[Calvin]

I am new to the industry working in an ISO and have found this board invaluable in the learning curve. Thank you all. I found the video in the news letter interesting. The renewal thing has had me a little concerned from the perspective of the merchant. How was this conversation taken by those at the conference? Is this an elephant in the room?

[Calvin]

http://www.youtube.com/watch?v=k62kCK5tZwo

[Sean Cash]

I am new to the industry working in an ISO and have found this board invaluable in the learning curve. Thank you all. I found the video in the news letter interesting. The renewal thing has had me a little concerned from the perspective of the merchant. How was this conversation taken by those at the conference? Is this an elephant in the room?

So most people in this industry refer to this methodology as a refi and truthfully I don't think many if anyone gives it a second thought these days. It has been a mainstream way to provide additional funds for years now. Some companies will still do an "add-on" which is additional funds without an increase in the holdback %/daily payment but it's rare.

Jim Salters at The Business Backer explained double dipping at the conference during a widely attended panel breakout session. It definitely raised eyeballs especially amongst those looking in from outside the MCA industry. For example, I think the whole reason double dipping even came up is because Bob Coleman of the Coleman Report (one of the nation's major SBA loan publishers) brought it up.

The conference was productive because you get a lot of the country's best minds in one place. For instance, nobody really suggested stacking was a regulatory issue there, yet if you come on dailyfunder there are posters who think stacking is the only weakness that the industry has.

But the big time lawyers at the show who are intimately familiar with the regulators say the real threats lie in transparency.

A refi if not explained simply might be deceptive, the costs if not explained well enough might be deceptive. Sales representatives who misrepresent or miscommunicate the nature of their financial service products both with prospects or internally might be deceptive.

One particular example offered by an attorney was that if you purchase future revenues/receivables, you can never ever ever say "payback", "repayment", "pay it off" etc. because those terms are consistent with loans. Instead the merchant needs to deliver receivables or revenues that you've purchased.

Half the people on this board refer to straight up revenue purchasers as lenders when they 100% absolutely are not. All it takes is one call to a merchant where you say the word loan or lender when talking about a purchase and you jeopardize your entire company.

That goes for posting on this forum too. If your contracts say you buy future revenues but then you come on dailyfunder saying you're a lender, you're already sending a mixed message that puts your business at risk.

Stacking is a civil matter but there are much greater threats that immediately affect everyone.

[Chambo]

I am new to the industry working in an ISO and have found this board invaluable in the learning curve. Thank you all. I found the video in the news letter interesting. The renewal thing has had me a little concerned from the perspective of the merchant. How was this conversation taken by those at the conference? Is this an elephant in the room?

"Double Dipping" refers to renewals for most of the industry. The merchant has pay off the remainder of their own balance with a portion of the new advance. No different than if they were moving to a different fund. TBB (MCC and BFS do it too, so it isn't original) adds on the funds instead of refinancing, or paying off the balance. Jim calls it double dipping, everyone else calls it refying.

The add on theory is really in the merchant's best interest. Some brokers ***** about it though, because the commissions aren't as fat (there's a smaller portion you are getting your commission on). These add ons are sold as credit lines. You can keep coming back every coule of months, based on the max RTR you are/were qualified for vis a vis what you have paid down. The problem with these deals though is 1) certain brokers cannot stand them because the commission is basically a fraction of what they would earn by flipping and 2) sooner or later, the Fund doesn't want to renew and keep extending the terms, so they hold off and wait for a huge chunk to get paid off.

Of course, in this market environment, that just invites stacking.