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  1. #1
    Karen37a
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    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.

    __

    the amended version of the bill needs to get approval in both the Assembly and the Senate by Friday before the legislative session ends.

    __

    **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 regulated
    Last edited by Karen37a; 09-01-2018 at 07:52 PM.

  2. #2
    Karen37a
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    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.

  3. #3
    Karen37a
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    Edit

    GL
    Last edited by Karen37a; 09-03-2018 at 12:42 PM.

  4. #4
    So this CA bill proposed by Glazer died in committee??

  5. #5
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Quote Originally Posted by BB_Cooper View Post
    So this CA bill proposed by Glazer died in committee??
    Yes, but then parliamentary procedure was challenged, the bill was withdrawn from the committee and just fast tracked to the floor for a vote. It passed. it will become the law, just needs the governor's signature (this is his party's bill).

  6. #6
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    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.

  7. #7
    Karen37a
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    Quote Originally Posted by sean bash View Post
    Yes, but then parliamentary procedure was challenged, the bill was withdrawn from the committee and just fast tracked to the floor for a vote. It passed. it will become the law, just needs the governor's signature (this is his party's bill).
    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

  8. #8
    Karen37a
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    Quote Originally Posted by abfunders View Post
    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.
    You still wont make sales if you are not a salesperson...its a dream

    We are salespeople...anyone who doesnt want to be a salesperson can get a job as a non sales person I would assume

  9. #9
    Karen37a
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    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 with
    Last edited by Karen37a; 09-05-2018 at 11:14 AM.

  10. #10
    Senior Member Reputation points: 86751
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    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

  11. #11
    Karen37a
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    Quote Originally Posted by fundingsmbs View Post
    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

    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

    __

    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

  12. #12
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    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?...

  13. #13
    Karen37a
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    Quote Originally Posted by fundingsmbs View Post
    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?...
    200%? lol not compounded?

    what is a renewal on A paper 1 .20 50k additional 50k at 1.20...i bet its more than 20% ..guessing its always 6666


    but if it pays back early double that
    Last edited by Karen37a; 09-05-2018 at 12:35 PM.

  14. #14
    Senior Member Reputation points: 18667 jdlaw's Avatar
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    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.

  15. #15
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    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

  16. #16
    Karen37a
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    Quote Originally Posted by jdlaw View Post
    Personally, I don't do CA for numerous reasons. I just wait for the businesses to move to TX or FL then fund'em.
    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

  17. #17
    Karen37a
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    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*

  18. #18
    Senior Member Reputation points: 18667 jdlaw's Avatar
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    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.

  19. #19
    Karen37a
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    Quote Originally Posted by jdlaw View Post
    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.


    I agree. The same for me but unfortunately this was a hail mary for some brokers who can't sell. Some that are out of business. They thought it would help them somehow...no matter how many word salad posts i made people will have to experience it for themselves

  20. #20
    Karen37a
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    ( almost ) All the people who wanted Regulation can list how this was helpful if they would like

  21. #21
    Administrator Reputation points: 55342 admin's Avatar
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    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.

  22. #22
    Senior Member Reputation points: 5036 DiamondBL's Avatar
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    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

  23. #23
    Senior Member Reputation points: 301165
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    as of now is this only for California ? if yes i will say that funders will just walk away from that state

  24. #24
    Karen37a
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    Quote Originally Posted by Michael I View Post
    as of now is this only for California ? if yes i will say that funders will just walk away from that state
    I agree. And they will walk away from other states that follow along. People cant demand risky capital at low rates from people. Default ratios prove its not working model.

    Id search for my posts on default ratios/ sba statistics etc ...but it isnt worth the energy

  25. #25
    Karen37a
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    This was a doozy of a fight... I think west coast was commenting on von mise

    https://dailyfunder.com/showthread.p...Dodd-Frank-Act

    __

    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.


    __
    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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