[jbrown]

11 Stacks. 8 stacks still outstanding. 3 year old restaurant.

In no particular order:

Advance Payment (existing from first bank statement received)
Yellowstone (existing)
World Business (existing)
Strategic - 5/14
Advance Payment -7/2 (increase previous ACH by 50%)
Pirs Capital -7/10
Complete Business - 7/10
Yellowstone (doubling previous ACH) - 7/21
Richmond Capital -7/23
Advance Payment (increase ACH again) - 8/4
Wide Merchant - 8/27
Ironwood Finance - 8/27
Pearl - 9/11
NLYH - 9/4
Capital Stack - 11/26

As expected there are multiple NSF's to various lenders. Average monthly gross is $94k. Hard to tell exactly what % of total revenue is being repaid but in some months it is in the range of 50%. Sort of a pyramid scheme in a way - take money from the next 3 stackers to be able to pay the current stackers.

Is there no underwriting at these companies?

[ADiamond]

What's the name of the restaurant? ISO double funded twice and you blame the funders?

[anonymous]

I'll see your 12th position client, and raise you a 1.74 factor rate haha. New records being set today.1.74.JPG

[Sean Cash]

A 1.74 four month???

Before closing fees?!

[ADiamond]

I'll see your 12th position client, and raise you a 1.74 factor rate haha. New records being set today.1.74.JPG

i know the broker that owns this merchant, you think you're nice?

10k, 1.795 10% psf, $445/day, merchant wires 12k balance before 20 days is up.

point, game score - you lose.

[WhoisKingsley]

OMG. J Brown, I thought my file I am working on was bad... and everyone knows her name and company.

I can try to help you be their hero. PM me.

[JSL23]

11 Stacks. 8 stacks still outstanding. 3 year old restaurant.

In no particular order:

Advance Payment (existing from first bank statement received)
Yellowstone (existing)
World Business (existing)
Strategic - 5/14
Advance Payment -7/2 (increase previous ACH by 50%)
Pirs Capital -7/10
Complete Business - 7/10
Yellowstone (doubling previous ACH) - 7/21
Richmond Capital -7/23
Advance Payment (increase ACH again) - 8/4
Wide Merchant - 8/27
Ironwood Finance - 8/27
Pearl - 9/11
NLYH - 9/4
Capital Stack - 11/26

As expected there are multiple NSF's to various lenders. Average monthly gross is $94k. Hard to tell exactly what % of total revenue is being repaid but in some months it is in the range of 50%. Sort of a pyramid scheme in a way - take money from the next 3 stackers to be able to pay the current stackers.

Is there no underwriting at these companies?

WOW, I mean WOW...I have seen a few bad ones this month but 11 stacks! What the hell are these Lenders thinking?! 2nd position fine. 3rd I understand, 4th and 5th are excessive but I know they are out there, but 11...who would do 7-11th position...what's the real upside?!

On a sidenote, who is Ironwood Finance? I have seen them on a couple of statements lately.

[MedDirect]

All aboard the default train.

[Chambo]

it is this predatory nonsense that will seriously hurt our industry

[Businesscap]

This stacking and 2nd position and beyond stuff is ridiculous. It's nothing less than self destruction and irresponsible lending. The fact that some post all the time looking for funders or ISO's who do this is nothing more than making money off of merchants misfortune and providing little to no value. The list of funders jbrown posted is the walk of shame.

[anonymous]

i know the broker that owns this merchant, you think you're nice?

10k, 1.795 10% psf, $445/day, merchant wires 12k balance before 20 days is up.

point, game score - you lose.

Yeah, can't really compete with that haha

[anonymous]

A 1.74 four month???

Before closing fees?!

I'm sure it was an error. Waiting to hear back from the lender to confirm that it is actually 1.47, but who knows. Will keep you guys posted.

[WhoisKingsley]

But did the merchant keep applying and want it? Yes, a 9th position is insane but if they want it and their finances can handle it- they are going to get it wherever they can get it. It's not the lenders issue- they underwrite it as if the previous balance was another debt against the company- they don't care who as long as they can handle the payback.

I'm not saying that business owners who want more money and are addicted to advances are like crackheads... But read the situation. Metaphorically you can say the same thing about a drug transaction.... It is pretty sad and no broker or lender can make them stop lol

[FUSIONCAPITAL]

Anonymous,

That has be a simple typo and switch of the factor from a 1.47 to 1.74...maybe a new admin with dyslexia??? lol

Plus knowing that lender its most definitely a 1.47.

[Chambo]

But did the merchant keep applying and want it? Yes, a 9th position is insane but if they want it and their finances can handle it- they are going to get it wherever they can get it. It's not the lenders issue- they underwrite it as if the previous balance was another debt against the company- they don't care who as long as they can handle the payback.

I'm not saying that business owners who want more money and are addicted to advances are like crackheads... But read the situation. Metaphorically you can say the same thing about a drug transaction.... It is pretty sad and no broker or lender can make them stop lol

Doesn't matter what they want. You, as the "seasoned professional", are supposed to inform them about standards and advise against destructive behavior. Not to mention, you're supposed to protect your funder's assets, and advise against an obviously super risky deal. Otherwise, you are just another predatory lender the Feds will want to throw in jail.

8 active deals, each taking (for argument's sake) 10% pull. That comes to 80% of GROSS SALES going to cash advance. A completely unsustainable equation

[J.Celifarco]

Anonymous,

That has be a simple typo and switch of the factor from a 1.47 to 1.74...maybe a new admin with dyslexia??? lol

Plus knowing that lender its most definitely a 1.47.

does that really make it better when we are talking about a 12th position

[fundgorilla]

This is precisely the sort of thing that's going to attract the attention of regulators:

"Well, they said that they'd pay off my balances and help me grow the business so I signed the contract and I can't read and now my business is closed and I'm homeless and I'm giving interviews to The Huffington Post and I'm on the Today Show tomorrow....."

[GRP Funding]

does that really make it better when we are talking about a 12th position

2nd, 3rd, 4th, 12th. It's all the same.

[J.Celifarco]

2nd, 3rd, 4th, 12th. It's all the same.

Brian, I usually agree with everything you say on the forums but here I don't think I can agree that there is no difference between a second and a 12th. A merchant taking a second can either be in a bad position and need a little more money or might not know that taking a second loan breaches their first contract.. At 12 positions they don't care and neither does the broker facilitating the loan.
I don't agree with stacking and I think my posts on here can confirm that, but that said there is a huge difference in the mentality with a merchant taking a second compared to taking a 12th

[FUSIONCAPITAL]

does that really make it better when we are talking about a 12th position

J.

The context of my post was a sarcastic remark on the typo, not the obvious perils of 12th position deals. But no it doesn't make matters any better.

[WhoisKingsley]

I completely agree. That's why if I have a merchant that qualifies for something better outside the MCA world, I work with them on going the best route and try to get others to do the same. What more could you do though?

[SupremeCapitalGroupinc]

That's nuts. I seen atleast 6 companies go out of business behind these kinds of deals. I know one guy who actually called us for a job lol. Not worth it.

[GRP Funding]

Brian, I usually agree with everything you say on the forums but here I don't think I can agree that there is no difference between a second and a 12th. A merchant taking a second can either be in a bad position and need a little more money or might not know that taking a second loan breaches their first contract.. At 12 positions they don't care and neither does the broker facilitating the loan.
I don't agree with stacking and I think my posts on here can confirm that, but that said there is a huge difference in the mentality with a merchant taking a second compared to taking a 12th

I agree from the merchant's point of view. The first stack could just be them in desperation mode like you said, or getting talked into it by a salesperson and not knowing any better. But from the funding side or sales side, I still don't think there is a difference. A breach is a breach whether you're selling it or facilitating it for the 2nd time or the 12th time.

[J.Celifarco]

I agree from the merchant's point of view. The first stack could just be them in desperation mode like you said, or getting talked into it by a salesperson and not knowing any better. But from the funding side or sales side, I still don't think there is a difference. A breach is a breach whether you're selling it or facilitating it for the 2nd time or the 12th time.

fair, OK I concede on that. From the banks side there is no difference when it comes to breaching of the 1st positions contract

[Chambo]

I agree from the merchant's point of view. The first stack could just be them in desperation mode like you said, or getting talked into it by a salesperson and not knowing any better. But from the funding side or sales side, I still don't think there is a difference. A breach is a breach whether you're selling it or facilitating it for the 2nd time or the 12th time.

The issue is, all these stackers don't care. They are just looking for quick revenue. Heck, there are a handful of brokers out there who fund with these companies & then turn around to a stacker for 2nd position.

Why should they care, when you think about it? What are YOU going to do about it? Sue them? Until the first position guys start taking a truly tough stance on these, these smaller companies will just keep doing what they are doing