[SFC]

I think a lot (most) of the people on this forum now were not in MCA in 2008. Would love to hear from brokers and funders alike on what your experience was on the way down and the way up. How long it lasted, how long it took to come back etc.

I think that would give a lot of guidance to people right now when the government and no one else will.

Thanks in advance,

[mrmrg]

Buckle up!

[Jack23]

This is nothing like 2008, we are in a brave new world now & if anyone say's different; there is only 2 possible conclusions...A.) They are in a state of extreme normalcy bias or 2.) In a mind set of the following; denial, anger, bargaining, depression or acceptance.

[Kevin Henry-Seacoast]

SFC,

I have been involved in various roles in capital markets since 1991. Back in 2008 I was an investment banker for a large German Family Office in Florida. We executed most of their M&A activity in the US and originated and placed proprietary investment banking transactions with other Family Offices, Private Equity Funds, Lenders...both traditional an non-traditional, corporate clients, etc....

Back in 2008 I financed a factoring company. They were growing quickly up until the collapse and their bank pulled their line. They also lost a number of customers as they just simply went out of business. I placed an equity round with a Private Equity fund. The round allowed them to fund small factoring deals with current clients and originate some new business. When the market finally turned they were able to obtain a bank line again. Their equity partner remained in the deal. They survived and are doing quite well.

So to answer your question....
-Small companies will go out of business
-Finance companies may lose their traditional lines and be forced to seek alternatives: equity or more expensive debt from hedge funds. Some may likely just go out of business.
-The recovery of 2008-2009 really did not start to make upward progress until late 2010. I expect that if this causes another recession, it will take much longer to recover.

[Michael I]

i would say half did not come back up. you will need a funder who can tell u for sure but i remember iso rep telling me that the one man shops disappear than

[mcaguru]

In MCA since 2005. I don't think you can compare this to others times. in 2008 the entire economy was struggling with most houses underwater (value from purchase)/ high unemployment etc. here i will only touch on the positive outlooks ( ill let chambo discuss the negative outlooks) i see 2 scenarios: 1. the virus runs its course numbers slow down and it phases itself out sooner then later. 2. (ill explain with a little background) when big Pharma bring a drug to market its only after a few stages 1. Discovery/ Pre-clinical 2. Clinical Trials Phase 1-2-3 and than goes at times half a decade before it gets FDA Approval (meaning if it passes phase 3 its determined that its effective and then they file at times 10,000 documents to FDA and after dragged out process it may get FDA Approval) with that said the bottom-line is IF this virus just gave 100% of those effected, fever and then fully recover this would be no real issue (similar to other colds) ---its the % of deaths that takes place that we are all concerned about---- now here comes my prediction (can be wrong) the FDA (VIA BIG PHARMA) may already have in the pipeline a drug that lowers the death rate (by either increasing lung function --which is the killer and buy enough time for those at major risk to recover) and if death rate goes to 0.etc via the new drugs that gets pushed into-use, then the death outcome will decrease and the concern will diminish and economy will roar back --- wishful thinking ? !

[abfunders]

If you're just selling MCAs all day in the first place, then you've been placing all of your eggs in one basket. Diversify in your brokered products and you'll have some action. Real estate funders are all still funding.

[WestCoastFunding]

If you're just selling MCAs all day in the first place, then you've been placing all of your eggs in one basket. Diversify in your brokered products and you'll have some action. Real estate funders are all still funding.

This.

[WestCoastFunding]

In MCA since 2005. I don't think you can compare this to others times. in 2008 the entire economy was struggling with most houses underwater (value from purchase)/ high unemployment etc. here i will only touch on the positive outlooks ( ill let chambo discuss the negative outlooks) i see 2 scenarios: 1. the virus runs its course numbers slow down and it phases itself out sooner then later. 2. (ill explain with a little background) when big Pharma bring a drug to market its only after a few stages 1. Discovery/ Pre-clinical 2. Clinical Trials Phase 1-2-3 and than goes at times half a decade before it gets FDA Approval (meaning if it passes phase 3 its determined that its effective and then they file at times 10,000 documents to FDA and after dragged out process it may get FDA Approval) with that said the bottom-line is IF this virus just gave 100% of those effected, fever and then fully recover this would be no real issue (similar to other colds) ---its the % of deaths that takes place that we are all concerned about---- now here comes my prediction (can be wrong) the FDA (VIA BIG PHARMA) may already have in the pipeline a drug that lowers the death rate (by either increasing lung function --which is the killer and buy enough time for those at major risk to recover) and if death rate goes to 0.etc via the new drugs that gets pushed into-use, then the death outcome will decrease and the concern will diminish and economy will roar back --- wishful thinking ? !

The only way to bring the death rate to 0 will be a vaccine. And Dr Fauci stood on stage in front of Trump the other day and said that will take 12-18 months to complete.

[SFC]

In MCA since 2005. I don't think you can compare this to others times. in 2008 the entire economy was struggling with most houses underwater (value from purchase)/ high unemployment etc. here i will only touch on the positive outlooks ( ill let chambo discuss the negative outlooks) i see 2 scenarios: 1. the virus runs its course numbers slow down and it phases itself out sooner then later. 2. (ill explain with a little background) when big Pharma bring a drug to market its only after a few stages 1. Discovery/ Pre-clinical 2. Clinical Trials Phase 1-2-3 and than goes at times half a decade before it gets FDA Approval (meaning if it passes phase 3 its determined that its effective and then they file at times 10,000 documents to FDA and after dragged out process it may get FDA Approval) with that said the bottom-line is IF this virus just gave 100% of those effected, fever and then fully recover this would be no real issue (similar to other colds) ---its the % of deaths that takes place that we are all concerned about---- now here comes my prediction (can be wrong) the FDA (VIA BIG PHARMA) may already have in the pipeline a drug that lowers the death rate (by either increasing lung function --which is the killer and buy enough time for those at major risk to recover) and if death rate goes to 0.etc via the new drugs that gets pushed into-use, then the death outcome will decrease and the concern will diminish and economy will roar back --- wishful thinking ? !

Appreciate the positivity but at this point mass layoffs have begun. Unemployment offices are already overwhelmed (google it). Every SMB I talk to has laid people off and plans to do more and a growing number are worried about closing the door.

Michael Burry (guy from The Big Short) said it best earlier this week: "With COVID-19, the hysteria appears to me worse than the reality, but after the stampede, it won't matter whether what started it justified it."

It doesn't matter when or how we recover, the panic and uncertainty seemed to have ruined it all.

For anyone looking for some hope, I do have a tiny Bio background, the only drug thats even close, Remdesivir is in trials in China and the US. The initial result on the first patient was GREAT. The interim readout was eh. https://www.biospace.com/article/a-p...-19-treatment/ but the trial will conclude in April. It is our only real hope at normalcy. It would have to be near 100% effective at saving lives and would have to signficinatly lower the need for a ventilator or hospital stay otherwise we'll deal with the same "Flatten the Curve (destroy our economy)" issue we still have now.

Here's hoping.

[WestCoastFunding]

The time to get ahead of this thing was in January and February. We didn’t. Instead we were told it was under control and headed toward zero. That was a lie. Now, I’d imagine that 95% of ISO shops will close up. And whoever is left will be handling nothing but health/medical care, grocery stores, guns/ammo and funeral homes. And only 1st positions.

[mcaguru]

The only way to bring the death rate to 0 will be a vaccine. And Dr Fauci stood on stage in front of Trump the other day and said that will take 12-18 months to complete.

even vaccine don't cover 100% --the Virus itself is not cuasing death its decrease lung function (Pneumonia) if there are breakthrough drugs that has been in fda-wait-stage that increses lung function and decreases death rate that would help ease the panic.... will know very quickly if that's even on the table. (my hunch is there is something)

[WestCoastFunding]

even vaccine don't cover 100% --the Virus itself is not cuasing death its decrease lung function (Pneumonia) if there are breakthrough drugs that has been in fda-wait-stage that increses lung function and decreases death rate that would help ease the panic.... will know very quickly if that's even on the table. (my hunch is there is something)

They are dying from more than decreased lung function. They are dying from Septic shock and multiple organ failure, too.

[cmarks]

even vaccine don't cover 100% --the Virus itself is not cuasing death its decrease lung function (Pneumonia) if there are breakthrough drugs that has been in fda-wait-stage that increses lung function and decreases death rate that would help ease the panic.... will know very quickly if that's even on the table. (my hunch is there is something)

your 1st option if numbers slow down doesnt mentioned deaths but is really best case scenario with all that is being implemented, you didnt include worse case or average case. worse case is millions infected, hundreds of thousands or millions die at even a mortality rate of 1-2%. Because hospitals and other medical treatment staff overwhelmed and lack of equipment this will be the main downfall even with some of your mentioned drugs to treat it.

[mcaguru]

your 1st option if numbers slow down doesnt mentioned deaths but is really best case scenario with all that is being implemented, you didnt include worse case or average case. worse case is millions infected, hundreds of thousands or millions die at even a mortality rate of 1-2%. Because hospitals and other medical treatment staff overwhelmed and lack of equipment this will be the main downfall even with some of your mentioned drugs to treat it.

How many people have it cant be pinpointed -- However actual deaths will always be realized. Lets take Israel for example they had cases early on # is currently at 433 cases with zero deaths -- what are they doing there to have 0? I dont know --Switzerland 2700 cases 27 deaths. ---my point is can Switzerland or Israel have MUCH higher case numbers in the general population not tested ? - YES 100% but no one is dying and slipping trough the data cracks !!

[cmarks]

How many people have it cant be pinpointed -- However actual deaths will always be realized. Lets take Israel for example they had cases early on # is currently at 433 cases with zero deaths -- what are they doing there to have 0? I dont know --Switzerland 2700 cases 27 deaths. ---my point is can Switzerland or Israel have MUCH higher case numbers in the general population not tested ? - YES 100% but no one is dying and slipping trough the data cracks !!

well yea its all about testing, and we lack it. deaths of course are counted if you believe certain governments.
heres an article https://www.reuters.com/article/us-h...-idUSKBN21415L

heres a summary by @Jeremycyoung of the document its referring to:
"
The Imperial College team plugged infection and death rates from China/Korea/Italy into epidemic modeling software and ran a simulation: what happens if the US does absolutely nothing -- if we treat COVID-19 like the flu, go about our business, and let the virus take its course?
Here's what would happen: 80% of Americans would get the disease. 0.9% of them would die. Between 4 and 8 percent of all Americans over the age of 70 would die. 2.2 million Americans would die from the virus itself.
It gets worse. People with severe COVID-19 need to be put on ventilators. 50% of those on ventilators still die, but the other 50% live. But in an unmitigated epidemic, the need for ventilators would be 30 times the number available in the US. Nearly 100% of these patients die.

Now, of course countries won't stand by and do nothing. So the Imperial College team ran the numbers again, this time assuming a "mitigation" strategy: all symptomatic cases in the US in isolation. Families of those cases quarantined. All Americans over 70 social distancing. This mitigation strategy is what you've seen a lot of people talking about when they say we should "flatten the curve": try to slow the spread of the disease to the people most likely to die from it, to avoid overwhelming hospitals

Finally, the Imperial College team ran the numbers again, assuming a "suppression" strategy: isolate symptomatic cases, quarantine their family members, social distancing for the whole population, all public gatherings/most workplaces shut down, schools and universities close. Suppression works! The death rate in the US peaks 3 weeks from now at a few thousand deaths, then goes down. We hit but don't exceed the number of available ventilators. The nightmarish death tolls from the rest of the study disappear.

But here's the catch: if we EVER relax suppression before a vaccine is administered to the entire population, COVID-19 comes right back and kills millions of Americans in a few months, the same as before.

After the 1st suppression period ends in July, we could probably lift restrictions for a month, followed by 2 more months of suppression, in a repeating pattern without triggering an outbreak or overwhelming the ventilator supply. Staggering breaks by city could do a bit better
""

[WestCoastFunding]

your 1st option if numbers slow down doesnt mentioned deaths but is really best case scenario with all that is being implemented, you didnt include worse case or average case. worse case is millions infected, hundreds of thousands or millions die at even a mortality rate of 1-2%. Because hospitals and other medical treatment staff overwhelmed and lack of equipment this will be the main downfall even with some of your mentioned drugs to treat it.

Had a medical clinic tell me they are using maxi pads while giving IV because they can’t get gauze pads.

[WestCoastFunding]

How many people have it cant be pinpointed -- However actual deaths will always be realized. Lets take Israel for example they had cases early on # is currently at 433 cases with zero deaths -- what are they doing there to have 0? I dont know --Switzerland 2700 cases 27 deaths. ---my point is can Switzerland or Israel have MUCH higher case numbers in the general population not tested ? - YES 100% but no one is dying and slipping trough the data cracks !!

Cmarks is right. This doesn’t mean ****.

Trump was touting no deaths in West Virginia the other day, only for the senator to come on TV this morning saying “that’s because they’ve only had 400 tests”.

The infection and death rates are no doubt high but unsubstantiated because we don’t have tests. This is a ****ing monumental failure — all because some ****ing moron in the WH and these pieces of **** on FOX news spent months downplaying it while this turned into a ****ing pandemic. Telling us they have it under control. That we will soon be at 0. That it will be gone by April. Blaming the news.

[Sean Cash]

I think a lot (most) of the people on this forum now were not in MCA in 2008. Would love to hear from brokers and funders alike on what your experience was on the way down and the way up. How long it lasted, how long it took to come back etc.

I think that would give a lot of guidance to people right now when the government and no one else will.

Thanks in advance,

I was doing MCA in '08. It wasn't the spike in defaults that dried everything up, at least not in MCA at first, it was that all the credit lines to the MCA funders got pulled. Investors wanted to hold on to their money instead of have it deployed and that is what brought about the end for a lot of players. It's a great reassurance to be a true balance sheet funder right now for sure. Or to have investors with nerves of steel. I worked at MCC/Bizfi during '08. Funding slowed down a lot for a while and then picked right back up. #1 reason being that all bank lending had completely stopped. All the criticism that MCA funders had been getting from the media stopped and it turned to praise (albeit silently) for bravely doing what no other institution in America was willing to do, keep the capital flowing into small businesses.

[abfunders]

Sean, thank you for the insight.

Something else that this should be teaching people, albeit it's a bit late to think about it, is that, in general, people and businesses live way over-leveraged. Hopefully liquidity will come back very quickly once this passes.

[fundpro1]

I had the pleasure of working directly with Sean during that time period and he is exactly right on all points. Credit facilities dried up for a bit but bounced back relatively quickly. Sean is also correct that the general impression of the entire industry changed.

[MCA]

Cmarks is right. This doesn’t mean ****.

Trump was touting no deaths in West Virginia the other day, only for the senator to come on TV this morning saying “that’s because they’ve only had 400 tests”.

The infection and death rates are no doubt high but unsubstantiated because we don’t have tests. This is a ****ing monumental failure — all because some ****ing moron in the WH and these pieces of **** on FOX news spent months downplaying it while this turned into a ****ing pandemic. Telling us they have it under control. That we will soon be at 0. That it will be gone by April. Blaming the news.

This became a pandemic because the Chinese Communist Party lied about it.

The massive Govt which created regulatory roadblocks, like they do in anything they are involved in is what caused delays, not the President or a news station.

97% survival rate, 99.5% survival rate for those under 60.

I believe, we will overcome this sooner than most expect. Probably another 3 - 4 weeks of rising numbers and then it will start to drop. The goal is to be like South Korea, not Italy and Iran.

[WestCoastFunding]

This became a pandemic because the Chinese Communist Party lied about it.

The massive Govt which created regulatory roadblocks, like they do in anything they are involved in is what caused delays, not the President or a news station.

97% survival rate, 99.5% survival rate for those under 60.

I believe, we will overcome this sooner than most expect. Probably another 3 - 4 weeks of rising numbers and then it will start to drop. The goal is to be like South Korea, not Italy and Iran.

Blaming the Chinese for our own government's failures doesn't cut it. We refused the WHO tests because the Trump administration wanted the CDC to create their own tests so we could say they were "Made in America". The CDC tests ended up being an abject failure. All while Trump himself was telling us that "anyone that wants to get tested can get tested".

[cmarks]

This became a pandemic because the Chinese Communist Party lied about it.

The massive Govt which created regulatory roadblocks, like they do in anything they are involved in is what caused delays, not the President or a news station.

97% survival rate, 99.5% survival rate for those under 60.

I believe, we will overcome this sooner than most expect. Probably another 3 - 4 weeks of rising numbers and then it will start to drop. The goal is to be like South Korea, not Italy and Iran.

youre kidding yourself if you think ONLY china is to blame, of course they lied and senators like RUbio were calling them out in Dec, not the president, who called it a hoax and like westcoast said that it would go away. media overhyping it was actually what most people were saying in middle of february, they were wrong

[Jess]

I think a lot (most) of the people on this forum now were not in MCA in 2008. Would love to hear from brokers and funders alike on what your experience was on the way down and the way up. How long it lasted, how long it took to come back etc.

I think that would give a lot of guidance to people right now when the government and no one else will.

Thanks in advance,

Underwriting was much tighter, 95% splits, low average ticket, high number of transactions average deal 6 months at 1.42. Portfolio had a 17% default rate. Now, less stringent underwriting, high dollar ticket, less transactions, longer duration, ACH, weekly or monthly payments and massive amounts of stacking. Completely different-most importantly, most merchant were still open but sales were lower. Many businesses that close for shut downs will NOT reopen. 30%+ default rates likely.