[Cjltitles]

Ok heres what I got.
Merchant does 6mill gas. Has an advance balance of 95 which is below half of the original 200 being paid back thru cc. Shes looking to stack and needs 100k. Strong statements however is behind on rent. Agreement set w.land lord for back months. Shes looking for ach payment structure and prefers longer term to help keep ach low. I got declined because of rent situation but feel if tax liens are wxcepted in plans whats the issue. She is in no danger of eviction and has been there for 15yrs.

This is a foodprep/catering business

[MCNetwork]

How can a food prep/catering business do 6 million in gas?? Does the merchant have several businesses, which includes a gas station/convenience store?

[Cjltitles]

Sorry my fault gross annual sales.

[Sean Cash]

never use "gas" for gross annual sales in this biz lol. some people strongly hate gas stations

[Finance1]

Current advance, behind on rent, tax liens (payment plan or not), long term repayment, and 100k stack is not a make sense deal. It has cash flow crunch, future collection problems, and potential default written all over it.

[MCNetwork]

Not to mention an undesirable industry (catering). This deal spells bad news no matter which way you slice it!

[Chambo]

sounds difficult, but not undoable. You would definitely need something IN WRITING form the landord about the payment plan, otherwise, this dela is going nowhere

[Cjltitles]

Current advance, behind on rent, tax liens (payment plan or not), long term repayment, and 100k stack is not a make sense deal. It has cash flow crunch, future collection problems, and potential default written all over it.

She does not have tax liens. I was saying I seen deals with tax liens done with payment plans. Comparing that to her current rent situation in a payment plan. Her current advance has 3 months left. Also said she would like a longer term on her 100k but has the ability to do short term eliminating the long repayment. She has an average balance of over 40k at any given time

[Cjltitles]

That's not a problem. At this time they are discussing a renewal on the lease where he would waive the balance to insure her renewal.

[HotRod]

Why would you help a merchant stack? That's a no, no and I don't care who you are.

[Cjltitles]

I understand that stacking is frowned on in the industry. I only do it when I feel that it is in the best interest of the merchant. Here is my school of thought. So the merchant is below the 50% balance usually needed to be eligible for more money. If I was to pay off her existing balance I would be paying off an already predetermined payback that is not due getting no discount netting no benefits. By doing so I would also have to factor an extra 100k into the new advance or loan product. This even at a 1.20 would create an additional 20k added to the payback. It would also extend the payment of the now inflated 100k due to be paid in 2-3 months. I would not even entertain the stack or new advance if the merchant was un able to afford it and after carefully reviewing the statements and seeing how she is paid on the invoices she has on contracts know it will not be an issue. I am new to this industry so am still learning but feel this time a stack was justified.

[nicolehcapital]

Where is this client? We are more likely to consider such a deal if we can do a site visit

[Cjltitles]

California

[Chambo]

I understand that stacking is frowned on in the industry. I only do it when I feel that it is in the best interest of the merchant. Here is my school of thought. So the merchant is below the 50% balance usually needed to be eligible for more money. If I was to pay off her existing balance I would be paying off an already predetermined payback that is not due getting no discount netting no benefits. By doing so I would also have to factor an extra 100k into the new advance or loan product. This even at a 1.20 would create an additional 20k added to the payback. It would also extend the payment of the now inflated 100k due to be paid in 2-3 months. I would not even entertain the stack or new advance if the merchant was un able to afford it and after carefully reviewing the statements and seeing how she is paid on the invoices she has on contracts know it will not be an issue. I am new to this industry so am still learning but feel this time a stack was justified.

More importantly, the funders are starting to put terms in the contract that stackign kills the deal with them, and therefore no renewals. Other funders will decline as well when they see the dual funding (some will auto decline depending on who it was who stacked). The question becomes, is the merchant going to jeopardize the larger fund for a short term gain?

[Finance1]

More importantly, the funders are starting to put terms in the contract that stackign kills the deal with them, and therefore no renewals. Other funders will decline as well when they see the dual funding (some will auto decline depending on who it was who stacked). The question becomes, is the merchant going to jeopardize the larger fund for a short term gain?

This is a good point. I'm not sure that full disclosure of consequences is in the front of the majority of agents' minds when stacking. We've come across a couple merchants looking for additional with an OD and NL loan in place. I flat told them that if they take on additional funding and NL or OD finds out then they can't renew. They were surprised to hear it and glad that I told them.

The clients' best interests should always be in the front of agents' minds. Unfortunately that type of old school thought is not as prevalent in this industry as others.

[Capital Stack]

This is a good point. I'm not sure that full disclosure of consequences is in the front of the majority of agents' minds when stacking. We've come across a couple merchants looking for additional with an OD and NL loan in place. I flat told them that if they take on additional funding and NL or OD finds out then they can't renew. They were surprised to hear it and glad that I told them.

The clients' best interests should always be in the front of agents' minds. Unfortunately that type of old school thought is not as prevalent in this industry as others.

Finance1 great point. Problem is you have commish junky ISO's out there that aren't thinking long term customer retention.

[Finance1]

Finance1 great point. Problem is you have commish junky ISO's out there that aren't thinking long term customer retention.

The ironic thing is this shortsightedness will end up making an agent less money in the long run. The average merchant renews 2.5 times or so. Being commission greedy upfront will result in a smaller book due to lower throughput. Each booked ISO deal typically = 3+ paychecks over a 1-2 year period. That is the real franchise of this industry. Not trying to hit walk off home runs every time. A bunch of singles and doubles is where it's at. Unless I'm missing something.

[jbrown]

While this sounds good in theory, virtually all funding companies carefully consider the maximum repayment that a merchant can afford when calculating an MCA split or daily ACH. When a merchant stacks, that formula is jeopardized and the collection on the remaining balance becomes more risky. That is why, as others have noted, that a merchant who stacks will jeopardize their renewal chances and also their chances of being funded elsewhere. When we see a merchant that has stacked presented as a new deal to us, and it is always in the bank statements so the merchant can't hide from their actions, we are more likely to decline that merchant based on past behavior and character and also our concern that the merchant can't manage their cash flow and will stack again regardless of their promise not to do so.

I understand that stacking is frowned on in the industry. I only do it when I feel that it is in the best interest of the merchant. Here is my school of thought. So the merchant is below the 50% balance usually needed to be eligible for more money. If I was to pay off her existing balance I would be paying off an already predetermined payback that is not due getting no discount netting no benefits. By doing so I would also have to factor an extra 100k into the new advance or loan product. This even at a 1.20 would create an additional 20k added to the payback. It would also extend the payment of the now inflated 100k due to be paid in 2-3 months. I would not even entertain the stack or new advance if the merchant was un able to afford it and after carefully reviewing the statements and seeing how she is paid on the invoices she has on contracts know it will not be an issue. I am new to this industry so am still learning but feel this time a stack was justified.