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  1. #1
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    Advice for a Defaulted Syndicated Deal

    I have deal that defaulted a while back. I syndicated the entire deal. Around 75k at a 1.28. ACH deal. This is the third round of funding. First two were paid back without a hitch.

    Anyway, his balance is around 48k.
    He is paying very sporadically, but he is paying. I set up a payment plan but he is not adhering to it. He provides me with checks when the money becomes available.

    It is a local merchant so he stops by my office to reassure me that he will get me paid, but it might take more time than i have.

    He seems pretty sincere. Do i keep on accepting the piecemeal payments or file a claim.

    I am thinking of letting it ride. The cost to file a claim or suit is expensive, and the ability to collect if i get a judgement will be difficult. He says he just does not have the money.

    Thanks for any insight.

    The syndication partner is not really of much help.

  2. #2
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    If you are getting payments I would let it ride. If you file a suit he will have no reason to make payments to you until the judgment is filed and you would have lost the good will of the merchant.. If you are on good terms let it ride and try to give him some incentive to get it paid off. Maybe a discount of some kind if he keeps to a payment schedule or if he is completely paid off by a certain date
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
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  3. #3
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    If god forbid they stop complete payment then reach out to me to discuss options my contact is bizdev@cresthillcapital

    OR

    you can signup as an ISO (aside from collecting Double Digit Commissions) during our funding chats we can discuss your options.

    bizdev@cresthillcapital.com

  4. #4
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    ^^Thanks. Good idea about the incentive.

  5. #5
    Senior Member Reputation points: 30475 Zach's Avatar
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    Can you use some short-term funding to bridge the gap until you are paid?

    ;-)
    Zachary Ramirez – CEO
    Phone: 562-391-7099
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    1661 N. Raymond Ave #265
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  6. #6
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    If you attempt a judgment, you also have to figure, How long until you are able to collect? Would it be quicker then letting him pay it off? You also have to figure that this is a local merchant. If you are good with him, he may get you future business. If you play hardball, it can bite you.

    And the idea about having a discount for an early payoff would really help.

  7. #7
    Providing a discount to a defaulted merchant? Wow.

  8. #8
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    Quote Originally Posted by GoodCustomerService View Post
    Providing a discount to a defaulted merchant? Wow.
    It is a local guy who he has given 3 advances to.. I am not saying wipe out all the cost of the money but a small incentive to get the guy paid off, when he has given him 3 advances and has made a good deal of money on the guy already. Do what you have to do to get out of the deal without a loss. So yes offer an incentive to a defaulting merchant. I would rather collect most of the money owed to me then none
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  9. #9
    Senior Member Reputation points: 50566 ADiamond's Avatar
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    Quote Originally Posted by skideeppow View Post

    The cost to file a claim or suit is expensive, and the ability to collect if i get a judgement will be difficult. He says he just does not have the money.
    my motto is "you can't get blood from a rock." the judgment will warn creditors not to fund him at best, let alone allow you to collect. you already know you're going to have a hard time collecting. be happy he didn't put you through bankruptcy or corporate turnaround.

    take what you can get, try to get him funded elsewhere and get paid. sounds like you almost have principle back, so if nothing else transpires cut your losses and move onto the next one learning from your mistake.
    Last edited by ADiamond; 05-19-2015 at 01:44 PM.
    Anthony Diamond
    Underwriter

  10. #10
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    Work with the owner, if he is willing to meet you in person and keep contact and he has plans to turn the business around and pay you then there is no need to bring in attorneys and collection, UNless you have the ability to go after some hard collateral.
    I usually let it ride unless they disappear and dont contact us back and make some efforts on payments..
    But if you have to work with a syndicate who wants money now and will trigger the collection that is another story. best of luck

  11. #11
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Quote Originally Posted by skideeppow View Post
    but it might take more time than i have.
    What do you mean it might take more time than you have? More time than you have for what?

    And when you say the syndication partner isn't really much of a help, are they not in the deal at all? Are you in it 100%?

  12. #12
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    Sean, i am 100%, and i shouldn't say the syndicater isn't helpful. I was just hoping they would have some better answers. I am talking the admin for the account.
    He comes into the office and always gets back to me. He paid me another 1500 this AM.

    All is good advice, and yes offering a discount is a good option. I have gotten paid 3 times and made a ton on him. I can give him a break, get my moeny back and some.
    Yes, was just referring to more time than i want to, but in the end if i get my money back, i will be happy.

  13. #13
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Quote Originally Posted by skideeppow View Post
    Sean, i am 100%, and i shouldn't say the syndicater isn't helpful. I was just hoping they would have some better answers. I am talking the admin for the account.
    He comes into the office and always gets back to me. He paid me another 1500 this AM.

    All is good advice, and yes offering a discount is a good option. I have gotten paid 3 times and made a ton on him. I can give him a break, get my moeny back and some.
    Yes, was just referring to more time than i want to, but in the end if i get my money back, i will be happy.
    Someone paying you, even if sporadically shows good faith. It sounds like from you that it's really due to financial hardship. Suing him is counterproductive if there is nothing to get out of him beyond what you are already getting. He will just be more broke because he'll need to spend whatever's left on a lawyer. And if he manages to afford one, that lawyer will come up with a bunch of arguments about why they don't have to pay you at all.

    That's where you'll really spend your money on, not the filing of the lawsuit itself. Even if you win or get a favorable settlement, the guy's going to be more broke than before.

    If he's secretly doing well and just giving you a phony story, that would change everything though of course.

  14. #14
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    It would be interesting to know what the default risk is for each successive advance that a merchant takes. I would assume that every new advance raises the default risk considerably. In this case, the 4th advance was the one that did the merchant in.

  15. #15
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    I think the % of the refi is probably the better metric.. i have merchant that have taken 10 advances but always wait till almost paid off if not almost paid off. Then other merchant that start calling me when they are 30% paid in.. The first guy can last forever the other guy it is usually just a mater of time. If the merchant is using this type of funding to survive to the next month they are dead if they use it for a specific use that grows the business they will do well
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  16. #16
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Quote Originally Posted by MCNetwork View Post
    It would be interesting to know what the default risk is for each successive advance that a merchant takes. I would assume that every new advance raises the default risk considerably. In this case, the 4th advance was the one that did the merchant in.
    But even then, how can one say it was from the advance? In my hometown, just about every small business fails within 5 years, but most within 1 or 2 years. Nobody makes it, yet there is always someone willing to rent out the space the day the previous businesses shuts down. Small businesses there are like speculative short term investments. Make what money you can and then close up or cut your losses and leave. It's not like that everywhere though.

    All small businesses eventually fail, that is why very few are celebrating 200 year anniversaries.

  17. #17
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    Quote Originally Posted by MCNetwork View Post
    It would be interesting to know what the default risk is for each successive advance that a merchant takes. I would assume that every new advance raises the default risk considerably. In this case, the 4th advance was the one that did the merchant in.
    From what I am understanding, this is the 4th time this guy funded the client, NOT that it was a 4th position. Has anyone ever seen a 1.28 4th position?

  18. #18
    Veteran Reputation points: 134971 Chambo's Avatar
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    Quote Originally Posted by mcaguru View Post
    If god forbid they stop complete payment then reach out to me to discuss options my contact is bizdev@cresthillcapital

    OR

    you can signup as an ISO (aside from collecting Double Digit Commissions) during our funding chats we can discuss your options.

    bizdev@cresthillcapital.com
    So merchant is in default...and you want to fund it if they stop payment?

  19. #19
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    Quote Originally Posted by Funder Mark View Post
    From what I am understanding, this is the 4th time this guy funded the client, NOT that it was a 4th position. Has anyone ever seen a 1.28 4th position?
    4th time funding not 4th position... I cant understand why anyone would ever give a 4th position forget a 1.28
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  20. #20
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    Quote Originally Posted by Chambo View Post
    So merchant is in default...and you want to fund it if they stop payment?
    yeah if you can figure out the logic here you are smarter then me because this makes no sense.. Lets put more good money after bad. That is a recipe for success if I ever saw one
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  21. #21
    yeah, but you make it up in volume!

  22. #22
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    Quote Originally Posted by adroc View Post
    yeah, but you make it up in volume!
    ??? No clue what point you are trying to make.

  23. #23
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    Quote Originally Posted by adroc View Post
    yeah, but you make it up in volume!
    make what up in volume we are talking about a collection account merchant???
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  24. #24
    i was kidding, fellas.

  25. #25
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    Quote Originally Posted by skideeppow View Post
    I have deal that defaulted a while back. I syndicated the entire deal. Around 75k at a 1.28. ACH deal. This is the third round of funding. First two were paid back without a hitch.

    Anyway, his balance is around 48k.
    He is paying very sporadically, but he is paying. I set up a payment plan but he is not adhering to it. He provides me with checks when the money becomes available.

    It is a local merchant so he stops by my office to reassure me that he will get me paid, but it might take more time than i have.

    He seems pretty sincere. Do i keep on accepting the piecemeal payments or file a claim.

    I am thinking of letting it ride. The cost to file a claim or suit is expensive, and the ability to collect if i get a judgement will be difficult. He says he just does not have the money.

    Thanks for any insight.

    The syndication partner is not really of much help.
    try to rewrite the deal as a split and switch his cc terminals. Maybe add write in an additional weekly payment so that it speeds up the payback period.

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