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12-02-2021, 09:21 AM #1
Because MCA isn't a loan...it's an advance against receivables. Think Pawn Shop....when you pawn something, it's an advance against the asset which can be retrieved back when the advance is paid back. It isn't a loan that's paid back. it's an advance against value due.
Last edited by Olderguy; 12-02-2021 at 09:24 AM.
Steve Benjamin
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12-02-2021, 09:26 AM #2
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Yes that i understand
i thought its illegal to use the word loan because if you categorize it as a loan any interest charged over a certain percentage would be illegal
which leads me to my next question how does a company like on deck use the word loan? (no beef with ondeck great company)
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12-02-2021, 09:30 AM #3Steve Benjamin
Professional Business Loans
522 Contessa
Irvine, CA 92620
steveprobiz@gmail.com
https://probizloans.net/
Broker, Underwriter, general business loan expert
949.228.1050
@ 24 hour funding working capital loans
@ Term loans from 3 years to 10 years at 9.5% and up
@ Equipment financing up to 7 years
@ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
@ SBA loans - 7A and 504.
@ Private money equity and debt for major investments
@ Personal Loans up to gross income from personal tax return.
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12-02-2021, 09:34 AM #4
Reputation points: 60165
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12-02-2021, 10:32 AM #5Steve Benjamin
Professional Business Loans
522 Contessa
Irvine, CA 92620
steveprobiz@gmail.com
https://probizloans.net/
Broker, Underwriter, general business loan expert
949.228.1050
@ 24 hour funding working capital loans
@ Term loans from 3 years to 10 years at 9.5% and up
@ Equipment financing up to 7 years
@ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
@ SBA loans - 7A and 504.
@ Private money equity and debt for major investments
@ Personal Loans up to gross income from personal tax return.
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12-02-2021, 10:43 AM #6
Reputation points: 60165
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12-02-2021, 11:10 AM #7Steve Benjamin
Professional Business Loans
522 Contessa
Irvine, CA 92620
steveprobiz@gmail.com
https://probizloans.net/
Broker, Underwriter, general business loan expert
949.228.1050
@ 24 hour funding working capital loans
@ Term loans from 3 years to 10 years at 9.5% and up
@ Equipment financing up to 7 years
@ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
@ SBA loans - 7A and 504.
@ Private money equity and debt for major investments
@ Personal Loans up to gross income from personal tax return.
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12-02-2021, 11:11 AM #8
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Ahhh but it doesn't. That 50k 1.5 deal still has a holdback % listed on the contract. Deep within the size 4 font of that contract there will be a clause stating how the merchant can adjust their payment to equal the proper hold back %. That ability to adjust means there is no set term, and thus it's not a loan.
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12-02-2021, 09:57 AM #9
The primary system that allows lenders to bypass state interest rate caps is to partner with a state or federally chartered bank. Banks are exempt from complying with the interest rate caps of states. Often times you will notice that it is not "the lender" as you know them making the loan itself, but rather the bank they are partnered with. Afterwards the bank can sell the loan to the lender or use the lender to fully service the loan on their behalf. Here's me talking about it: https://debanked.com/tv/?v=532324556
It is okay to use the word on loan contracts. In fact, if it really is a loan, that is the term you should definitely use. You should read every contract you present to a merchant in full so that you know exactly what it is you are selling. And if it is a loan, you need to know what makes the company legally eligible to offer them. Some states require a lending license. If the lender demurs on explaining to you as the broker how they are legally able to make loans, do not work with them.
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12-02-2021, 09:59 AM #10
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On Decks funding (loans) are bank originated - The average rate for term loans is 54.96% APR. Averages are based on loans originated in the quarter
The alleged benefit is a longer term (2 years) vs. a MCA is generally a much shorter term (typically less than 6 months - 120 payments or less)
https://www.ondeck.com/short-term-loansDave 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
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