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09-01-2018, 07:42 PM #1Karen37aGuest
The California Business Loan & MCA Disclosure Bill
https://debanked.com/2018/08/califor...e-unfavorable/
California’s bill to mandate certain disclosures on business loan and merchant cash advance contracts is looking a little bit worse. TThe Annualized Cost of Capital method (Explained here) that some folks in the industry were accepting of, has been scrapped in favor of whatever formula a state regulator decides to pick. That means if the Commissioner of Business Oversight decides on an APR disclosure, which many industry trade groups believed they had already successfully lobbied against, all loans and non-loans alike would have to report an APR, a mathematical impossibility for a product like merchant cash advance. At present, however, all that is known is that the Commissioner’s choice must be an annualized metric.
https://www.bna.com/calif-smallbusin...-n73014482092/
Opposition Remains
Though the bill amendment doesn’t define which metric should be used, its supporters are backing the use of an estimated annualized rate to give borrowers something akin to an apples-to-apples comparison among products.
But some companies that offer open-ended financing products such as merchant cash advances and other nonfixed term financing say APR doesn’t give an accurate picture of the cost of their products, which can depend on the volume of transactions to repay credit.
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the amended version of the bill needs to get approval in both the Assembly and the Senate by Friday before the legislative session ends.
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**ps I can sell a 600% rate on paper in big bold print, and so can some other salespeople...so...this is where the real salespeople come in on the phone ( some are cutting thier own throats and they havent realized it yet)
I wonder what the A paper renewals with the double dip will look like on paper .. 66%...100%? Is kabbage going to disclose all the interest up front...i never calculaed that number to an exact figure. If it pays back early then what...you opened a hornet nest
And I said from the beginning you are not regulating some small ( in regards to funding) dui woman...the money is what is going to be regulatedLast edited by Karen37a; 09-01-2018 at 07:52 PM.
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09-01-2018, 08:18 PM #2Karen37aGuest
https://dailyfunder.com/showthread.p...ders-and-ISO-s Thread from Feb 2017
Quote Originally Posted by Karen37a View Post
Yes it does.
And my main point has always been ( and I may be wrong but I doubt it ), that every time regulation steps in...Financial industry, stock-market /securities...Mortgage industry; when they force it, it brings a myriad of new problems with it, problems that people do not foresee. The main one being compliance and extra compliance and extra extra compliance, then compliance for compliance.
This forces the small players to merge in with the large ones because they can not have a dept on the second floor dedicated to it, nor can they bear the expense, or want to.So when people think the market will open up to less competition because the seedy brokers get out, thats partially true, but it also creates a monopolistic effect where you have to join the big boys club or you cant survive, or you have to have inside connections or extreme knowledge or deep pockets. Then compensation gets cut to the loyal ones on the inside, thats fun to watch and some of the big boys shut down .
Its like watching a movie but its live
here comes the monopoly
Ive seen it too many times before I guess, fool me once, fool me twice, fool me 3 times, i had enough....I don't trust them or people, or policing organizations and I do not want to be on here saying "told you so" in 3 years.This argument has been beaten to death. I am not going to change anyones mind and half the people have self serving beliefs and ideas.
I guess you would have had to experience it to know.
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09-03-2018, 12:23 PM #3Karen37aGuest
Edit
GLLast edited by Karen37a; 09-03-2018 at 12:42 PM.
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09-05-2018, 10:47 AM #4
- Join Date
- Jun 2014
- Posts
- 541
So this CA bill proposed by Glazer died in committee??
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09-05-2018, 10:54 AM #5
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09-05-2018, 10:57 AM #6
- Join Date
- Feb 2017
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- 3,433
This bill might still be good for those of us non-salesmen. If it gets signed, it won't be about selling and faking out the client and talking around the rate, and pulling a fast-one, it's about related costs and comparing ROI, hopefully puts the merchants focused on getting higher quality money that will do what they need, not endlessly lock them into a debt cycle.
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09-05-2018, 10:58 AM #7Karen37aGuest
And this does not help with backdooring or defaults or stacking or background checks
just monitors the money and puts people in a more "fiduciary" capacity and opens the door for full-on regulation additional costs and monopolies
And the brokers who cant make sales...still cant make sales
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09-05-2018, 11:02 AM #8Karen37aGuest
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09-05-2018, 11:08 AM #9Karen37aGuest
well ... I did everything I could...rallied people, calls for vote to change...I tried..gl in calif
So here's a question...are the contracts going to have a big fat 200% Apr on the face of the contract and these non sales people will have an easier time selling??
Add*And do not think that these merchants who try to slime out of paying back loans and advances do not have an extra weapon to slap you withLast edited by Karen37a; 09-05-2018 at 11:14 AM.
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09-05-2018, 11:41 AM #10
- Join Date
- Feb 2018
- Posts
- 1,349
California historically, has always been a beast regarding this space. There were two historical lawsuits in California that newbies don't know about. The suit against Advanceme and the suit against Rewards Network. Both parties had to settle. Here is a blast from the past article:
http://www.greensheet.com/emagazine.php?story_id=3088
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09-05-2018, 11:43 AM #11Karen37aGuest
It wasnt newbies who battled me on regulation for 3 years
some went so far they made up a stock fraud story on me to say that I do not want regulation because I cant get thru the vetting process...which is a bunch of bs
And just like I said
they amended the bill the last second like I said they would, then people like Electronic Transactions Association (ETA), whose members include companies that offer merchant financing, like PayPal Inc. and Amazon.com Inc. opposed it
and lickity split hustled it in a bing bam boom ..voted on approved
and i am sure just like Doofy frank zillions of amendments will be coming down the pipeline
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as stated
Dodd-Frank financial reform bill, an 850-page bill that has generated over 2,000 pages of interpretive regulations so far and required “as many as 698 new regulations,”
bureaucratic suffocation of mega-bills...the wolf is in the hen house
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09-05-2018, 11:47 AM #12
- Join Date
- Feb 2018
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- 1,349
It opens the door to more suits. If the bill is signed off, and, funder's do not disclose the fees they are mandating, history will once again repeat itself. What is the APR for a 1.49/3 mo deal on a daily repayment? anyone?...
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09-05-2018, 11:49 AM #13Karen37aGuest
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09-05-2018, 11:51 AM #14
Personally, I don't do CA for numerous reasons. I just wait for the businesses to move to TX or FL then fund'em.
You either win or you learn. The only failure is in quitting.
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09-05-2018, 11:53 AM #15
- Join Date
- Feb 2018
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- 1,349
merchant's who need the money, even if disclosed, will still sign to get the money. Will some merchant's jump out of their seat if an APR is disclosed on front page of contract? Yes. Time will tell how this shapes the industry in Cali and if other states adopt the practice in the future
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09-05-2018, 11:53 AM #16Karen37aGuest
I didn't go in there either...people yelling at me on the DF saying I didn't know how to fill out the forms...meanwhile, I think I licenced up 5000 people over the years In Financial Services...various states
More if you count in the one hit wonders...pass the test...quit day one when they see the phone
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09-05-2018, 12:03 PM #17Karen37aGuest
Website on Kabbage comparion on Apr
http://blog.streetshares.com/how-to-...ess-loan-offer
Calculate the APR on Your 6-month Kabbage offer:
Enter your line of credit amount in green
Enter your fee for the first two months in green
Enter your fee for the next four months in green
http://blog.streetshares.com/how-to-...ess-loan-offer
View your APR in the yellow box
You’ll see the fee is being charged on the original loan amount and not the remaining balance. (Scroll to the right to see the cost of credit and the total cost of the loan.) See below for further explanation.
Line of Credit *$ * * 50,000* Factor Rate 16.0%
Fee 1 - 2 months 4.00% APR 54.1%
Fee 3 - 6 months 2.00%
Payment 1 Payment 2 Payment 3 Payment 4 Payment 5 Payment 6 Total
Principal payment *$ * * * 8,333* *$ * * *8,333* *$ * * * *8,333* *$ * *8,333* *$ * * *8,333* *$ * * 8,333* **Principal* *$ * 50,000*
Fee payment *$ * * * 2,000* *$ * * *2,000* *$ * * * *1,000* *$ * *1,000* *$ * * *1,000* *$ * * 1,000* *Cost of credit* *$ * * 8,000*
Total Payment *$10,333.33* *$ * *10,333* *$ * * * *9,333* *$ * *9,333* *$ * * *9,333* *$ * * 9,333* *Total cost* *$ * 58,000*
I think Some boiler room isos know math*
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09-05-2018, 12:06 PM #18
Don't have a problem with merchants seeing price of the money. If you haven't done
a cost justification by the time they see paperwork, you'haven't really sold the funding yet.
If we haven't had a conversation on how a $50K advance is benefitting your business,
I haven't done my job. But if you project a 20% increase in revenue (assume you're doing $60K monthly)
that's an annual increase of $144K annually, year after year all things being the same.
So, if I'm getting you $50K for $77,500 (1.35), money is costing you $17,500.
Is it worth $17,500 to jump revenue by $144K, or is it better to just be stagnant.You either win or you learn. The only failure is in quitting.
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09-05-2018, 12:09 PM #19Karen37aGuest
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09-05-2018, 12:36 PM #20Karen37aGuest
( almost ) All the people who wanted Regulation can list how this was helpful if they would like
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09-05-2018, 01:18 PM #21
Karen if you feel like you need to add more commentary, just edit your previous post. Some of these threads have 3 and 4 posts in a row all from you and it's hard to find other people's input.
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09-05-2018, 01:22 PM #22
There are at least a couple lenders (we know) that use proper full disclosure on the loan they issue (which looks like an MCA but is called loan).
Jonathan Kohanoff
B.R.E. #01962090
Diamond Business Loans
Beverly Hills, CA 90211
jon@diamondbl.com
www.DiamondBL.com
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09-05-2018, 01:59 PM #23
- Join Date
- Jun 2015
- Posts
- 3,325
as of now is this only for California ? if yes i will say that funders will just walk away from that state
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09-05-2018, 03:27 PM #24Karen37aGuest
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09-07-2018, 11:48 AM #25Karen37aGuest
This was a doozy of a fight... I think west coast was commenting on von mise
https://dailyfunder.com/showthread.p...Dodd-Frank-Act
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And here is the actual result article Sept 2018
http://www.investmentnews.com/articl...FREE/180909974
The Department of Labor's fiduciary rule led to "tremendous" losses for brokerage and other investment firms, causing billions of dollars to be shed from their market valuations as investors feared the rule would hurt profitability, according to a new report.
The report examines the stock prices of 36 publicly traded brokerage, mutual fund and life insurance companies, finding they lost a total $14 billion in value as a direct result of the fiduciary rule.
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BICE
June 21, 2018, the U.S. 5th Circuit Court of Appeals officially vacated the rule, effectively killing it. The rule, and the cost and burden of complying with it, was the source of much anxiety among financial advisors. In the original draft, there was a requirement of ongoing disclosure of compensation over the life of a product, no clear limits on liability which would be decided by the plaintiffs’ bar.
Read more: Best-Interest Contract Exemption (BICE) Definition | Investopedia https://www.investopedia.com/terms/b...#ixzz5QQwghRsP
Edit Add*** ...my comments on BICE https://dailyfunder.com/showthread.p...her-industries
*** this Calif bill will most likely go into appeal and then be challenged to be vacated
https://www.natlawreview.com/article...ce-disclosures
Unless industry trade groups can persuade Governor Brown not to sign this poorly drafted bill, many companies offering commercial financing in California will have to choose between challenging the law in court and limiting the financing options they offer in the state. For example, companies may stop offering merchant cash advances and analogous loan products, depriving California merchants of the ability to align their financing obligations with their cash flow. This surely is not the result intended by the bill’s sponsors.
( but I said that would be the net result)Last edited by Karen37a; 09-07-2018 at 01:30 PM. Reason: add bice comments
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