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04-24-2020, 08:32 AM #20
- Join Date
- Feb 2017
- Posts
- 3,411
FHF, there are no rules in the industry, remember? It's still the wild west. "It's technically considered a default" is in the eyes of the beholder. Everyone wants to not pay a premium for money, and there's nothing wrong or illegal about good-faith negotiations. If the MCA companies cared about "their" merchants, then they would be thrilled that they found something else. Instead, it's a show of "selling cash" and selling bandaids as "real" solutions. Funders have obligations to resell their investors money, and want the entire balance paid-in-full. The funders legally bought the future receivables, there's nothing wrong with them demanding the entire amount (there is a contract after all ), but there's something wrong with someone saying that good faith negotiations are "technically defaults."
If a merchant successfully negotiated an early payoff, there's no law stating that the funder needs to write "settled" on a ZBL, nothing preventing them from saying "paid in full." They just might do it anyway. Both may be accurate statements.
Also, I don't think that a merchant who's entering a 24-month program with a balloon will be going back for MCAs so quickly (at least I hope not). Saving the merchant the money on the payoff and increasing cash-flow might save their business.
Trying not to take sides, just pointing out what is obvious to me.
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