[CNC30]

I’m new to MCA space and have a couple of basic questions.
Can someone please explain the following like I am a baby?


1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

Sorry if this is the wrong forum for these questions.


Cheers.

[simonwein12]

I’m new to MCA space and have a couple of basic questions.
Can someone please explain the following like I am a baby?


1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

Sorry if this is the wrong forum for these questions.


Cheers.

1. A hop wouldn’t pay off the position before it. Hops and payoffs are two different things. A hop would only have a negative affect on the ability to potentially pay off because it adds more leverage to the merchant.

2.A renewal will have better terms 99% of the time vs taking a new position- however a new position might get the merchant more money quicker, depending on how much of his balance is paid

[Yankeeman07]

I’m new to MCA space and have a couple of basic questions.
Can someone please explain the following like I am a baby?


1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

Sorry if this is the wrong forum for these questions.


Cheers.

Better Question - Who are you ? Company you work for/with?
Disclose your identity

[BR-Nightmare]

Better Question - Who are you ? Company you work for/with?
Disclose your identity

Better question: Why do they have to disclose that? They are not soliciting!

[Yankeeman07]

Better question: Why do they have to disclose that? They are not soliciting!

What are you or they hiding - They are soliciting information - why not who they are -

[abfunders]

What are you or they hiding - They are soliciting information - why not who they are -

"Soliciting" business means seeking the business of potential customers. That's for sure the context that it's meant on this forum.
They are requesting information in an anonymous way, not soliciting customers or brokers to send THEM deals.
They're hiding because they don't want people like YOU calling them and soliciting them.

Steven O gave solid answers.

[BR-Nightmare]

They're hiding because they don't want people like YOU calling them and soliciting them.

Steven O gave solid answers.

Indeed

[Yankeeman07]

"Soliciting" business means seeking the business of potential customers. That's for sure the context that it's meant on this forum.
They are requesting information in an anonymous way, not soliciting customers or brokers to send THEM deals.
They're hiding because they don't want people like YOU calling them and soliciting them.

Steven O gave solid answers.

I don't solicit rookies or old washed up brokers.

[ridextreme]

What are you or they hiding - They are soliciting information - why not who they are -

That's not how the internet works and it's the reason we use handles instead of our real names.

[budlightboy]

I’m new to MCA space and have a couple of basic questions.
Can someone please explain the following like I am a baby?


1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

Sorry if this is the wrong forum for these questions.


Cheers.

This a good question!

A renewal will payoff their current balance with a new deal and net the merchant the difference. It's good because it will keep them just one payment. It can be more expensive in the long term though, as they're paying off expensive money with more expensive money... It's commonly called double dipping.

A hop (also called stacking) is where the client doesn't payoff the current position with the new funds and instead just takes another funding alongside what they already have. This will increase their total payments but at times it can make more sense.

Say a merchant took a $300,000 MCA. They've paid it down to $100,000 and need an additional $50,000. They could renew their current deal for $150,000, paying off the 100k balance and netting out 50k. Or, they could get a 2nd position for $50,000. If the factor is a 1.35 on their renewal offer, they'll pay $52,500 in RTR to net out 50k. A stack, even at a 1.49, is cheaper for the client (50k X 1.49 is 24,500 in RTR). The stack makes sense AS LONG AS they can comfortable handle both payments.

[CNC30]

This a good question!

A renewal will payoff their current balance with a new deal and net the merchant the difference. It's good because it will keep them just one payment. It can be more expensive in the long term though, as they're paying off expensive money with more expensive money... It's commonly called double dipping.

A hop (also called stacking) is where the client doesn't payoff the current position with the new funds and instead just takes another funding alongside what they already have. This will increase their total payments but at times it can make more sense.

Say a merchant took a $300,000 MCA. They've paid it down to $100,000 and need an additional $50,000. They could renew their current deal for $150,000, paying off the 100k balance and netting out 50k. Or, they could get a 2nd position for $50,000. If the factor is a 1.35 on their renewal offer, they'll pay $52,500 in RTR to net out 50k. A stack, even at a 1.49, is cheaper for the client (50k X 1.49 is 24,500 in RTR). The stack makes sense AS LONG AS they can comfortable handle both payments.

Thank you, this make sense! In this example, does the merchant have to pay off the 100k balance when they renew?

[Steven_O]

1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?

ANSWER: Do NOT "hop" a NEWLY FUNDED position / merchant... usually, dirt bag brokers do this to max out the commissions they can make on a business - putting the business and funder in jeopardy of default. YES, they get more money. YES, others will say "if I don't do it - someone else will". YES, some have made millions, derailing other business owners dreams with funding that has a high cost (and if the business owner doesn't have some huge returns, won't make a penny and end up working for the advances you gave them - ultimately losing their livelihoods.) Be better. Be responsible. Work for the long plan where you don't burn your name (assuming you use your real name, which you should!). Educate your business owner that taking more than 1 position "a hop" can put them in a bad financial position. There is a REASON why underwriters make offers up to certain %'s of revenue... if your merchant is seeking lower cost, you can: reduce points, sell the lowest cost deal, get a pre-payment discount, tell them take less money/ only what they need now (if the payback is too high). Let someone else burn them if they're desperate. You'll lose your funding relationships if they learn that you are hopping them.


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

ANSWER - the difference is a renewal, depending on the funder, might be MORE expensive when it comes time to renew... UNLESS, the "interest" (should be called "cost of capital") is forgiven - like Ondeck. Why? A renewal usually occurs when 70% has been paid down, allowing the funder to refinance, putting new capital (and cost of capital/interest) ON TOP of the previous funding... in essence, paying interest on interest... My advice? You can renew. It's usually easier for the merchant. BUT... if they want the best deal, once they've paid down 50-60%, you should shop for a 2nd position or Buyout and see if there are better options. If you want to really go long in this game, put your merchant on a plan to get out of MCA altogether. There are plenty of new businesses every day and they will need MCA at some point. Give them a plan out, and guess what - they will come back when another emergency hits. Don't give them a plan and guess what? They take multiple positions, default, get 1,000's of calls and harrassed and absolutely hate that YOU put them there. Believe me, they will remember who screwed them over.

Bottom line... don't burn your merchant. Don't burn your funders. Keep those relationships clean and you'll be around a long time. You ARE going to make money in this business because it's lucrative, but you don't want to keep starting over and "rebranding" because you've burned ALL your bridges.

On that note. Good luck. Keep asking questions!

[CNC30]

1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?

ANSWER: Do NOT "hop" a NEWLY FUNDED position / merchant... usually, dirt bag brokers do this to max out the commissions they can make on a business - putting the business and funder in jeopardy of default. YES, they get more money. YES, others will say "if I don't do it - someone else will". YES, some have made millions, derailing other business owners dreams with funding that has a high cost (and if the business owner doesn't have some huge returns, won't make a penny and end up working for the advances you gave them - ultimately losing their livelihoods.) Be better. Be responsible. Work for the long plan where you don't burn your name (assuming you use your real name, which you should!). Educate your business owner that taking more than 1 position "a hop" can put them in a bad financial position. There is a REASON why underwriters make offers up to certain %'s of revenue... if your merchant is seeking lower cost, you can: reduce points, sell the lowest cost deal, get a pre-payment discount, tell them take less money/ only what they need now (if the payback is too high). Let someone else burn them if they're desperate. You'll lose your funding relationships if they learn that you are hopping them.

Thanks Steven. Your answers are very helpful.
Always better to do things the right way.

Most Merchants will eventually take a 2nd MCA. When is it viewed as acceptable to provide merchant with a 2nd position?
Confirming Hop/Stacking and Adding another position or the same thing, correct?

[MichaelP]

Thanks Steven. Your answers are very helpful.
Always better to do things the right way.

Most Merchants will eventually take a 2nd MCA. When is it viewed as acceptable to provide merchant with a 2nd position?
Confirming Hop/Stacking and Adding another position or the same thing, correct?

Oh Boy, a question as old as time, you have opened the flood gates my friend.

[BR-Nightmare]

Thanks Steven. Your answers are very helpful.
Always better to do things the right way.

Most Merchants will eventually take a 2nd MCA. When is it viewed as acceptable to provide merchant with a 2nd position?
Confirming Hop/Stacking and Adding another position or the same thing, correct?

Full transparency in your funding request will go a long way.

Some funders can do the deal only if it fits to a point of both affordability for the Merchant and profitability for the Funder.

If you are able to obtain the best affordable deal that the Merchant can take, a second position may not be required.

Now, the concern would be in regards to the Merchant offering 100% transparency with you as well. If their expectations are not managed properly, they can be sabotaged and ruin their own business and their relationship with you.

As a broker, you'd have to truly review their statements and see what their actual average revenue is and what funding amount would be suitable for their business.

I've done deals where the broker submits requesting an offer as second position to a recent funding, the offer we give fits our bucket and has the potential to pay full term.

I've done deals where we come in and when I look at it for a possible renewal, they get stacked to the gils after the fact because the "Merchant" got money hungry.

Be upfront with your submission, manage your Merchants expectations the right way, earn their trust all around and you can build your client into a residual income for yourself.

[BR-Nightmare]

I also apologize for my spat with Dave on your thread

His policing tends to get out of hand for no reason.

[CNC30]

I also apologize for my spat with Dave on your thread

His policing tends to get out of hand for no reason.

No worries, can't take someone like that serious.
Thanks for having my back.

[Kevin Henry-Seacoast]

I also apologize for my spat with Dave on your thread

His policing tends to get out of hand for no reason.

Poor Dave,

Perhaps his need for policing stems from him still owning a 1972 Plymouth Polara.

[SendDocsPlox]

If the renewal isn't giving more money, and a better rate, and a longer term, its usually bad for the merchant
The overwhelming majority of renewals are 50% pay ins with the exact same specs, just "we gib more money n payments stay the same buddy :^)"

Until the file is approaching Paid in Full it's the merchants grabbing their ankles for the Funder and the ISO, and its being done to our advantage, not the merchants advantage.
It's interest on interest, merchant paying sometimes up to a 3.0 TRUE Factor Rate, and in many cases the merchant is better off taking a new position entirely

You may not like it but its true

[Yankeeman07]

If the renewal isn't giving more money, and a better rate, and a longer term, its usually bad for the merchant
The overwhelming majority of renewals are 50% pay ins with the exact same specs, just "we gib more money n payments stay the same buddy :^)"

Until the file is approaching Paid in Full it's the merchants grabbing their ankles for the Funder and the ISO, and its being done to our advantage, not the merchants advantage.
It's interest on interest, merchant paying sometimes up to a 3.0 TRUE Factor Rate, and in many cases the merchant is better off taking a new position entirely

You may not like it but its true

Or possibly working with the merchant to secure a better funding option that is NOT an MCA.
Not always possible, but it may be worth the effort.

[closer129]

I’m new to MCA space and have a couple of basic questions.
Can someone please explain the following like I am a baby?


1) I’ve heard of brokers hopping recently funded positions.
Since MCA’s offer little discounts on early payoffs, how would hopping a newly funded position work?


2) What is the difference/advantage between a renewal and taking a new position with a different funder?

Sorry if this is the wrong forum for these questions.


Cheers.

If you want to hop on a call i can break everything down for you and explain how my company does things a little different than most funders when it comes to renewals and offer.


Scott Platto
scott@tmrnow.com
tmrnow.com
212-220-9872

[abfunders]

If you want to hop on a call i can break everything down for you and explain how my company does things a little different than most funders when it comes to renewals and offer.

You should speak with Scott about the 3rd thing that you didn't mention, which is called "add-on" which most funders do not do. TMR and Quikstone are the only two companies that I know for sure that do it regularly.

[simonwein12]

When is the Daily Funder boxing match happening? Dave Vs BR Nightmare? Get Al Haymon on this

[Yankeeman07]

When is the Daily Funder boxing matching happening? Dave Vs BR Nightmare? Get Al Haymon on this

Never -I don't take advantage of my elders

[Jason Sterling]

Quikstone Capital Solutions never double dips merchants on renewal.
Typically after 90 days if the advance is paying as expected we will offer renewal (original funding amount). We do not make the merchant payoff the existing balance with proceeds from the new renewal. Instead the merchant will net the full renewal amount and we don't start remitting on it until the original deal is paid in full. This is a huge advantage for the merchants. It also allows the ISO/Broker to keep making commissions on each renewal instead of putting the merchant into a horrible situation with double dipping (fee on top of fee). Quikstone has many merchants who have been funding with us since we opened in 2005.