[NCL]

Need help if anyone here knows any lenders that will stack loan.

Much appreciated for any info.

[Chambo]

FYI, the NorthAmerican Merchant Advance Association, or NAMAA is collaborating to add rhetoric in their collective contracts that if a merchant stacks, they enter into default judgment (or something along those lines) in line with "Tortious Inference."

I would hate to be the small ISO of 5 - 10 guys dragged into that lawsuit for damages and misrepresentation.

[CO1]

What is the source to this claim Chambo?

[MCNetwork]

I don't work with any stackers. It's just bad for business.

[CO1]

We all have Stacked a deal or two in our careers, lets not be so harsh on the person.

[MCNetwork]

Really? I've never stacked one in my four years in this business.

[GoodCustomerService]

Not everyone stacks. Some people feel it is hurtful to the merchant, and others feel it is still frowned upon in the market and don't want to hurt a relationship with one of their funders by doing it. I'm not against it completely. If you are a broker and one of your merchants, who currently has an advance out with an MCA company, says that they need more money, and your fear is that if you say "Not now, Buddy. Need to wait until your balance is lower" that you could lose the merchant to a different broker, makes sense to try and keep the merchant. But I feel the best way to handle those situations are to contact the MCA provider and let them know the merchant needs more funds and if they won't give it to him then he is going to look for a stack. If they still say no to an add on, what choice do you have?!

[MCNetwork]

If the merchant is desperate to stack, then he's in bad financial shape and a high risk for default. There's no point in jeopardizing your relationship with the primary lender by stacking a small loan with a high rate on top of the existing advance for a relatively small commission. The risks outweigh the rewards.

[funding pro]

if the merchant is desperate to stack, then he's in bad financial shape and a high risk for default. There's no point in jeopardizing your relationship with the primary lender by stacking a small loan with a high rate on top of the existing advance for a relatively small commission. The risks outweigh the rewards.

bingo!!!!!

[Capital Stack]

You know its really weird what's going on of recent. I'm seeing 4 or 5 open advances now, very often on submissions. Its becoming prevalent in the market unfortunately. Now with that said some of these merchants are utilizing the cash properly and probably performing for the collective funders. In other cases for merchants that cant handle all the extra leverage of receivables will get in trouble and hurt everyone in the deal.

Never know if this will be good or bad for business. Just a thought! I remember a time when starters first came out by 1st merchant and certain players were saying this will destroy the industry lending to these types of merchants. Then two years later the trend turned when proved its value, and most big funders started offering starer advances on CCP deals.

So as I've expressed often to many my discontent with stacking, although on that note trying to keep and open mind. And hopefully the guys that are doing the stacking as a business model and the merchants taking them wont F--k everybody in the process including themselves.

DR

[NCL]

If the merchant is desperate to stack, then he's in bad financial shape and a high risk for default. There's no point in jeopardizing your relationship with the primary lender by stacking a small loan with a high rate on top of the existing advance for a relatively small commission. The risks outweigh the rewards.

Its not quite true. Just because he is looking for more money, it doesn't mean that they are in bad shape. I have two accounts at this time that is looking for loan. First one, they were approved for $75K but decided to only take $50K. 1 month down the road they decided to take the balance only to find out that they can't because once the contract is signed, they have to wait till renewal time to get the balance which is 7 months away.

I'm just looking for a lender that is willing to go 2nd on UCC.

[MCNetwork]

Try IOU Central

[NCL]

Try IOU Central

I did. but IOU is very hard to get approved. Very strict underwriting. I'm looking for other lenders that may do the same as IOU. Merchant definitely qualifies for a lot more advance, they got the revenue to support it. Any input would be appreciated.

[GoodCustomerService]

ARF maybe. If the merchant is solid, they would consider giving him a sizable deal, low rate, and a term long enough to where paying off the existing advance may be worth it to the merchant. ARF is strict on SIC code, so you are restricted there.

[MCNetwork]

True, ARF will refinance a merchant even if he's only 20% paid down.

[MCAVeteran]

all of these longer terms are pushing stacking to occur. the merchant takes on a 15 mo term and has to wait 9 months to get more cash. In those 9 months, if they run into a pinch, they start calling around for cash to brokers. so, in a effort to push terms and lower rates, it has created a underground operation for stacking. on the flip side, if the longer term wasn't avail initially, merchant wouldn't have signed w/broker to begin with. this is simply a quagmire in the industry now. it would be interesting to see any type of data that shows % of defaults that occur with stacks in the bz to see if it does materially cause defaults.

[MCNetwork]

If the monthly debt service for the stack and underlying advance is significantly greater than 15% of gross monthly sales, then you can assume that default rates will be much higher. If the percentage is under 15%, then the merchant should still be okay.

[GoodCustomerService]

That all depends on the type of business. Most businesses cant afford 15% of their gross sales. Stacking would be less frequent on longer term deals if the funding companies would consider more add ons or tranches then renewals. Saying "no" to additional funding for a merchant currently on your books, especially a paying merchant, within the term of their advance, prior to being eligible for a renewal, is why merchants go for stacks. A more traditional line of credit product would solve a lot of these issues.

[Sean Cash]

Some of these merchants on longer term deals should be eligible for a regular credit card. Why don't they just use that??

If they're at the point where they've maxed out all their credit cards, then took an advance, and then need to stack another advance on top of it, then they are at or past the breaking point of sustainability.

[GoodCustomerService]

Where are most of the stackings happening? On longer term loan deals or longer term MCA deals?

[Capital Stack]

Everywhere! its probably a mixture of ISO's pushing them to generate extra commission and merchants looking for additional working capital.

[Quickfunder]

Other than Pearl, who else comes to mind?

And what does ARF stand for? We're not talking about American Restaurant Financing are we?

[MCNetwork]

Advance Restaurant Finance

[Quickfunder]

So besides they and Pearl....?

[Finance1]

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.