[skideeppow]

I just got a lead, the guy does 850k a year in gross. He has 6 advances right now, total balance outstanding is $257k. Daily payment is at $3800 daily. He was funded by the following:
Strategic
Yellowstone
World Global
Par Funding
LCF
TBT

Strategic and Yellowstone just renewed him.

WTF guys? You in this to actually help people or just put them out of business and make your commision. I asked the guy, how do you take 6 of these loans.

[ridextreme]

a lot of times they are sneaky and use different bank accounts, or fund two at the same time. They know how the game works and they are like drug addicts they get high on the money.

[skideeppow]

^^ I understand, but 6 is not be sneaky, it is just the lenders being greedy. And there are usually transfers between bank accounts so any underwrite worth a **** will request the other banks.

[mcg168]

a lot of times they are sneaky and use different bank accounts, or fund two at the same time. They know how the game works and they are like drug addicts they get high on the money.

Speaking of sneaky - One of my reps got a call yesterday from a merchant basically saying 'my business isnt going to be able to stay open much longer, but I'd love to get some unsecured financing before we close shop...we have a 2nd bank statement that looks like the business is strong so let me know if you wanna play ball' Unreal.

Thing is, there are probably plenty of brokers in our industry who would entertain this scumbag.

[Quickfunder]

I bet I know who that is. Salon?

[MCNetwork]

So let me get this straight...the merchant grosses $71,000 per month and the cash advance payments total $76,000 per month? All those underwriters should be fired!

[MCAVeteran]

If he has a daily payment of $3800 and you use 22 business days per month that's $83600 repay per mo. Helping smbs congrats

[skideeppow]

Just sad, some real stand up people in this industry.

[jotucker1983]

The lenders and the merchant are both wrong in this case, but merchants are going to have to take more active responsibility in these deals.

You have to run your business, feed yourself and feed your family, you can easily take out a calculator and calculate what your payments are going to be, to see that you will be paying out more in cash advance payments than you are grossing monthly in your business for a couple of months. You are already on short cycle payments in the first place, how can you quickly flip the money in now an even shorter period of time?

I personally don't think their cash advance related payments should go over the 15% - 25% of their monthly gross range, anything higher than that becomes too excessive to where you wonder how in the world are they even using the money for growth? They are just taking out money to pay off other advances.

The last thing I would do is call a merchant "stupid," but some days I question how in the world does this guy operate a $1 million business, doing insane stack deals like this? The deals make absolutely no sense.

Yes, the lenders shouldn't be marketing to them for stacks, but goodness just because you get a pre-approved credit offer in the mail, that doesn't mean you should take it if you can't afford it.

[J.Celifarco]

if all these numbers are correct and his payments are greater then his total monthly gross then these underwriters are either insane and didn't care how much they took from this guy or they were blind and didn't notice that there had to be multiple accounts

[ADiamond]

and yet if any of you reps had a 3-6th position deal to place, say you brought it to these companies, they gave an offer and the merchant signed, you would say "no sir, I just did it to see if there was a chance of it happening, I can not in good faith fund you a 6th position and make $4k commission with a $4k psf. Why don't you consider the MCA anonymous website?

hahaha GTFOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

[J.Celifarco]

and yet if any of you reps had a 3-6th position deal to place, say you brought it to these companies, they gave an offer and the merchant signed, you would say "no sir, I just did it to see if there was a chance of it happening, I can not in good faith fund you a 6th position and make $4k commission with a $4k psf. Why don't you consider the MCA anonymous website?

hahaha GTFOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

I wouldn't submit it so I sure as hell wouldn't fund it

[MCNetwork]

No self-respecting agent is submitting 3rd to 6th position applications. At least I don't associate with them...

[J.Celifarco]

No self-respecting agent is submitting 3rd to 6th position applications. At least I don't associate with them...

agreed

[jotucker1983]

and yet if any of you reps had a 3-6th position deal to place, say you brought it to these companies, they gave an offer and the merchant signed, you would say "no sir, I just did it to see if there was a chance of it happening, I can not in good faith fund you a 6th position and make $4k commission with a $4k psf. Why don't you consider the MCA anonymous website?

hahaha GTFOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

Anthony,

I personally wouldn't submit it for a 3rd position, and two, none of my lenders would even go out further than a 2nd position anyway. The lenders doing 3rd and 4th stacks are mostly (from what I can see) newer lenders who are looking to gain any type of market share, doesn't matter if it's profitable, ethical, or what.

Why would a lender even want to be in a 4th, 5th, or 6th position in a financing arrangement lol? Like I said, it makes no sense.

[ADiamond]

Anthony,

I personally wouldn't submit it for a 3rd position, and two, none of my lenders would even go out further than a 2nd position anyway. The lenders doing 3rd and 4th stacks are mostly (from what I can see) newer lenders who are looking to gain any type of market share, doesn't matter if it's profitable, ethical, or what.

Why would a lender even want to be in a 4th, 5th, or 6th position in a financing arrangement lol? Like I said, it makes no sense.

Strategic and Yellowstone just renewed him.

Why would strategic, a supposed A+ lender give a renewal if they had 5 positions stacked on top of them? The lenders doing 3rd, 4th, etc positions aren't doing it to just gain a market share - they're doing it because there is value in high risk lending. If you or no one else here would submit for a 3rd position, then god bless you, because someone will do it, and they're going to make money off it.

[J.Celifarco]

I wouldn't even have a bank to submit this deal to if I wanted to. The only reason I would send this to any of the banks I work with would be if it was a joke, becuae the second they saw 5 outstanding loans the only reaction they would have would be laughter.
Concerning strategic they may not know about the other balances if there are multiple bank accounts.. . If they did I would guess they would kill it. It is bad business and its predatory. Just because you can make money doesn't mean it makes sense. It is lending like this that will lead to regulation of the industry and profits for all people in the space to drop immensely. Smart people in the space are staying away from these deals not because you can't make money but because they are looking big picture and realize a couple extra dollars today is not worth risking the ability to make money in the future

[ADiamond]

I wouldn't even have a bank to submit this deal to if I wanted to. The only reason I would send this to any of the banks I work with would be if it was a joke, becuae the second they saw 5 outstanding loans the only reaction they would have would be laughter.
Concerning strategic they may not know about the other balances if there are multiple bank accounts.. . If they did I would guess they would kill it. It is bad business and its predatory. Just because you can make money doesn't mean it makes sense. It is lending like this that will lead to regulation of the industry and profits for all people in the space to drop immensely. Smart people in the space are staying away from these deals not because you can't make money but because they are looking big picture and realize a couple extra dollars today is not worth risking the ability to make money in the future

It's bad business and it's predatory, yet the merchant knows to build revenue and submit another account? MERCHANTS ARE PREYING ON MCA COMPANIES AND EVERYONE ON HERE WANTS TO CRY FOUL PLAY WHEN THEY SEE STACKING. Merchants know exactly what they are doing, they do these things methodically and with intent. You think they don't realize the expense they're paying for this money, or the hole they're digging themselves in? They get as much as they can and then by the grace of god or some worldly miracle corporate turnaround ends up with the file the day after the last stack.

Although we are speculating purely that the merchant has another account - If strategic is dumb enough to not see transfers coming from and going to another account and inquire about it then they deserve what they get.

[J.Celifarco]

At the end of the day if and when regulation comes they wont care if a couple of merchant tried to defraud a bank. We should know better and it will be us who are punished.. All you need is some congressman somewhere to try to make a name for himself by going after what he considers a bunch of predatory lenders who took advantage of one of his constituents. It doesn't even need to be true, so why should we invite it upon ourselves. There is nothing to be gained by doing 4th 5th etc. positions. There are plenty of deals out there worth funding why go after after these bottom of the barrel deals just gives us a bad name.

[jotucker1983]

Anthony,

I honestly believe that most of the merchants doing these types of stacks do not know what they are getting themselves into. On a daily basis, when I run into a merchant with an outstanding balance that's being paid on a split, when I begin discussing factor rates and "cost for capital", they start discussing how they are only paying "7%" right now so why would they switch over to me with my 1.20? In other words, they don't even know the difference between their holdback percentage and their factor rate.

While some merchants are frauds and looking to take out excessive advance balances, then file bankruptcy or sell the business, that's not most merchants from my experience. Most merchants just don't really understand a lot of the concepts and procedures that are going on with our industry, just like on the bankcard side they don't understand interchange.

These same merchants would ask me, "John, why should I go with your bankcard proposal when you can only save me $30 a month, when this other company can save me $400 a month?" But when you review his processing statements, he doesn't even pay out $400 a month in charges/fees and he owns his processing technology free/clear, so how can you save $400 a month if you aren't paying that much out in the first place lol?

Lol, like I said, these merchants are smart enough to run million dollar grossing businesses, but seem to not truly understand the lingo of the merchant services/merchant cash advance industry.

Some companies and brokers in our space understand this situation and instead of educating merchants, they take advantage of their lack of knowledge to put them in deals that make absolutely no sense.