[Sean Cash]

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

Hmmm and just yesterday a big alternative lender concluded that the industry had only reached 1% of its potential annual volume. That means 99% of the deal opportunities out there have never been funded by an MCA company or alternative business lender.

[HeatherF]

Hmmm and just yesterday a big alternative lender concluded that the industry had only reached 1% of its potential annual volume. That means 99% of the deal opportunities out there have never been funded by an MCA company or alternative business lender.

I am probably going to make a lot of people mad with this statement... but Stacking is the lazy man's way of gaining market share... Hence the reason of 1% potential.. Very few new players(funders) are presenting anything to the market that requires a competitive nature which would drive new innovation and quality products. The last thing to come about was presenting fixed ACH products and still debatable the Algorithmic model.... All the growth is coming from Lead Gen companies not the actually funders.

[Jared_Weitz]

Hmmm and just yesterday a big alternative lender concluded that the industry had only reached 1% of its potential annual volume. That means 99% of the deal opportunities out there have never been funded by an MCA company or alternative business lender.

As living proof that there are a ton of new deals each month that fund I'd like to hop in here and say there are still PLENTY of new businesses that require financing.

[J.Celifarco]

If a companies business model and marketing is built around second and third position deals that is just a recipe for disaster. If you cant build your own book of deals and grow your refi business I dont see how you can last. If you business model is stacking then you are working on deals with the lowest possible commissions and you need to do twice as many deals to make money. Bringing new clients to this form of lending and then having client control and being able to stop them from going to other companies for second and third positions will build you a book of business that is way more profitable then trying to squeeze a 5k 2 month 3rd position deal for clients that will be out of business in a month

[BSCI 504]

This industry does need some innovation from some of the major players but nobody is willing to fix a car that is already working in their favor. Most companies are already holding at least 12 to 25% in slow pays or bad debt. Surely the collections aspect of this industry is taking off...I am ready for some new products that will give an edge. The horror stories are too drastic on the merchant side for this industry to take much more before the Consumer Protection Agency or some other regulator steps in to blow everyone's mind.
Is there any way to move forward without brokering the stacked deals?

[Scott Williams]

I think brokers are looking to funders to protect their new merchants better too (ie UCC filings). Nothing is worse for a broker than to spend the money and educate a merchant that hasn't used this product before....then the funder files a UCC and every other broker starts calling your merchant daily. Hopefully funders can come up with something to secure their interest in the business and not have that information go public so marketing companies attack it.

[CASHCASH]

Going back to the tone of the original email received from your merchant, the way it was worded was just maddening.

"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."

She really blames the companies?? Was the funding done without specifically worded agreements that laid out exactly what it was that she was getting? Definitely not. Darwinism is alive in business just as it is in humanity, and if a company wants to start making stupid decisions and stack on top of funding they already have then it is on them if they don't survive. A smart business owner will see the merit in not taking more than one advance at a time. In this particular case, she could have easily extrapolated what each of these advances would cost her business on a daily, weekly, and monthly basis. Ultimately, a business owner has to take responsibility for his or her own actions.

[J.Celifarco]

yes blame falls on the merchant for making bad decisions, but dont the banks also get some blame for giving someone a loan that the bank knows will put the merchant in breach of their original contract???

[ADiamond]

I am sure the industry has not reached it's fullest potential as far as generating new deals for first positions, when I said most of the deal floating around already have positions, that's just what I see as an underwriter. You sales guys know how hard it is to bring in a new account, selling this product to someone that is not desperate or educated is practically impossible, so how do the reps keep their commissions up? Fund a deal, wait a month, add another position, wait two months, add another position.

I am not hating on reps, I will never hate on anyone's method of making money, by all means - do you, but I am not going to agree that it is completely ethical.

[GRP Funding]

I am sure the industry has not reached it's fullest potential as far as generating new deals for first positions, when I said most of the deal floating around already have positions, that's just what I see as an underwriter. You sales guys know how hard it is to bring in a new account, selling this product to someone that is not desperate or educated is practically impossible, so how do the reps keep their commissions up? Fund a deal, wait a month, add another position, wait two months, add another position.

I am not hating on reps, I will never hate on anyone's method of making money, by all means - do you, but I am not going to agree that it is completely ethical.

We still see a lot of deals that don't have any open balances. But we don't work with a lot of sales partners that use UCC's as their primary lead source either.

[channin19]

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.

Your reasoning throughout this thread has been inconsistent.

You'd have no qualms doing a 2,3,4,5th etc position on a deal but when you get caught holding the bag its everyone else that was acting irrationally.

Selling this product to someone that is not desperate or educated is practically impossible.

How would you know if you've never tried it.
If you're in this for the long haul why would you do that you client base?

As living proof that there are a ton of new deals each month that fund I'd like to hop in here and say there are still PLENTY of new businesses that require financing.

Bingo. New businesses are started every day.

[ADiamond]

We still see a lot of deals that don't have any open balances. But we don't work with a lot of sales partners that use UCC's as their primary lead source either.

So what methods are companies using now to generate clean leads beside pulling UCCs, SEO, SBA leads, etc? I'm curious, I would like to know how that side of the business operates. With all the new ISO shops popping up every day and each one of them going through the same lists - how do certain companies differentiate their methods?

[ADiamond]

Your reasoning throughout this thread has been inconsistent.
You'd have no qualms doing a 2,3,4,5th etc position on a deal but when you get caught holding the bag its everyone else that was acting irrationally.

channin, he who has not paid attention to anything i've said thus far but is just looking for a reason to argue with me and call me out - if it makes sense and payments do not exceed 25%-33% of gross revenue then great, stack away. if payments exceed 50% of gross revenue, there is absolutely no rationale to stack. did that summarize my position in a way you can comprehend?

edit - and I wouldn't put myself nor my company in a position of holding the bag, as I've also said - I wasn't the 3rd or 4th position in that deal that started this thread.

[J.Celifarco]

I am sure the industry has not reached it's fullest potential as far as generating new deals for first positions, when I said most of the deal floating around already have positions, that's just what I see as an underwriter. You sales guys know how hard it is to bring in a new account, selling this product to someone that is not desperate or educated is practically impossible, so how do the reps keep their commissions up? Fund a deal, wait a month, add another position, wait two months, add another position.

I am not hating on reps, I will never hate on anyone's method of making money, by all means - do you, but I am not going to agree that it is completely ethical.

If thats what your sales guys are doing to make money then you need new sales guys they are cutting out there own legs to make a couple of dollars and screwing over the bank in the process... New business is harder to close but it is not impossible.. Like a lot of people in this thread have said there is plenty of new business out there you just have to go out and find it and then close it

[GRP Funding]

So what methods are companies using now to generate clean leads beside pulling UCCs, SEO, SBA leads, etc? I'm curious, I would like to know how that side of the business operates. With all the new ISO shops popping up every day and each one of them going through the same lists - how do certain companies differentiate their methods?

Direct mail, cold calling, CC processing portfolios, local networking, trade shows, referral partners in other industries, bank relationships, referrals from existing clients, etc.

[channin19]

channin, he who has not paid attention to anything i've said thus far but is just looking for a reason to argue with me and call me out - if it makes sense and payments do not exceed 25%-33% of gross revenue then great, stack away. if payments exceed 50% of gross revenue, there is absolutely no rationale to stack. did that summarize my position in a way you can comprehend?

edit - and I wouldn't put myself nor my company in a position of holding the bag, as I've also said - I wasn't the 3rd or 4th position in that deal that started this thread.

I'm done... I get it... You're very talented at underwriting a second position deal. Last I checked there is a 2 before 3 & 4. If you're writing the second you know there is a risk for 3 & 4 and that's why the rates are higher. Sometimes you win... sometimes you lose. No use blaming other's greed.

[ADiamond]

Sometimes you win... sometimes you lose. No use blaming other's greed.

at least we agree that it was others' greed that is the problem. <3 have a great day channin!

[J.Celifarco]

one thing is for sure, out of all the topics that are talked about on this site, nothing gets people going more than this topic

[CashAdvanced]

ADiamond - don't you realize that you are the one who gave the merchant HIS FIRST STACK, hence how we was able to get to the point of a third, and fourth position. What makes you think that you can decide how much a merchant can or cannot afford. How long have you been in the industry? What kind of data are you basing these percentages of revenue of off. You are not realizing that you are just basing this off of what "you think good underwriting is" and what "you think a merchant can handle". I got news for you, you have no idea what you are talking about. I agree with Channin 100%. You are just as greedy as the 3rd position and 4th position lender. Fact of the matter is, you should have educated the merchant that it is dangerous to take a 3rd and 4th position, even a 2nd position. Your underwriting on the deal was not sufficient.

[RCFsales]

Touche! Another case of the pot calling the kettle black!

[funding pro]

if it makes sense and payments do not exceed 25%-33% of gross revenue then great, stack away. if payments exceed 50% of gross revenue, there is absolutely no rationale to stack.

So you mean to tell me that you think there are businesses out there that can operate their business, paying their rent, payroll, COGS, etc. all while 25-33 cents of every dollar that comes in goes to repaying debt? I dont know you or your company, but your comments in this thread are showing your inexperience and are not reflecting well. This is the problem with the stacking world we live in.

[ADiamond]

one thing is for sure, out of all the topics that are talked about on this site, nothing gets people going more than this topic

i threw gas on the fire with this one, huh?

[Chambo]

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

In the end though, it is ultimately their choice.

That is the same excuse that Bank Of America, JP Morgan and Citibank used in the mortgage scandal. "But they signed and agreed to the terms!"

How many BILLIONS have been paid in fines to date? How many more to come?

[Chambo]

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

But bars are liable if someone drinks in their bar, and then goes out and drives drunk and kills someone

We're supposed to be the professionals here with fiduciary responsibilities.

[Chambo]

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.

They won't (and shouldn't) because the merchant has shown a proclivity for stacking. Consolidate them? three months later they are back at it