[bsilva434]

Sure it does as I'm sure you and everyone here sees it on a regular basis.

Business is not functioning optimally, over time client fills in gaps with borrowing, eventually they hit a cash flow crunch and it becomes a time issue because they need to pay rent or make payroll or any other number of things and they go looking for more funds.

The long term answer is to address whatever issues they have that put them there in the first place. The short term problem still exists today.

I used to say that I wouldn't do that type of financing at all and did my best to try slow down and take a more affordable route, or see what the underlying issue was. What that resulted in was clients disappearing for a couple of months, resurfacing with their docs, and saying by the way I had to take out this loan/advance in the meantime. The result was the same except I gave away business.

At least if I work with clients on these types of deals I can explain the funding to the client so they understand everything and can make their own decision, as opposed to the next guy or funder rep who glosses over the negative and accentuates the positive to get it closed. We can ask questions like does this solve a problem or make it bigger? If you do this, what's your exit strategy?

Believe me, I would happily choose to get paid less and have a better deal to present to a client. Unfortunately, here I made that effort without success.

Unfortunately, most of the top tier lenders in the industry are putting out offers on the higher end of their rate threshold due to the current economic climate. Rates are high across the board and those higher rates are passed down to lenders from their credit facilities. I see a lot of A paper lenders come back with sell rates close to 1.50 for their 18 month product. Anyone who has been in this industry for any amount of time knows that if a business is in a cash flow pinch that it will be much more beneficial for them to pay a higher rate (closer to 1.50) for an 18 month program as opposed to anything in the 1.30 - 1.40 range that would most certainly cap out at 12 months. The lower payment is what will ultimately help this client the most.

It does seem like you have had a few declines for this merchant at other shops. I would like to say that we may be able to come in at a lower rate for an 18 month cost, but I would certainly need more information. Also, how many points are built into that 1.54 offer?