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04-24-2020, 08:32 AM #1
- Join Date
- Feb 2017
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- 3,426
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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04-24-2020, 08:39 AM #2
- Join Date
- Jan 2020
- Location
- New York, NY
- Posts
- 102
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04-24-2020, 09:35 AM #3
- Join Date
- Jul 2018
- Posts
- 54
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04-24-2020, 09:56 AM #4
- Join Date
- Apr 2020
- Location
- Broomall, PA
- Posts
- 123
Michah,
You are 100% correct on everything you have said, especially the lines about saving their business.
And again, we have no adversarial relationships with any MCA companies. They are happy to get their capital back from a merchant who is struggling with cash flow.
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