[Spike_likes_football]

new to the boards and was curious if anyone had examples of MCA firms that didn't make it (blew up in the credit crunch, fraud, any reason really)? mostly want to understand some of the historic bad business practices that should be avoided

thanks in advance

[Sean Cash]

Fast Capital
Merit Capital Advance
iFunds
Reach Financial
Global Swift Funding
Infinicap
First Funds
CashReady

All for different reasons.

[Sean Cash]

Global Swift Funding was wiped out by a single merchant. They funded dozens of locations for a chain of restaurants that all declared bankruptcy: http://www.ocregister.com/articles/g...y-million.html

Merit Capital Advance had no idea how to underwrite and paid too high commissions.

Fast Capital got killed off by bad debt. They didn't ask for bank statements at all back then. Just 3 merchant statements and a credit report.

iFunds is a classic example of a credit card processor thinking they can do MCA just by monitoring split performance with other funders on their platform. iFunds was owned by iPayment and iFunds is no more due to bad debt.

[Spike_likes_football]

great - thanks. super helpful

[funding pro]

I remember speaking with one of Merit's top guys after they shut down. Forget not knowing how to underwrite, they didnt underwrite. Their entire business model was that if their funding in month 1 is X, if the funding in month 2 is 2X even if your bad debt is around 15% it will look significantly lower.

[Spike_likes_football]

Thanks guys - it's been a bit of a murky research project but it really seems like the trends are:

- balance sheet mismanagement
- Crappy underwriting (or lack thereof)

all in an effort to achieve scale