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  1. #51
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    https://youtu.be/kXYshW1FL5s

    Wow. So corporate so professional!
    Doesn’t look like a criminal to me.

  2. #52
    Quote Originally Posted by FCG View Post
    Yea but Square,Paypal, and Kabbage are different products. I wouldn't consider funders who don't accept iso's part of the equation. Bluevine is an MCA disguised as a LOC. The other big companies named spend millions on marketing a year so I would expect their revenue to be up there. They also retain merchants by kicking isos off if they don't meet quotas or when iso's don't survive and close shop. With new c-f paper lenders popping up every day, I would say the 40-120 payment space is the majority of the industry (From my experience). I truly hope they regulate and not try and shut the industry down as a whole. Ive always been one to say our entry barriers are way too low. Hopefully some good comes out of this.
    This seems very analogous to how New Car Dealer groups have used the state level Dealership Laws to make it more expensive and harder for B-Lot Used Car Lots & BHPH Lots to operate. Is this not largely an outgrowth of ILPA's/RLBC efforts to introduce regulation into the marketplace that favors their members' products and the expense of the MCA side of the business?

  3. #53
    Senior Member Reputation points: 16117 capaxess's Avatar
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    Quote Originally Posted by pcfunder View Post
    yeahhhhhhhh my thing is I have trouble believing that only 1% of brokers offer those type of deals. I know that MCA has A/B funding companies but they seem to get stacked a lotttttttttttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttt of the time. I mean enough of the time to literally stall funding, shut down, or cause massive A paper funding companies to sell. Also companies like Yellowstone are funding how much a month again? Par had 500 million dollars to fund with as well? I've also met a lot of brokers who give a merchant a great 1st position deal. A type of deal that if I was a restaurant owner would make me happy. Then once the merchant reaches out after 3 months for more money, their eyes glow with dollar signs instead of advising the merchant not to do that. Then when the 2nd position starts to hurt and the merchant asks for more money, the broker is like "oh ma gawsh more comishhhhhhhh lets do itttttttttt!". If the merchant was advised on how to better handle the capital with the 1st position, I would bet a lot of money that the default rate would be MUCH lower.
    There is an argument to be made about the distorted incentives in our industry which lead many to poor decisions and abused merchants. It's also wrong to collectively punish an entire industry every bit as much as to ban casinos because some gamblers don't know when to stop but they keep making their bets. Regulation is tricky because it's hard to balance the benefits with risks for abuse and therefore best not left to politically appointed bureaucrats that have no nexus to the industry. These issues require a scalpel used by experts that have skin in the game, not an axe used by idiots imho.

  4. #54
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    Lightbulb

    Quote Originally Posted by Michael I View Post
    Golf stop trying to vindicate why you failed in this industry.in the last ten years this industry went from a couple of million to a couple of billion and is still growing.look how people are willing to buy on deck, kabbage.This industry is not going anywhere
    Appears Amex is going to purchase Kabbage at a healthy premium
    Dave Lambert, Business Development
    dave@fcbankcard.com
    Merchant Services Consultant
    High Risk Merchant Payment Solutions
    SBA 7(a) Loans & Short-Term Funding
    T/VM: 727-291-7890
    Office: 727-233-1111
    Skype: fc-financial

  5. #55
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    good previous point on first position funders who have a direct sales arm that sends deals to the very companies who are under a microscope in order to generate revenue- there is a level of hypocrisy in this. they want to say oh, we don't stack but we sure as hell well send stackers paper to make money. no need to name names but yes, a large % of revenue for funders is brokering out deals.I have heard as high as 40% of paper flows out to high risk, stackers from first pos funders. So, on one end, you have these companies lambasting high risk funders as bad apples, yet, they themselves send them deals to make money. You cant cast a stone and in the same breath accept commissions from the bad apples. whether you want to classify a funder as A, B, F, Z, Q, everyone is in the same industry. so, regulation has to address everyone across the board. also, using a middle man bank to export rates above usury, does that really make you better than those who don't? no. it just means a loophole was found and those companies executed that loophole. its still an expensive loan.

  6. #56
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    Quote Originally Posted by pcfunder View Post
    I think that exact scenario is what legislators are using to discuss why MCA needs to be regulated
    You are " given a "do not stack" clause on the ISO contracts, _ Whomever funds 1st has collateralize ALL FUTURE SALES until the Merchant Cash Advance has been repaid. A funder is purchasing an asset " the business owner's future receivables
    Dave Lambert, Business Development
    dave@fcbankcard.com
    Merchant Services Consultant
    High Risk Merchant Payment Solutions
    SBA 7(a) Loans & Short-Term Funding
    T/VM: 727-291-7890
    Office: 727-233-1111
    Skype: fc-financial

  7. #57
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    Quote Originally Posted by Yankeeman07 View Post
    You are " given a "do not stack" clause on the ISO contracts, _ Whomever funds 1st has collateralize ALL FUTURE SALES until the Merchant Cash Advance has been repaid. A funder is purchasing an asset " the business owner's future receivables
    If he client has a bank line or someone else has filed a UCC......the same applies.
    Hedley Lamarr......That's Hedley

  8. #58
    Quote Originally Posted by Kevin Henry-Seacoast View Post
    If he client has a bank line or someone else has filed a UCC......the same applies.
    Yes, but if a bank's client is staying within their covenants, generally banks accept they have a right of first refusal if future financing isn't going to take a borrower out of covenant. As example, purchase money equipment financing, etc. Most of the early anti-stacking clauses in the UCC language and ISO contracts alike were written such that the merchant had no right to gain any additional business credit, whether they were paying their senior lender or not. Banks understand covenants and different positions in the capital stack and don't generally take the position they hold their customers captive.

  9. #59
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    Quote Originally Posted by BB_Cooper View Post
    Yes, but if a bank's client is staying within their covenants, generally banks accept they have a right of first refusal if future financing isn't going to take a borrower out of covenant. As example, purchase money equipment financing, etc. Most of the early anti-stacking clauses in the UCC language and ISO contracts alike were written such that the merchant had no right to gain any additional business credit, whether they were paying their senior lender or not. Banks understand covenants and different positions in the capital stack and don't generally take the position they hold their customers captive.
    This is partly correct, but 99.9999% of the time an advance is taken without anyone checking with the UCC holder for permission. If there was a first right of refusal that was passed and allowed someone to obtain capital away from their original facility a inter-creditor or subordination agreement would have to be put in place. That NEVER....NEVER happens. I have never ever seen a subordination or inter-creditor agreement in place for a cash advance .... We have had clients come to us to replace their current LOC, ABL, or factor because they stacked an adavance or multiple advances with no agreements in place. There have been too many occasions to count where the stacking was so bad there was not enough availability on assets to pay off all the advances. We have put forward proposals in these instances and asked for subordination agreements and/or inter-creditor agreement from the staking advance companies and they flat our refused to enter them.
    Hedley Lamarr......That's Hedley

  10. #60
    Quote Originally Posted by Kevin Henry-Seacoast View Post
    This is partly correct, but 99.9999% of the time an advance is taken without anyone checking with the UCC holder for permission. If there was a first right of refusal that was passed and allowed someone to obtain capital away from their original facility a inter-creditor or subordination agreement would have to be put in place. That NEVER....NEVER happens. I have never ever seen a subordination or inter-creditor agreement in place for a cash advance .... We have had clients come to us to replace their current LOC, ABL, or factor because they stacked an adavance or multiple advances with no agreements in place. There have been too many occasions to count where the stacking was so bad there was not enough availability on assets to pay off all the advances. We have put forward proposals in these instances and asked for subordination agreements and/or inter-creditor agreement from the staking advance companies and they flat our refused to enter them.
    Fully agree that many in the industry don't respect or appreciate the rules of the road set out in Article 9. But many of the first generation anti-stacking language efforts took the position that the acquisition of percentage of merchant's receivables translated into ownership of the merchant's ability to access any credit, full stop, which is just not how it works.

    This thread originated with an FTC commissioner's apparent comment that he wants to regulate the MCA industry out of existence. Many point to the Dodd-Frank as the driving regulatory force creating the void the MCA industry filled. The question all sides need to answer is how will future regulation allow the the bottom quarter of the US small business risk pool to access credit markets? Not many banks are focused on these clients, but should they have access to credit? So to Chambo's earlier point is this an effort to clear out bad actors in our back yard or will it turn into a situation where regulators apply blunt sword style regulation to the MCA industry and other non-bank providers of credit and purposefully or unwittingly regulate which small businesses can or can't have access to credit?
    Last edited by BB_Cooper; 08-13-2020 at 08:52 AM.



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