[Chambo]

"On Deck funded over 1000 loans last month in June for around 35 Million. Our loans will be getting bigger, faster and stronger in the coming months"

Who else finds this incredibly hard to believe?

[Finance1]

Renewals are the majority imo. 1k & 35M in new business is extremely unlikely.

[CO1]

what is your source?

[Chambo]

my source is On Deck's Press release....goes alongside their new starter program (3 mo' 1.18's) they are rolling out next month

[MCNetwork]

I don't think it's too far fetched. On Deck has been super aggressive lately with low factor rates and 24 hour express funding. I've been to their NY office and its like walking onto the trading floor at Goldman Sachs. Tons of account reps with state of the art workstations and best of all, a gaming room with 60 inch TV and Xbox, pool table and ping pong. It's like working at Google for chrissake!

[Sean Cash]

3 months with money being debited out daily from the first day they get it. How many merchants will use this money for the right reasons or be able to use it profitably?

[Chambo]

Sean, I sent you the breakdown on their new programs, right?

-Express Closing Has been extended and now in effect!- all deals $50K under just require a driver’s license, void check and terms page of business lease to fund! Only on unusual cases will more be requested.

-Our Newer High-Risk Product “On Deck Marketplace” is going live by the end of Summer! Marketplace will offer higher line amounts and longer terms are riskier deals.
- This is a higher risk product willing to take more chances!
o If your ODC deal is declined you may receive and ODC Marketplace offer
o If your ODC deal is to low you may receive a high loan amount from ODC Marketplace! This will be very beneficial especially for Yellowstone

- New Contracts are here! Our new contracts are live- enjoy! This should make selling the On Deck Loan even easier with less fees and a simple loan and payback amount structure.

-We are now funding up to $250K per single location: Submit larger deals as normal and if eligible we will flag it. Additional documents required will be 2012 financials (Tax Returns, P&L and Balance sheet) plus YTD P&L and balance sheet

[Chambo]

they don't even do landlord references anymore....

[MCNetwork]

How many merchants will use this money for the right reasons or be able to use it profitably?

Doesn't this question apply to all MCA customers? The answer is that the great majority use the money to catch up on some bills and get a little breathing room. Then they rinse and repeat the process.

[Sean Cash]

Doesn't this question apply to all MCA customers? The answer is that the great majority use the money to catch up on some bills and get a little breathing room. Then they rinse and repeat the process.

Catching up on bills is the worst use of this money. That's a default down the road. 3 month loan should really only be used to pay for a very large bulk order invoice that has a discount incentive, to put cash down on the closing of a new location, cash for a one time emergency, or any type of arbitrage opportunity.

[Chambo]

so what is your opinion on the multiple stacking that is going on?

[Sean Cash]

bad, very bad.

[merchantscap1]

bad, very bad.

The question is when will this unsustainable financing/2nds/3rds and refis hit the wall ???
Small business cannot afford the vig...

[Chambo]

The question is when will this unsustainable financing/2nds/3rds and refis hit the wall ???
Small business cannot afford the vig...

When some small merchant in humbuck land complains to his cousin over dinner in a town of 2000...and the cousin is the local councilman, who then calls his associate in the governor's office.....

[Chambo]

and the big, bad, greedy city slickers will get dumped on....

[Chambo]

then I want to see all these bad ass brokers claiming "it is business to business and who cares, the merchant signed it" will do when the Attorney General asks for the files regarding underwriting standards and how they came to determine the merchant could handle the payments...."oh wait, you have NO WRITTEN UW Guidelines? OK, let's see your financials then..."

That is what happens when you have a business saturated with younger folks who pay no attention to history, or think "things are different now." This story has been repeated in American history, and in most of our lifetimes (which is a scary thought)

[MCAVeteran]

i think multiple stacking will continue as longer terms are pushed by the larger funders who have capital structures to do so. if merchants get in a pinch and renewals force them to wait to get more cash, the merchant or the broker will seek out the small funders who dont mind doing stacking. the stackers have no desire to payoff large balances.

[Sean Cash]

i couldn't find any press release about the $35 million a month number

[merchantscap1]

i think multiple stacking will continue as longer terms are pushed by the larger funders who have capital structures to do so. if merchants get in a pinch and renewals force them to wait to get more cash, the merchant or the broker will seek out the small funders who dont mind doing stacking. the stackers have no desire to payoff large balances.

As a funder, I believe in constant contact with the merchants.. I have had CSRs in touch with merchants at least once a month, friendly,sales types developing relationships with the merchant after funding. They are also our first line of collections.. following performance and seeing that the merchant is on pace. Letting the merchant know where he is at.. Those funders that have hard fast rules about additional money are those same funders that get stacked. I would rather keep a good merchant topped off than have him getting stacked at a 1.42 8 to 10 week deal.. Add Ons not Stacking will put Stacking to rest!

The funders have the power to limit Stacking.. Fund merchants that you feel will pay you back and keep them topped off.. You shouldn't be funding merchants that are so desperate for $$$ that they go right out and get stacked.

[Finance1]

I don't think it matters how much you stay in touch with a merchant. If you say no to a renewal or add-on then the merchant will immediately go on a search for more cash. If nobody wants to pay you off (most likely scenario) then you will get stacked. I don't care how many times you tell a merchant that they aren't allowed to stack. Desperate people do desperate things.

[Chambo]

Catching up on bills is the worst use of this money. That's a default down the road. 3 month loan should really only be used to pay for a very large bulk order invoice that has a discount incentive, to put cash down on the closing of a new location, cash for a one time emergency, or any type of arbitrage opportunity.

Dr Death UW'er has spoken yet again

[Chambo]

I don't think it matters how much you stay in touch with a merchant. If you say no to a renewal or add-on then the merchant will immediately go on a search for more cash. If nobody wants to pay you off (most likely scenario) then you will get stacked. I don't care how many times you tell a merchant that they aren't allowed to stack. Desperate people do desperate things.

Alas, this is true. Duncan can call a merchant every day, but if his company will not renew and the merchant needs the money NOW (reason almost irrelevant), they are going to go out and get wit...with or without Duncan.

That's why I like "add-on" deals. Merchants can get a quick couple grand every other month if they want it, not refi's, not strings

[skideeppow]

who does add ons right now? I know factor funding, but how about some of the bigger players?

Thanks

[MCNetwork]

GBR Funding, On Deck, BFS and Rapid Advance all do add-ons. And if a funder that normally doesn't do add-ons is in danger of losing a good performing merchant to a competitor, they'll do the add-on to keep the merchant.

[Chambo]

Rapid doesn't do add ons as a normal practice. Only in extreme circumstances as mentioned above. TBB does add ons and so does SFS when specifically requested (but better be prepared to cough up some syndication dough)