[Winning]

Due to the shutdown, I realize that I may have to default on an advance I am in.

As with most things, there is a right way and a wrong way to do anything.

So I am all ears to listen to any advice you all could give a merchant regarding the best way to go about defaulting if it comes to that.

Will just closing the business be all that is required? Will I need to file for personal Bankruptcy? Will the lender just decide to move repayments out for months to see if I can get revenue back up? So many questions...

Are there people that specialize in this that I can consult with?

[WestCoastFunding]

Due to the shutdown, I realize that I may have to default on an advance I am in.

As with most things, there is a right way and a wrong way to do anything.

So I am all ears to listen to any advice you all could give a merchant regarding the best way to go about defaulting if it comes to that.

Will just closing the business be all that is required? Will I need to file for personal Bankruptcy? Will the lender just decide to move repayments out for months to see if I can get revenue back up? So many questions...

Are there people that specialize in this that I can consult with?

Go to the funder and tell them you have no income. See if they’ll pause for a couple months. See what they say and go from there.

[Winning]

When the shelter in place 1st happened I called my lender and they did stop the repayment drafts.. But eventually I will need to face the music and figure out what my options are in the event I am unable to pay for months or decide to close my business completely until the economy bounces back.

[SmartAdvanced]

When the shelter in place 1st happened I called my lender and they did stop the repayment drafts.. But eventually I will need to face the music and figure out what my options are in the event I am unable to pay for months or decide to close my business completely until the economy bounces back.

Dude just ****ing default and block payments. Let them kiss your ass. Don’t even pick up the phone when they call. Send them a **** you emoji.

[KanjorskiPartners]

Merchant cash advance companies have always been know to be aggressive when payments are missed and/or in a default scenario. They have historically been quick to enter COJs, to start illegally grabbing receivables from an unsecured position and some companies even terrorize the borrowers. I know they are ALL singing a different tune now. Losing good borrowers to better rates and terms and especially with COVID there is a spike in defaults and utter meltdown within their book of business.

[HDF]

Merchant cash advance companies have always been know to be aggressive when payments are missed and/or in a default scenario. They have historically been quick to enter COJs, to start grabbing receivables from an unsecured and some companies even terrorize the borrowers. I know they are ALL singing a different tune now. Losing good borrowers to better rates and terms and especially with COVID there is a spike in defaults and utter meltdown within their book of business.

Hi CIO. They don't have "borrowers" in the first place. You know that right?

[WestCoastFunding]

Dude just ****ing default and block payments. Let them kiss your ass. Don’t even pick up the phone when they call. Send them a **** you emoji.

Haha. I’d imagine this is 50% of merchants right now.

[KanjorskiPartners]

Of course, they are selling their receivables and not borrowing. Either way, their "customers" have the power now.

[Winning]

Dude just ****ing default and block payments. Let them kiss your ass. Don’t even pick up the phone when they call. Send them a **** you emoji.

The funny thing is that I don't know if this is satire or if this is honest advice. ????

[WestCoastFunding]

The funny thing is that I don't know if this is satire or if this is honest advice. ????

He’s being honest. The Funders are desperate as hell.

[Winning]

I've been pretty much a Lannister in a literal sense when it comes to paying what I owe. And a Lannister all ways pay their debts (Game of Thrones reference).

I would rather not burn any bridges, so if there is away I can handle this respectably and above board I would. Cause in 1, 2, or 3 years when I rise from the ashes, I would want to be in the best favor possible giveen the situation, so if I needed access to capital again my character will be able to do some speaking. I may have an 800 credit score now, but when all this is said and done, I am not sure what it will be. So if a good character history, helps me in the future, I will take it.. I'm playing chess not checkers, and need to be thinking 5, or 10 moves ahead.

How do I best play the current hand that I have been dealt so that after a few more hands still get up from the table a winner?

Winners Win.

[Winning]

He’s being honest. The Funders are desperate as hell.

WOW! That is hard for me to believe.. Just say 4uck it!... Really...

The company that I am in an advance with is Paypal.... The history I have with them is crazy... When I 1st started selling things on Ebay back in high school in the 90's they have been there for me.. All the way through present day where they gave me a no doc, no stip advance for 100K with a payback of 105K.. Based on my history with them is the reason they said they could do such a deal for me in the 1st place...

I just hate to flush all that down the toilet.

[HDF]

Aside: What about all of the Brokers/Independents who will not be able to gain any or as much benefit from federal assistance or unemployment simply because a number of "Funders" or ISOs didn't issue 1099s in 2018, 2019 or both? Really hard to tell them they are essentially out of luck. Anyone else getting this question?
Edit: Sorry WINNING for stepping on your post. My bad

[WestCoastFunding]

WOW! That is hard for me to believe.. Just say 4uck it!... Really...

The company that I am in an advance with is Paypal.... The history I have with them is crazy... When I 1st started selling things on Ebay back in high school in the 90's they have been there for me.. All the way through present day where they gave me a no doc, no stip advance for 100K with a payback of 105K.. Based on my history with them is the reason they said they could do such a deal for me in the 1st place...

I just hate to flush all that down the toilet.

I would go to PayPal and explain exactly where you are at. Ask them how best this can be handled. See if they can pause payments for a few months and go from there. I’d imagine that is a company in which you want to have the best of terms with.

[Fly]

Aside: What about all of the Brokers/Independents who will not be able to gain any or as much benefit from federal assistance or unemployment simply because a number of "Funders" or ISOs didn't issue 1099s in 2018, 2019 or both? Really hard to tell them they are essentially out of luck. Anyone else getting this question?
Edit: Sorry WINNING for stepping on your post. My bad

If you are a 1099/sole prop you can apply for PPP loan which gives you 2.5x of your avg monthly income from 2019. If you are 1099/Sole Prop, Corp, or LLC without w2 employees you can apply for the low interest EIDL loan.

[Shorebird]

Funders can go kick rocks. They funded, they took the risk. Who cares about funders? Hope they all close down.

Don't you read Debanked?

https://www.jdsupra.com/legalnews/co...ergency-71980/

[Winning]

I would go to PayPal and explain exactly where you are at. Ask them how best this can be handled. See if they can pause payments for a few months and go from there. I’d imagine that is a company in which you want to have the best of terms with.

Thanks... When I originally called them the said they would stop the payments immediately for 4 weeks and to call them back if i need more time. That was about 2 weeks ago.. So I will call them next week to extend it..

[Winning]

Funders can go kick rocks. They funded, they took the risk. Who cares about funders? Hope they all close down.

Don't you read Debanked?

https://www.jdsupra.com/legalnews/co...ergency-71980/

Why the disdain towards Funders?

I thought yall (Iso's, Broker's, Funders's, etc...) was 1 big happy family...

[Christian]

Guide them through a true-up, and avoid defaulting. Read the contract...

[KanjorskiPartners]

Has anyone every used the clause in most MCA contracts to true up to actual deposits and alter the payments? Do MCA companies even adjust in this fashion upon request?

[J.Celifarco]

Has anyone every used the clause in most MCA contracts to true up to actual deposits and alter the payments? Do MCA companies even adjust in this fashion upon request?

Yes and Yes. They have to if they dont they are subject to usury laws. But only with a big enough data set. Cant do it after a week or 2. With the world we are living in now they are being used a lot

[fundingsmbs]

there are articles floating around saying that due to covid-19 there are no receivables, hence, the MCA should not be enforceable at this time as the collections practices of mca's are being closely monitored by the FTC. a purchase/sale contract relies on future sales based on historical sales and covid forced businesses to shut down without fault of their own and they have no sales to collect

[Winning]

So since posting this I have realized a few things in regards to a Cash Advance Purchase of Future Receivables. This info may help other merchants that lurk the site..

Fact: MCA's are not Loans (by law).
Since MCA's are not loans they can legally charge higher interest rates. Since they are not loans they a governed differently and are unregulated.

You can call this a Gift & a Curse.

Fact: Technically the MCA company did not lend money to you or your business.

What the MCA did was purchase your future sales (not lend you money). The only thing the merchants business is liable for is providing them a percentage of those receivables. If you have zero receivables, you owe them a percentage of zero!

Since the merchant was never lent any money (cause that would be a loan), the merchant does not owe them a loan payment. Again the merchant only owe them part of the sales, which currently don’t exist!

So due to shelter in place the business owes nothing, because it makes nothing. If the merchant re-open again, and starts making sales, the merchant may still be bound to the agreement. But if your business closes and you open a new one, that business is not bound to the previous agreement.

So if this is the case, how are the advance companies filing COJ's and going after merchants that default?

An advance company can take the prerogative to do whatever they want, especially since this is bad news for them, as they won't see that money for a very long time, if ever.

The reality comes down to what happens when the MCA company and the merchant are in front of the judge....what exactly will be MCA companies argument?

Merchant:

-I was ordered to close my business by the State of TX, so I have no receivables and no revenue.
-My business is open, but few to any come to purchase because of the quarantine.
-All the surrounding businesses around me are closed, so their employees don't shop with me anymore

Every possible answer leads to you no longer having a business with receivables.


Cash Advance Company:

-I lent merchant money and they didn't pay it back. (No you didn't, its not a loan, if it is a loan, you broke the law, case dismissed).

-Merchant went out of business he owes me money. (No he doesn't, the advance is tied to his business receivables, which no longer exist).

-Merchant should be ethical and moral and pay me back. (When you buy 'FUTURE' receivables, you are speculating/gambling/banking on the business staying around long enough to see a return, and you price this risk into the advance, which is why it's so expensive, and why it's not a loan).

Fact: The language in the cash advance contract that makes it not a loan but a purchase, is language that would work against the funder in this particular climate we are in.

Now it makes perfect sense why some of you told me just to tell the lender to **** off! Because you already understood these points that I am just now connecting. I am enlightened now!

[Winning]

Guide them through a true-up, and avoid defaulting. Read the contract...

Regarding if lenders will do a True-Up.

Yes and Yes. They have to if they dont they are subject to usury laws. But only with a big enough data set. Cant do it after a week or 2. With the world we are living in now they are being used a lot

Great advice and info from the both of you when it comes to reopening the business and facing an entirely different revenue situation!

It would be great if someone could jump in and provide any 1st hand accounts of walking through True-Ups?
Successful or Not, insight can be gained from either outcome.

I will do more research on True-UP's and post it if I realize any thing of substance.

I know some of you may be worried about blowback from the community if you are seen as helping merchants in any shape or form regarding defaulting. I understand, So just PM me instead.

[WestCoastFunding]

Regarding if lenders will do a True-Up.



Great advice and info from the both of you when it comes to reopening the business and facing an entirely different revenue situation!

It would be great if someone could jump in and provide any 1st hand accounts of walking through True-Ups?
Successful or Not, insight can be gained from either outcome.

I will do more research on True-UP's and post it if I realize any thing of substance.

I know some of you may be worried about blowback from the community if you are seen as helping merchants in any shape or form regarding defaulting. I understand, So just PM me instead.

Just contact the funder and tell them exactly where you are at. Tell them you have every intention on staying in business and don’t want to hurt your relationship with PayPal, as they’re essential. Tell them you just need to suspend the payments for a few months to resituate yourself. Tell them that as you understand it, the True-up language along with the “purchase of future receivables” language should allow for and adjustment. Let them know you’re not trying to reduce the overall debt, just need some time before payments resume, and then once resumption happens it may be at a much-reduced payment until things normalize. In meantime, apply for every SBA option (including 7(a)). You may find that your old commercial space may be available at a reduced price.