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06-16-2021, 10:20 AM #1
- Join Date
- Mar 2021
- Posts
- 16
Why You Shouldn't Stack A Reverse Consolidation
I've seen this happen with two of my clients because of dishonest brokers and I want to share my experiences with you. I typically get a merchant a reverse consolidation if they have a holdback percentage towards MCA's over 25%. For example, I had a merchant with 4 positions, 32% leverage and the reverse got them down to 24% leverage. This typically helps the client operate in the short term and get them out of an overleveraged position.
Lately, dishonest brokers are calling my clients and telling them to take funding out without clearing it with the reverse company. In many cases, these stacks are 60 or 80 day 1.499 factors with 10% fees because those are the only funders who stack a reverse. Immediately the reverse company then stops funding the client and continues taking their daily debit. A client who was down to 24% leverage is now at a holdback above 60% because of the terrible 60-day deal and the large reverse payment with no funding coming in. In both cases, the merchant could no longer afford payments, freaked out because the broker told them it was fine to stack a reverse and did a block payment on everyone.
I know the reverse is a somewhat newer product and I wanted to share my experience because the brokers who are stacking reverses are hurting all the funders and pushing the merchant out of business.
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06-16-2021, 10:34 AM #2
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- Feb 2016
- Posts
- 242
:/
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06-16-2021, 10:37 AM #3
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- Nov 2018
- Posts
- 30
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06-16-2021, 11:07 AM #4
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- Feb 2017
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- 3,425
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06-16-2021, 11:08 AM #5
- Join Date
- Jul 2015
- Posts
- 215
Yea its crazy. At least the reverse companies can tell themselves they are actually trying to help the merchant despite all the funders in before them. Stacking a reverse is actually one of the worst things around in my opinion.
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06-16-2021, 12:06 PM #6
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- Jun 2017
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- 2,049
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06-16-2021, 12:25 PM #7
- Join Date
- Feb 2019
- Posts
- 96
Reverse is the biggest scam in the industry and will do more damage then COJs
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06-16-2021, 01:53 PM #8
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- Nov 2018
- Posts
- 30
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06-16-2021, 02:01 PM #9
- Join Date
- Oct 2020
- Posts
- 92
I have never seen a reverse help a merchant. Literally is the nail in the coffin for all the merchants that get them, at least the ones I have funded or come across. THEY HURT MERCHANTS MORE THAN THE STACK ON TOP.
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06-16-2021, 05:31 PM #10
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- Feb 2019
- Posts
- 209
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06-16-2021, 08:56 PM #11
- Join Date
- Nov 2016
- Posts
- 44
How about when the 1.499 20 day stack on top of the reverse is a higher payment than the reverse payment…. sad to see. It’s usually the merchant getting lied to as well
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06-16-2021, 10:37 PM #12
- Join Date
- Nov 2018
- Posts
- 30
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06-16-2021, 11:18 PM #13
- Join Date
- Nov 2016
- Posts
- 44
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06-17-2021, 07:05 AM #14
- Join Date
- May 2017
- Location
- New York/Miami
- Posts
- 65
Hey guys,
I almost never post and before anyone says it, yes we are still around! All of the above is bad and really you are discussing what is the least evil here. So really know you have to say from whos perscepective?
From the merchant: If they are at a 32% holdback and its killing them and that gets consolidated down truly to 25% yes that should help them and they should NEVER take another dime until that finishes or EVER again! But will they be able to help themselves and not take another call and not get suckered into another pitch??
From the Funder: Once the reverse is in the banks the A/B funders really never want to touch this file again when they see the consolidation which is why some of the consolidators leave them out of the grouping...its not for any other reason but to think that they may have a shot of getting that position refinace by some miracle since their payment was "paid" without any aid. Believe me I have heard it ALL.
Then you have the very short guys who just jump in for sport for 40-80 days thinking last in first out and they will just float them some cash so now you have (again from a Funder perspective) a group of short term guys that are on your "blacklist" so this merchant is DEAD to you forever!!
So when you do a reverse: think about what I said! When you throw some cash at a deal, think about what I said. Just wanted to give you some fresh eyes on a very touchy spot for both the ISO & the Funder!
Happy Selling!
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06-18-2021, 04:11 PM #15
- Join Date
- Jan 2014
- Posts
- 1,374
your merchant knew he was not supposed to take more money regardless of what another broker told them. They make it very clear you can't take additional funding while in a reverse and clearly states in the contract you are not allowed to take additional funding while in a reverse. Do yea dishonest brokers are an issue but merchants aren't so innocent either, they know what they are doing and attempting to do then blame the broker lied to them.
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