?! Just try to consolidate or do a Refi a little bit further down the line. Tell the Merchant they are going to be in bad shape. Many will actually respect you MORE for turning down their business and remember you when things go back to normal and turn to you to get them funded.

In the end though, it is ultimately their choice.

I dont disagree but the problem is once they have the 2nd and third position no advance company is willing to pay off all the balances because they are afraid the merchant will stack again on them. Once that second position is taken more often then not the account is dead for traditional programs because you can never get the balance paid off.
From a commission standpoint you will make more money doing regular refis for a merchant then you ever will getting them second and third positions

[MCNetwork]

It's kind of like blaming the liquor store owner for continuing to sell to the alcoholic.

[ADiamond]

the problem is that most people that price and underwrite deals think it's OKAY for monthly payments exceed 1/3 of monthly revenue, and it's not okay. You know what her payments are? 10k/month. Revenue? 18-20k. That is the problem, I am not saying she is not at fault. but how the heck do companies think they are going to get their money back when payments are hovering around half of gross revenue? Very few companies even consider that.

[channin19]

4 positions, I wasn't the third or fourth, my underwriting is solid - none the less I am sure (positive, actually) the Reps/ISO's double funded this lady four positions, banged her out for 10% PSF's on top of 10%+ commissions - and now what, I have to lower my payment just to avoid the threat of receiving an r08 stop payment? Because of other idiots and their ethics or lack thereof? I don't blame the industry completely, obviously there is ignorance on her part, but god damn it's just really pathetic.

How does being the second differentiate you from being the 3rd or 4th or 5th...?

[Andy]

I think that we need more funders that will consolidate. The problem now is that most companies will not touch a merchant with more than one advance except to stack on top.
In my experience, we come across merchants with 2 or 3 positions who realize it was a bad idea, they cant support the strain on their cash flow, they want out! But no one will pay off the balances and consolidate even if the merchant nets 50% after all balances are paid, all we can do is stack another position on top, which is just a bandaid, borrowing from pete to pay paul, instead of fixing the problem.

[ADiamond]

How does being the second differentiate you from being the 3rd or 4th or 5th...?

read my post right above your question.

edit - I am not against stacking if it makes sense. Stack all day if you want, but it has to make sense. Don't drive people out of business just to profit from them at the risk of losing investor's money.

Take a 4th & 5th if the 1st and 2nd are ending within two weeks. take a 6th if their credit and payments aren't over extended.

Hop all day, don't hold the bag. <--- I'm trade marking that by the way so don't steal it.

[GRP Funding]

Life was easier before stacking 1 position you want to fund the deal you pay off the balance

100% truth - if the merchant thinks it's OK to take a 2nd - why not a 3rd, 4th, 5th, 6th, etc. ?

[channin19]

I did.

A 2nd, 3rd, 4th position whatever position lender charges more over a shorter time frame to account for this additional risk.

[ADiamond]

I did.

A 2nd, 3rd, 4th position whatever position lender charges more over a shorter time frame to account for this additional risk.

So then obviously you understand this thread wasn't made to say I am against stacking, I said someone double funded her for their own interest a 3rd and 4th position, making payments in excess of 50% of gross revenue. THAT IS THE PROBLEM WITH STACKING, I AM NOT AGAINST STACKING. Let's be real, the only deals left floating around this industry are mostly deals that have been funded already.

[funding pro]

But you are missing his point that you cant say stacking is ok in some situations. That's like saying drunk driving is ok, so long as you are not driving very far OR you have on eye closed OR you drank a red bull OR you are following your friend and so on and so on.

[FundingWiz]

i was involved with a large brokerage shop that sold 3000 cash advances to a NYC funding group by 2010 70% were out of business with out stacking in play..point is the day a merchant takes a 1st position from an ondeck the clock is ticking!

[JSL23]

It's kind of like blaming the liquor store owner for continuing to sell to the alcoholic.

LOL, great analogy! Very true. I agree with those that say it would be great for the Merchants and us, the ISOs/Salespeople/Lenders if there were more shops willing to consolidate multiple positions. An up and coming firm can make a name for themselves on that alone.

I'm not an Underwriter or a master at Risk Assessment so I can't honestly say how risky it would be, but wouldn't the financial gain and carving out a much needed niche make it worth it?

[Scott Williams]

LOL, great analogy! Very true. I agree with those that say it would be great for the Merchants and us, the ISOs/Salespeople/Lenders if there were more shops willing to consolidate multiple positions. An up and coming firm can make a name for themselves on that alone.

I'm not an Underwriter or a master at Risk Assessment so I can't honestly say how risky it would be, but wouldn't the financial gain and carving out a much needed niche make it worth it?

That would be the worst business model for a funder to do. Check with all the funders that have paid off merchant's with 3+ open advances. Two months later the merchant go back and stacks again. Now the consolidated funder has a huge balance outstanding with multiple payments coming out again. As soon as funders get paid off that do 3+ advances....their sales teams is calling the merchant pushing more money on them.

Paying off 2 open advances can work but paying off 3+ open advances never works.

[JSL23]

So there is no conceivable way to make it work? Has anyone ever consolidated enough triple funded deals to get enough of a sample size? I was thinking mainly 2 or 3, I realize that 4 is really pushing it and just not feasible. What if they agree and notarize something in the Funding Agreement saying that if they stack they will be fined $______ AND put on that NAAMA banned Merchant list....and the Lender enforced it without exception? Everyone is finding ways to consolidate their debt nowadays, is this really that much different?

[funding pro]

So there is no conceivable way to make it work? Has anyone ever consolidated enough triple funded deals to get enough of a sample size? I was thinking mainly 2 or 3, I realize that 4 is really pushing it and just not feasible. What if they agree and notarize something in the Funding Agreement saying that if they stack they will be fined $______ AND put on that NAAMA banned Merchant list....and the Lender enforced it without exception? Everyone is finding ways to consolidate their debt nowadays, is this really that much different?

Yes. What you are saying is the equivalent of just giving a crack head a whole lot of crack to last him a year instead of him constantly going out every day to get his crack. Either the crack head is going to finish the year's worth of crack in a month and start looking for more crack sooner than expected or he is going to OD.

And since I am talking about crack and its been a while since I posted a .gif, here ya go...

tumblr_m4v2whZrJo1rpl29so1_500.gif

[JSL23]

OK, then there will continue to be dozens of "crack-dealers" giving our clients 4th and 5th positions....... (trying hard not to laugh at that .gif-Chappelle?)

[BSCI 504]

The conversation definitely needed a tension breaker and this GIF of Chappelle was it. Hilarious!!

[golf2014]

money is sometimes and maybe more often the root of all evil..as long as the broker gets money they can throw the merchant under the bus

[channin19]

Let's be real, the only deals left floating around this industry are mostly deals that have been funded already.

That is ridiculous.



Plenty of opportunities available. If you market for second position deals you will fund second position deals.

Are there opportunities where a second position makes sense? Sure. On a business with annual revenue of $100K? Probably not. And who wants to deal with the headache? Those are the business owners that will give the most trouble. Not worth the <$300.

[J.Celifarco]

I agree that if there were banks that would consolidate it would help but at the end of the day why would they? The merchant breached the original contract by stacking the first time, why would they take the risk of it happening again to them

[ADiamond]

Are there opportunities where a second position makes sense? Sure. On a business with annual revenue of $100K? Probably not. And who wants to deal with the headache? Those are the business owners that will give the most trouble. Not worth the <$300.

Sorry, I disagree. You're entitled to your opinion though.