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  1. #1
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    Real Estate vs MCA - Positions ????

    Guys, I've booked a couple of MCAs here or there.... I'm mainly a real estate guy (past 20 years) - I specialize in: Hard money bridge, rehab loans, 30 year DSCR loans-no tax returns, and some commercial.

    Question 1: What's 2nd - 6th position MCA signify? (in real estate 1st position and 2nd position mean they were recorded on title in that order and must get paid off in that order in the event of a sale, a 1st position = 1st mortgage, 2nd position = a 2nd mortgage, etc)

    Is this similar in terms of MCAs? Is this reflected somehow in the UCC filing?
    Can positions be paid off in any order?
    What's the benefit of NOT recording a UCC filing to the merchant - it seems it would be in the funder's benefit to record a UCC --EVERY-- time? Why wouldn't they?

    Question 2: Is the MCA space back and running on all cylinders? (I was considering diversifying because real estate loans can take weeks or months so I'm looking for a "short game") I used to use BFS, Yellowstone, etc... (though I see BFS sold to some technology company)

  2. #2
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    Question 1: 2nd - 6th position is basically the same idea, but very often funders do not file liens (UCCs) on the business unless they are ready to / have already defaulted. So practically for a broker, it means who's actively funding the deal now. Is it first position UCC (factors need that on all of the AR), is it first position MCA (as in, there's already senior debt), or is it is looked at as a "position" behind another "position" that gets priced differently. Some funders will view Fundbox as a LOC and not a position, others will ignore it. Some funders will view monthly payments like LoanMe as a position, others will ignore all monthlies. When MCA and non-traditional funders say "we only do 1st position", it generally means "we only come behind senior debt, but not behind other MCAs", i.e. IOU and OnDeck.

    Positions can be paid off in any order, and a 3rd position can become a 2nd just from the fact that the capital stack was changed because the 2nd position funder was paid off. Some funders will come in and pay off up to 2 positions.

    Question 2: MCA is running on all cylinders, and I'd say that everyone who didn't go BK is back up and running post-COVID, post-PPP. BFS doesn't exist as BFS anymore, and Yellowstone rebranded as Fundry (and pull as under different brands like Green Funding). Principis was my favorite first position funder who really didn't make it out. PAR also didn't make it out, but that was for a completely different reason.

  3. #3
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    1) I suppose my brain is so programmed for mortgages that the UCC Filing system has always seemed so inconsistent to me. I imagine senior debt always files a UCC? whereas MCA funders file them more so in the event of a default like you said? (so by senior debt you mean more traditional business loan products: term loans, ARs, LOCs? Are these more likely to file a UCC?

    2) I was considering diversifying into credit card stacking and MCAs. All my leads are paid traffic so I'm probably leaving money on the table by NOT doing so. Know of any LEGIT credit repair partner programs?

    3) Micah how do you get most of your business? co-brokering, client referrals or paid traffic? or all of the above?

  4. #4
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    1) Senior debt is always going to file a UCC. I would say that most 1st position MCA funders and 2nd position lenders (OnDeck, IOU) will file a UCC also, it's the 2nd position MCAs who are filing on defaults. Yes, when I refer to senior debt I mean more traditional term loans/SBAs/LOCs/factoring with "normal" rates.

    2) Credit card stacking is great, but you should also have access to personal loans, credit card stacking has become slightly more difficult in the last couple of years. Yes, you're leaving money on the table, I have groups funding 2-4 of these monthly. 700+ FICO, it's doable with less, but highly unlikely. Don't mix in credit repair in the same words, since credit repair takes time, and even credit repair won't help everyone, since that missed mortgage late in January of 2021 still shows up, and you can't get rid of it. I have great credit repair people, and he knows how to help with the credit building also.

    3) Mainly cobrokering. I did get some excellent clients who have found me through Daily Funder, a $220,000 reverse consolidation with PAR in Feb 2019 and a term loan/LOC mix in May this past year (we funded him around $850,000 already). Also I refer brokers to other methods of getting paid, and I get paid an override. For example, the group I use to do the personal loans/credit card stacking program, I can introduce you directly and when you do a deal, since all of the contracts are on their paper, I get paid when you do.

    Reach out today, I'd like to make a few introductions.

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