[happyman]

https://debanked.com/2020/12/ho-ho-h...s-lending-law/

[harvey]

merry christmas thats all she wrote

industry is officially over

[FunYouMan]

merry christmas thats all she wrote

industry is officially over

For a layman, can you explain exactly what this means for the future of the industry?

[Winning]

I see that it says "New York State Legislature Passes Law That Requires APR Disclosure On Small Business Finance Contracts (Even If They’re Not Loans)".

So does that mean that the advance companies now have to do the math that the merchant should have been doing themself?

For instance, when I am presented an advance offer I break the numbers down to an effective rate and a annualized factor rate.

For example.
$48K for a fee of $5505 paid back via 52 $1005.83 Weekly ACH Payments.
Total Payback = 52303.10
(52303.10 / 48000 = 1.089 Effective Rate)
Annualized Factor Rate 8.9%

So is this what the new law is calling for? If not what additional conversion would I need to do to the example numbers to arrive at what this new law is requiring to be provided?

[ridextreme]

And yet Senator Thomas tweeted, “This will help a lot of small businesses trying to get back on their feet during this pandemic.”

How on earth will this help small businesses get back on their feet? Is NYS gonna provide them with capital?

[abfunders]

I see that it says "New York State Legislature Passes Law That Requires APR Disclosure On Small Business Finance Contracts (Even If They’re Not Loans)".

So does that mean that the advance companies now have to do the math that the merchant should have been doing themself?

For instance, when I am presented an advance offer I break the numbers down to an effective rate and a annualized factor rate.

For example.
$48K for a fee of $5505 paid back via 52 $1005.83 Weekly ACH Payments.
Total Payback = 52303.10
(52303.10 / 48000 = 1.089 Effective Rate)
Annualized Factor Rate 8.9%

So is this what the new law is calling for? If not what additional conversion would I need to do to the example numbers to arrive at what this new law is requiring to be provided?

The state wants the "great equalizer" to be annualized APR, not factor rate.
https://www.breakoutfinance.com/apr-calculator/
APR is 19.56%
I personally understand factor rate much better than APR, and I think that most people don't understand either of them well enough.

[Winning]

The state wants the "great equalizer" to be annualized APR, not factor rate.
https://www.breakoutfinance.com/apr-calculator/
APR is 19.56%
I personally understand factor rate much better than APR, and I think that most people don't understand either of them well enough.

You mind walking us through the conversion, explaining and showing your work in long form with out using the APR calculator?

That would help me understand it better if I could manually calculate it with out the need to use an APR calculator.

I know I can spend sometime on youtube or ask my daughters tutor to break it down for me, but if a forum member here feels up to it, it would be much cooler.

[Dailyweekly]

put simply, what exactly does this mean? That merchants in new York are going to have to sign differently worded contracts clearly stating the rates and fees and everything?

[abfunders]

APR is way beyond me, but I remember this thread was of great help:
https://dailyfunder.com/showthread.p...ll=1#post70789

Also, you can use the =RATE() function on Google sheets, it might help, though it might only assume monthly
https://corporatefinanceinstitute.co...rate-function/

[Michael I]

with a specified percentage and no change in rate, it is impossible to correctly write down an apr . Will probably just cause majority of funders to not fund in new york. Ny business can not catch a break cumo and belasio are on a mission to make sure they all close and go out of business

[Winning]

with a specified percentage and no change in rate, it is impossible to correctly write down an apr .

Maybe you are our in house guy that can show us manually in long form format the correct way apr is calculated and how this is impossible to correctly compute with a specified percentage..??

[Michael I]

Maybe you are our in house guy that can show us manually in long form format the correct way apr is calculated and how this is impossible to correctly compute with a specified percentage..??

To calculate APR, you can follow these 5 simple steps:
Add total interest paid over the duration of the loan to any additional fees.
Divide by the amount of the loan.
Divide by the total number of days in the loan term.
Multiply by 365 to find annual rate.
Multiply by 100 to convert annual rate into a percentage

now with specified percentage how to you know how many days it will be?

also not sure how breakout calc is set up because this math does not match up to theirs

[StipMeBabyOneMoreTime]

To calculate APR, you can follow these 5 simple steps:
Add total interest paid over the duration of the loan to any additional fees.
Divide by the amount of the loan.
Divide by the total number of days in the loan term.
Multiply by 365 to find annual rate.
Multiply by 100 to convert annual rate into a percentage

now with specified percentage how to you know how many days it will be?

also not sure how breakout calc is set up because this math does not match up to theirs

Hey - I made a post about this back in July. Bumping my own **** because I think it could help. I've even included the excel file that will do the APR calc for you (and mine matches the Breakout calculator). Find my DMs if you need help in any way.

https://dailyfunder.com/showthread.p...l=1#post143478

[Michael I]

Hey - I made a post about this back in July. Bumping my own **** because I think it could help. I've even included the excel file that will do the APR calc for you (and mine matches the Breakout calculator). Find my DMs if you need help in any way.

https://dailyfunder.com/showthread.p...l=1#post143478

What's the formula you used and what am i missing ?

[ridextreme]

industry is officially over

yes it definitely is for the people who won't know how to rebut questions like "why does it say I'm paying back 120% APR?"

[StipMeBabyOneMoreTime]

What's the formula you used and what am i missing ?

The annualization is only 252 periods, not 365, since generally there's only 252 payment periods in a year after considering weekends and bank holidays.

[SmartAdvanced]

yes it definitely is for the people who won't know how to rebut questions like "why does it say I'm paying back 120% APR?"

We charge at a higher 120 percentage, even though a lot of banks like to look at 80 percentage or 70 percentage of, let’s say, the property value, or collateral. It is common for banks to do 65 percentage and up to 80 percentage max. We go up to 120 percentage though. So you know, we’re in two different zones.

(I’m Donald trump and I approve this message)

[CT3]

For a layman, can you explain exactly what this means for the future of the industry?

Sure. 2 major things.

1. They want everyone to have a "smart box". Essentially a front and center box on the front page of your contracts disclosing ALL the fees a merchant is being charged. Since they do not understand factor rates (the actual amount a merchant pays) they want you to add the APR.

This allows them to make an MCA "comparable" to a loan, thereby showing a borrower that an MCA is expensive AF. We'll, obviously this ISN'T a loan, but they don't care. This is how the nanny state will make sure no-one takes an MCA. Instead of seeing a 1.35 factor youll now see 200% APR and be like WTF!

Again, won't change much, if a merchant was getting sweet banking 5 year loans and LOC's they wouldnt be here.

2. BUT BUT BUT we are missing a MUCH larger issue. Right now the world writ large doesn't understand MCA. They don't know what it is or what to make of it. Once NY makes everyone have 150-500% APR's on their contracts (again this is not a time based product therefore there can be NO APR) that's when the lawsuits and investigations will begin.

People will hear about an industry "charging" hundreds of percent APR, false equivalent, and boom! the industry will be attacked/regulated/sued etc. out of existance.

THAT IS THE REAL BATTLE!

Exactly 0 merchants will look at the APR and decide they don't want the money. This isn't about the merchants. It's about the contracts and giving the industry an easy to understand black eye. Or worse.

[Winning]

Looks like CT3 is a chart topper, #1 draft pick, shooting star. I appreciate your contributions to the DF site! Your numbers would show that you have been dropping major knowledge here in the forums during you short history here.

578.19 IMHRS CT3
(45677 / 79 = 578.19).

7.138 AANS CT3
( join date 10-05-2020 = 81 days account age. 578.19 / 81 = 7.138

For background info on these numbers see post at https://dailyfunder.com/showthread.p...Forum-VS-Least