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09-08-2012, 04:15 PM #1
The Banks Behind The Funders
Many of the big funding companies are backed by banks, though that's not true for mca providers. It is interesting to see just how directly involved they are though:
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09-10-2012, 08:49 AM #2
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09-12-2012, 04:22 PM #3
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This is good to know but it doesn't affect my sales pitch. I can't exactly convince a merchant to pay a 1.38 factor because Wells Fargo is backing the deal!
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09-17-2012, 01:01 PM #4
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09-19-2012, 01:17 AM #5
There are more- You forgot ARF- They utilize community federally chartered banks to provide loans to merchants and export the rates they charge across state lines. They have been doing this for years. Venture Bank was a main one for years but I believe that has shifted to other banks they partnered with- I find it interesting how a merchant end user cant walk into a bank to get an advance or unsecured loan but they provide the backing to these funders to supply the same merchants money-
Last edited by MCAVeteran; 09-19-2012 at 01:22 AM.
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09-20-2012, 12:07 AM #6
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this has really opened my eyes. i did not know that banks were this involved.
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09-20-2012, 12:01 PM #7
Cashman....these MCA's take out business loans, or get lines of credit from Hedge Funds, just like any other business would do. Difference is, they have the credit and/or assets to back it up. Cash Ready used to co-sign loans to merchant from Citibank at 10% over 6 months, then add on 25% commission (thus making it a 1.35). That way they could charge the late fees, monthly fees, etc.
Banks are involved to the point that they lend the money. Federal Regulations keep them from getting directly involved.
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09-20-2012, 01:42 PM #8
"Banks are involved to the point that they lend the money. Federal Regulations keep them from getting directly involved." - Exactly!
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09-21-2012, 01:24 AM #9
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so basically the banks are as close as they can possibly get to the industry already. is it possible for them to set up a subsidiary that isn't bound by fed regulations and go into the cash advance biz directly themselves?
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09-21-2012, 12:07 PM #10
seems risky to try that route as it could be linked as a simple shell company in an effort to evade the regulations- newco's are formed all the time for loopholes and sometimes it comes right back at those owners....
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09-21-2012, 01:49 PM #11
With the scrutiny banks are currently under, this would be a rather foolhearty move. Most major banks are publicly traded and thus have to report their financials to the SEC and to the public every three months. You have analysts at companies (and the federalones) who do nothign but comb through these reprots looking for discrepancies/improprieties.
Easier just to lend the money to the MCA or whatever and have no part of the day to day stuff.
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09-23-2012, 11:09 PM #12
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makes sense. who said trickle-down doesn't work?
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09-24-2012, 09:46 AM #13
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Bank are heavy on protecting reputation now more than ever. Getting involved directly in the MCA biz can easily set a bank up for a reputation black eye. Especially with litigation. One of the things that protects a small - mid size cash company is there is nothing really worth going after. That's (probably) why the only suits in this industry are against the big ones. Could you imagine lawyers chomping at the bit if say Wells Fargo overstepped usary in a class sized suit? eek.
It's also still a cottage insdustry. It's a tiny one compared to other financial stuff. Banks will make their money in it but will most likely stay one layer away. Even if the MCA space quadrupled in size it would still be tiny.
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09-24-2012, 12:11 PM #14
Banks already paid Billions with the Subprime Mortgage Industry Involvement and Robo Signings....They thought that industry was their golden ticket to keeping their Board Members happy and look what happened. Now, they are feeding this bz money behind closed doors. Some things never change- just loopholes to a regulated system.
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01-16-2016, 07:17 PM #15
Oh, how the times have changed... We should create a more expansive list of this (like in DeBanked a few months ago)
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01-18-2016, 12:31 PM #16
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great info I was always under the impression banks could not get involved it was always private hedge funds backing or private investors.
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01-19-2016, 02:56 PM #17
they're STILL not involved .....they facilitate, they lend money to businesses. But the direct UW'ing and handling of merchants?
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01-19-2016, 03:17 PM #18
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The banks are not involved.
Have you ever got a mortgage from Wells Fargo? or tried to Refi with Wells? If you understand their process and how they work with individual investors you could understand the basics of how they can back an MCA/Funding Company.
Correct me if I am wrong.
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01-19-2016, 03:57 PM #19
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None of this is exactly news to those who stay up to date on the latest headlines - I've known about the wells and g/s involvement for over a year....my question is where are BofA and JPM getting in on this action?
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01-19-2016, 04:21 PM #20
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01-19-2016, 05:10 PM #21
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Somebody's doing more homework than I am!
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01-19-2016, 05:11 PM #22
But how does any of this change anything that we do?
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01-19-2016, 07:03 PM #23
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01-19-2016, 09:35 PM #24
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Very interesting. I didn't know GS backs OD. Another way to get those sweet subprime lending returns, ay?
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01-19-2016, 09:39 PM #25
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