[funding pro]

They take affordability into careful consideration.

The problem is that the primary funder already did this. In most situations the merchant is already maxed out at what the first funder believes that business can operate on with a reduced percentage of their revenue. Yes, in some situations the merchant has the ability to lose a larger percentage of their sales and continue to operate, but it is not the secondary funders place to make that decision.

The merchant has already sold their revenues to the first funding company and contractually agreed not to "stack". While many times merchants are knowingly breaking this agreement, there are also funding companies lying to the merchants and telling them they can do this. I've heard it first hand.

[Scott Williams]

Lenders that require the merchant to payoff their existing balance on a renewal are always going to run the risk of the merchant taking a second funding. Double dipping these merchants causes them to pay interest twice on the money and upsets many merchants. I bet lenders that "add on" renewals see a lot more of their merchant not take second fundings.

[Quickfunder]

Biz Backers will do them and they are one of the more responsible co's doing it. They take affordability into careful consideration. However, they have required the client to sign a doc saying they won't renew with whomever they have an open advance with.

Thank you. Do you have a # for them? Can't seem to locate them on search.

[Finance1]

Thank you. Do you have a # for them? Can't seem to locate them on search.

No prob. They FINALLY have a dedicated ISO person now:

David Polaniecki

10101 Alliance Road, Suite 140
Cincinnati, OH 45242
o- 866-615-4747 | f- 866-430-3352
Email: dpolaniecki@businessbacker.com

[Quickfunder]

No prob. They FINALLY have a dedicated ISO person now:

David Polaniecki

10101 Alliance Road, Suite 140
Cincinnati, OH 45242
o- 866-615-4747 | f- 866-430-3352
Email: dpolaniecki@businessbacker.com

Great - thanks!

[Chambo]

this should be fun to watch unfold...

[CO1]

A whole discussion on stacking and information exchange on stacking. Its bound to happen to everyone in the MCA World to stack. Companies are stacking left and right. Wide, Business Backer, Same little ISO's, and even big company.

[HeatherF]

Did your mom ever give you that saying "If all your friends are jumping off a bridge, would you do it?" Just because more and more are participating in the practice it does not make it the smart thing or make it what should be considered the norm. Being a decline company we get a lot of deals that show stacks and i can tell you that very few have healthy bottom lines. Matter of fact i will show you a bank statement we received the other day... Took out an advance in Feb and then stacked in march.

Screenshot_7_2_13_12_03_PM.jpgScreenshot_7_2_13_12_04_PM.jpgScreenshot_7_2_13_12_05_PM.jpgScreenshot_7_2_13_12_06_PM.jpgScreenshot_7_2_13_12_08_PM-2.jpg

[CO1]

There was a company i forgot the name but they were telling me that, if they have over draft protection they would go ahead and stack, and the guy was offering 4 points on each deal. And i laughed and i hung up. And heather what company is this you work for?

[HeatherF]

I'm the Director of Merchant Cash Group.

[CO1]

Well pleasure to me you Director.

[Chambo]

There was a company i forgot the name but they were telling me that, if they have over draft protection they would go ahead and stack, and the guy was offering 4 points on each deal. And i laughed and i hung up. And heather what company is this you work for?

The issue with stacking from a lender's prospective, is that with each subsequent deal, the merchant becomes more at risk of default. I never understood why someone looking to stack on top of an already faltering deal, or even worse, coming in number 3 or 4, knowing good and well it is a crap shoot, would demand "X" in commissions. The deal is essentially garbage and everyone is palying musical chairs to see who gets left standing at the end. If you get ANYTHING for that kind of deal, it is better than zero (which is what should be offered for taking such an enormous risk). 10% of SOMETHING is better than 0% of NOTHING

[Finance1]

I got a call from a distressed merchant today. Has an advance (thank god it's not us) with a 31% hold that wouldn't renew so he took out a stack with a $200 daily payment. That hurt so bad that he stacked the stack a week ago that has a $140 daily payment. What an ugly scenario. I doubt anyone gets paid in full. You could hear in his voice. The end is near.

I think stackers will self regulate themselves to some extent. Take it on the chin enough and you're out of the game.

[Sean Cash]

Did your mom ever give you that saying "If all your friends are jumping off a bridge, would you do it?" Just because more and more are participating in the practice it does not make it the smart thing or make it what should be considered the norm. Being a decline company we get a lot of deals that show stacks and i can tell you that very few have healthy bottom lines. Matter of fact i will show you a bank statement we received the other day... Took out an advance in Feb and then stacked in march.

Heather, thank you for sharing that. We talk about issues as hypotheticals too often so I think it's important that we see certain things in action. Yes, this is just one merchant and no this doesn't represent every merchant, but look at the bind this merchant is in. I did some consulting last year for a company in regards to underwriting and I saw a ton of submissions with 2,3, 4, 5, and even 6 stacks. There is not just 1 company doing it or two companies doing it. It's happening on a major level and some of them are funders I've never even heard of. I guess they try to stay off the radar. I saw many cases where these multiple daily ACHs had turned merchants so far negative that they had maxed out their overdraft protection and were getting hit with NSFs. And what was the merchant doing? Applying for another stack of course to try and stave off demise just a little bit longer. Everyone was losing in these deals.

Let's be honest, some funders make stacking their entire business model. They hunt UCCs, call merchants shortly after a filing took place (when a merchant has just been freshly underwritten), do little to no underwriting of their own because a reputable company has just done it for them, do a short term stack which puts the merchant in breach, and walk away as the merchant's primary funder after the original funder refuses to renew them again. Then it becomes their deal. It keeps acquisition costs incredibly low and underwriting overhead is unnecessary. Call UCC, stack and breach, deal's all yours, and repeat with the next UCC. Of course then other companies will stack on your deal and payback will be a *****, literally.

It makes no sense to work against each other like this. Find your own brand new clients. There's millions of small businesses out there that are untapped. There is no need for everyone to latch onto one deal.

[funding pro]

I often speak with CPAs, loan officers, franchisors and other business professionals. Many of whom are familiar with the MCA industry and have a negative view point of our industry. Those that do, think that because of what we do, we don't help businesses rather we put good businesses out. My objection to this view is always the same. Cash is the lifeblood of any business and when a business is dying the business owner will do whatever is necessary to get more cash. Just like a terminally ill patient would go out and take medication, you can't blame the medication for that person dying.

It applies exactly the same to what we do, except in the case of stacking. In the case of stacking a healthy business will die because they cannot afford to operate while being squeezed so tightly.

[Finance1]

There are clearly 2 types of stacks out there. There's the most prolific- bottom feeding on desperate merchants. 1.40's over 6-8 weeks is shameful. It's nothing more than taking a gamble that you get paid back at least the principal and then get some juice if the merchant survives. I know they aren't *all* like that but I've seen enough.

Then there's the ones where a business is healthy and can clearly afford to repay something in the interim while the longer term deal in place continue to season. Those businesses aren't taking 1.40/6 week deals though. That is the "niche" for "good stacking". Not saying I agree with any of it but if it HAS to be done then these type of stacks are at the very least "much less damaging".

[Capital Stack]

Well said!

There are clearly 2 types of stacks out there. There's the most prolific- bottom feeding on desperate merchants. 1.40's over 6-8 weeks is shameful. It's nothing more than taking a gamble that you get paid back at least the principal and then get some juice if the merchant survives. I know they aren't *all* like that but I've seen enough.

Then there's the ones where a business is healthy and can clearly afford to repay something in the interim while the longer term deal in place continue to season. Those businesses aren't taking 1.40/6 week deals though. That is the "niche" for "good stacking". Not saying I agree with any of it but if it HAS to be done then these type of stacks are at the very least "much less damaging".

[merchantscap1]

SHAMEFUL ! 1.40 6-8 week ???? The legal term is UNCONSCIONABLE ! We are going to find one States Attorney General out there looking to make our industry an example... A " Cause" for his next re-election... Only time will tell...

There are clearly 2 types of stacks out there. There's the most prolific- bottom feeding on desperate merchants. 1.40's over 6-8 weeks is shameful. It's nothing more than taking a gamble that you get paid back at least the principal and then get some juice if the merchant survives. I know they aren't *all* like that but I've seen enough.

Then there's the ones where a business is healthy and can clearly afford to repay something in the interim while the longer term deal in place continue to season. Those businesses aren't taking 1.40/6 week deals though. That is the "niche" for "good stacking". Not saying I agree with any of it but if it HAS to be done then these type of stacks are at the very least "much less damaging".

[MCAVeteran]

some of the common names i am seeing are wide lending, viking, horizon,pearl, ARCH, quick bridge funding, and a handful more who go in second place or third place with short terms.

[Chambo]

some of the common names i am seeing are wide lending, viking, horizon,pearl, ARCH, quick bridge funding, and a handful more who go in second place or third place with short terms.

the sick part is, there are ISO's advertising that they WANT to be 3rd, 4th or even 5th position! How does anyone expect a merchant to stay in business with 5 advances? EACH ONE taking 5-15% of gross deposits?! How are they supposed to eat or pay rent, much less pay them all back?!

[Chambo]

the 4th and 5th position deals are the ones that are going to bring the hammer of Thor down on this business. NO WAY you can defend that position...that you are trying to help the merchant. Simply rats feeding off a dying carcass

[rosewell13]

The "debt stacking" method recommends that you make a list of all your debts, ranked by interest rate, from highest to lowest. For example, you might owe:
Mastercard - $2,500 - 19 percent - Highest Interest Rate
Visa - $7,500 - 13 percent - Second-Highest Interest Rate
Car Loan - $4,000 - 8 percent - Third-Highest Interest Rate
Student Loan - $1,900 - 5 percent - Lowest Interest Rate
The "debt stacking" method advises that you make the minimum payment on all your loans. Then, you should throw all your extra money towards paying off your MasterCard, which has the highest interest rate, at 19 percent.

[merchant cash cloud]

If a business can sustain it and needs capital, why is stacking so bad?

[MCNetwork]

Who determines if the business can sustain it? What are the guidelines?

[Gini Co]

If a business can sustain it and needs capital, why is stacking so bad?

Because many "funding companies", and I use that term lightly, aren't able to determine or don't care if "the business can sustain it". The broker/agent certainly doesn't care. And because there is no "first/second/third position" in this industry (despite many in the industry misusing these terms), the funding company that first funded the merchant, which typically has the largest exposure to the merchant, takes the biggest hit. Its not a sustainable model for the industry as a whole, even though many who take part can get in and out relatively unscathed....for now.