[Mynameisbob]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

[Kevin Henry-Seacoast]

Bob,

If the prospect has a $10Mil net worth, how is he not able to leverage personal holdings to obtain the funds needed to acquire the business. Are the other 5 companies in a similar business under a holding company? Perhaps financing the holding company unlocks enough liquidity to get the financing needed.
How much equity is the prospect putting up to buy the target company?

KH

[Mynameisbob]

Kevin,

He wants to go Unsecured. He does not want to tie up any personal assets.

The other 5 companies he is a 45-55 % shareholder, so he does not want to tie those up.

[Yankeeman07]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

Read your Funding Contract - everyone I have reviewed has a "No Stacking Clause" plus, Funder 1 is purchasing "All Future Receivables" so if they are stacked, the Merchant is in violation of his contract.

To many in this Industry, contracts have no meaning, which is why the Industry has Investigations and legislation coming at it.

[abfunders]

Dave, you again show your ability to read.
Not every contract has a do not stack clause.
And there is such a thing as a "second position" in every type of financing. Second mortgages are very common. WBL is a high-risk second mortgage.

[Kevin Henry-Seacoast]

Dave, you again show your ability to read.
Not every contract has a do not stack clause.
And there is such a thing as a "second position" in every type of financing. Second mortgages are very common. WBL is a high-risk second mortgage.

There is such a thing as a second position in many types of financing, but it the 1st position lender has filed a UCC1 and has a security interest in all the business assets....by taking the second position your are risking a default in the original financing. If the UCC1 and security agreement exists you need a subordination agreement or inter-creditor agreement in place to avoid a conflict with the lender.

[abfunders]

It's all about what it states in the contract.
Of course, if you stack someone in a way that threatens default on the previous ones.
Tell that to OnDeck, who stacks banks with UCC1's all day long with billions of dollars.

[Kevin Henry-Seacoast]

Hence the reason why some banks will lock down an account if the client has a facility with them with all assets pledges and the client obtains financing without the proper permissions or documentation in place. For years many banks have let it slide as they did not want to upset the relationship with the client if the client is current with their facility. Now some banks are enforcing their agreements, especially if the financing upset the ability for the company to pay the bank back.

As far as OnDeck is concerned..... I don't think the banks that have provided them lines or access to capital and accounts are thrilled about them stacking their own clients.

[Michael I]

To many in this Industry, contracts have no meaning, which is why the Industry has Investigations and legislation coming at it.

Any thing coming will be pro the merchant not pro the funder .stuff like showing breakdown and interest will be the first

[Michael I]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

who is lender A that is giving someone doing 250k 430k ?
are you talking about stacking or double funding with neither knowing about each other?
funding both at a 12 month will put him at 30% which is getting high , if it is shorther than even worse and it makes no difference that there are other business

[OC Funder]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

As a broker you are a professional middle man, which means you have an obligation to both sides of the relationship - funder and merchant. If you are upfront and transparent with the merchant about what he's getting into then you are good on that side, but I'd say you've failed your ethical obligation to the first position funder by stacking a transaction that you were paid a commission for.

[Lmonus]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

Recipe for disaster.

[WestCoastFunding]

I'd like to know how the community feels on this topic.

I have a Merchant that needs 800K to purchase a new business. Wants to take out as many MCAS as he can in order to get to 800K

He has multiple companies but only wants to use one company that's doing around 250-350K a month and keeps great balances

So far I have 2 approvals below:

Lender A approved for 430K 1st

Lender B Approved for 175K 2nd

Is this ethical on my part to stack him up? The guy has 5 other businesses and has over a 10M net worth and is more than capable of paying it back.

If the merchant is doing $250-350K a month, they won’t qualify for $800k. And the only way you could fund $175K on the $430K is if they’re done side by side without either funders know about it, because there’s no way that $175K offer holds after funding the $430k. If that’s the case, it’s definitely unethical.

[Garth Butcher]

Would love to be Lender B here

[Sachip24]

to come on a forum to ask if its ethical to stack a merchant 800k deep in mca's when he has other businesses you can use to get it done is kind of suspect

[Mynameisbob]

Lender b is already aware of the terms on the 1st position. I don’t see any verbiage in the contract that says anything about stacking.

[WestCoastFunding]

Lender b is already aware of the terms on the 1st position. I don’t see any verbiage in the contract that says anything about stacking.

Funder A is giving an approval for $430K because that’s the max they think they can debt service. To add an additional payment (shorter term/higher rate) destroys Funder A’s debt service model. If they knew about what was intended, they’d kill the deal.

[Sachip24]

If you want to be ethical tell lender A you are stacking them with 3-4 other lenders behind them because your merchant needs 800k and see if they give you the green light to move forward.

[Atlas Financial]

interesting..

[Mynameisbob]

Ok I see your point

[Mynameisbob]

Funder A is giving an approval for $430K because that’s the max they think they can debt service. To add an additional payment (shorter term/higher rate) destroys Funder A’s debt service model. If they knew about what was intended, they’d kill the deal.

Ok I see your point. Shouldn't Funder B notify Funder A?

[Mynameisbob]

to come on a forum to ask if its ethical to stack a merchant 800k deep in mca's when he has other businesses you can use to get it done is kind of suspect

So why doesn’t lender B inform lender A? I have no problem telling Funder A.

Am I obligated to disclose the second funding to Funder A? The merchant will more than likely receive calls from other funders and offer right after the 1st funding takes place anyway.

[Mynameisbob]

Recipe for disaster.

Recipe for disaster?
Lmao you guys would love to be apart of this party.

[Yankeeman07]

It's all about what it states in the contract.
Of course, if you stack someone in a way that threatens default on the previous ones.
Tell that to OnDeck, who stacks banks with UCC1's all day long with billions of dollars.

You are missing point - Read the "Negative Pledge" of any MCA