[Fundyman]

I have a client who is sick and tired of doing daily ACH. Won't even consider doing it. Average about 46K/mo.
Sometimes ends months neg. bal. but average daily bal. $1,000; payback months looking lovely.
Construction company with over $150K in AR but won't do factoring because he won't have his clients called by another company.
Credit is about mid 600s.
He's a sole prop (tax ID #; bank statements in company name).
Looking for at least $50K; factor no higher than 1.30 as long as it's 12-36 months.
I'm looking for 12 pts or more.

Anybody out there does that on an MCA or different loan type?

PM or email me: solidmerchantsolutions@yahoo.com

[sigmundpannu]

Your kidding? you want to make 12 bps at a 1.3 fator rate on 12-36 months? on a daily debit loan? maybe if the merchant is tired of MCA you'd think he wouldn't want a business cash advance with a daily debit either. you should expand your knowledge and product offering and give him much better loans with better rates and monthly payments. and try not to kill him making 12bps. good luck.

[anonymous]

A construction company with negative ending balances, $1K ave ledger, and sub-700 credit is not getting a monthly payment or any term exceeding 18 months. Frankly, I'd be shocked if anyone even offered him that.

[Andy]

there are some monthly payment funders but doesnt sound like they would qualify for any except loan me, and rate would be much higher than 30% given credit is not the best. your best bet is convince him to take weekly payments instead of monthly. But given negative days and relatively low daily balance, you will probably have a difficult time for that too. But that is the route I would try to take it if I was you, 12 month 1.30 with weekly payments instead of daily . Credit would have to be at least 650 and solid TIB Also 50k for a construction company doing 46k a month with negative days is not realistic , most funders are conservative when issuing approvals to construction companies

[Fundyman]

OK. The 12 pts is the least of my worries, because even if I got a company to give me 18 pts, if he doesn't take the deal, it's 18 pts on zero sale. I've spoken to someone who said it's more realistic he'll get weekly or bi-weekly ACH, which is still much better than daily.

The main concern here is that he needs at least time to generate revenue prior to paying the advance back. This isn't the 1st time I get that complaint from construction-related industries. I remember I had a roofing guy I got $260K for, who complained he would never do a cash advance again! And he hasn't since! "It's like you're repaying the money before you get to use it!", he said.

This guy said the same thing. If he could get some type of deferment to repay, giving him time to collect on his receivables or at least to complete a few more jobs before his 1st payment, that would make sense. Now, I explained to him that's not at all likely but I would look for a company that would at least spread his payments out to 12 months and no less.

I think in the MCA space it's someone out there doing such terms at least on weekly ACH! Am I losing it, or asking for something that's unreasonable? After all, why put the guy at risk of default by giving him daily ACH on a 4-month term, when he can clearly repay comfortably on a 12-18month term??

[anonymous]

I remember I had a roofing guy I got $260K for, who complained he would never do a cash advance again! And he hasn't since! "It's like you're repaying the money before you get to use it!", he said.

...as he was likely signing paperwork elsewhere for a 1.45 over 3 months lol. Buyers are liars.

[Miller192]

My approach would be to get this guy to understand that he needs working capital, not permanent capital. If he needs to stretch 50k over 2 years, what's going to happen when he needs materials or labor for the next job 4 months down the road?

I would sell him a smaller amount over a shorter turn and utilize it like a line of credit. This way he can comfortably afford the payback and can get capital on an ongoing basis. The cost of funds is cheaper for him and if he needs to break glass in case of an emergency, he should have the revenue to buy this out and do so.

[WhoisKingsley]

Factor.

Your merchant needs to understand the ins and outs of factoring before he is pushy and says "No! I don't want anyone calling my clients!" - it's more professional than that. If you're a construction company or contractor and you say "No" to factoring even though it's the perfect solution, than something is wrong.

No matter the credit- construction is high risk because of... Everything. There is no gaurantee of payment unless the job is complete- what if they can't complete it or something happens while doing it?

If they want to take their personal financials or assets into play he can get a LOC and have a monthly interest off of that.

[CreditGuy]

Here's a free underwiting lesson for you.

I have a client who is sick and tired of doing daily ACH.

How many advances has he had previously? If one, how has it performed? How far is it paid down in terms of both percentage of total payback and term? What was the initial pricing, payback schedule, and net funded amount?

If more than one, how have they performed? How often is he renewing? Is the borrower renewing at the same amount paid down every time? If not, is he renewing earlier or later in the repayment term?

Sometimes ends months neg. bal. but average daily bal. $1,000;

The answers to the above questions will add some more color to the above statement, but generally speaking, if the borrower has already taken an advance, or multiple advances, and they haven't gotten their cash flow managment in order, what good is another loan going to do here? Since we aleady know this is a renewal, the borrower should be demonstrating that they are using the funds to put themselves in a better financial condition. This company has $500k in cash flow a year and they can only manage to retain $1k in short term working capital in the bank. You mention they end negative, so that's at least one negative day. How many others during the month? I'm sure they have NSFs too, given the $1k average balance. I'm guessing they are living on float a lot. That's not effective cash flow management.

Credit is about mid 600s.

Why?

General questions: Is this home based too? If not, where are they operating out of? How long have they been there? How many employees? How many jobs/crews are they working simultaneously? What is their bread and butter (residential, commercial, TI, remodeling, etc)? Time in business? Since their initial advance, how much have their revenues grown? How much has their average balance grown? Have they shown a decrease in neg days/NSFs? How has the borrower's FICO trended since their initial advance? What was the initial advance used for (working capital is a **** answer, UWs hate it)? What are the new funds being requested for?

I realize I'm not going to get all the answers to these questions, but if you are managing this relationship and haven't already asked them all these questions or already know the answers, you are doing both the borrower and yourself a disservice.

I'm looking for 12 pts or more.

You don't deserve 12 points let alone more. Your expectations here are so out of line with the risks associated with the file that you can't possibly be effectively managing your client's expectations. It sounds like you already sold him on a pretty ****ty product the first go round, and are now trying to find him a sweetheart deal to smooth things over.

[bdshaw]

I agree with Amanda and would add that after 40 years of financing construction companies factoring should be presented by folks who have experience deal I g with all of the pitfalls. my experience tells me they don't want a third party calling their customers because they don't understand the process or they're hiding something.

[wallerbusiness]

I have a lender. Who can do 1-5 year term Sole Prop. I dont like to sub broker the deal. I would give the relationship with the lender for another relationship that I dont have. I have two vendors that can do that. Im not blowing smoke. The numbers would have to look right. Call me or Email me. I can 3 way the vendor on a call. I do that for a lot of people and make the introduction.

[Fundyman]

"Quote Originally Posted by Fundyman View Post

I remember I had a roofing guy I got $260K for, who complained he would never do a cash advance again! And he hasn't since! "It's like you're repaying the money before you get to use it!", he said."

Anonymous:"...as he was likely signing paperwork elsewhere for a 1.45 over 3 months lol. Buyers are liars."

Nah. That one got a loan w/ Kabbage a few months later. I doubt he'll ever take a cash advance again outside of having an emergency. But if all I had for him at the time was a cash advance, he would have taken it but very reluctantly.

[Fundyman]

My approach would be to get this guy to understand that he needs working capital, not permanent capital. If he needs to stretch 50k over 2 years, what's going to happen when he needs materials or labor for the next job 4 months down the road?

I would sell him a smaller amount over a shorter turn and utilize it like a line of credit. This way he can comfortably afford the payback and can get capital on an ongoing basis. The cost of funds is cheaper for him and if he needs to break glass in case of an emergency, he should have the revenue to buy this out and do so.

Surely makes sense. Nonetheless, I can't see him going with a daily ACH unless he breaks the point of desperation, which I hate to let a client get to prior to doing business with them... They remember me as the guy they had to use when they had no other choice. I rather be the guy who broke the monotony.

[wallerbusiness]

You definitely won't get 12 points! I don't know anyone who will give 12 points on a deal like that.

[Fundyman]

Here's a free underwiting lesson for you. ....

You don't deserve 12 points let alone more. Your expectations here are so out of line with the risks associated with the file that you can't possibly be effectively managing your client's expectations. It sounds like you already sold him on a pretty ****ty product the first go round, and are now trying to find him a sweetheart deal to smooth things over.

Completely incorrect assumption, but then again, you provided quite valuable insight on the underwriting end, which I truly appreciate. The only thing I sold him on so far is that I wouldn't come back to him with a daily ACH on a 4month at a 1.45, nor would I just take an application and never call him again. Perhaps I should have accurately stated that this is not an actual client but a prospect! And again, I must reiterate that 12 points I threw out there as an ideal figure, and it's the least important factor in my post.

[admin]

I have a client who is sick and tired of doing daily ACH. Won't even consider doing it. Average about 46K/mo.
Sometimes ends months neg. bal. but average daily bal. $1,000; payback months looking lovely.
Construction company with over $150K in AR but won't do factoring because he won't have his clients called by another company.
Credit is about mid 600s.
He's a sole prop (tax ID #; bank statements in company name).
Looking for at least $50K; factor no higher than 1.30 as long as it's 12-36 months.
I'm looking for 12 pts or more.

Anybody out there does that on an MCA or different loan type?

PM or email me: solidmerchantsolutions@yahoo.com

please do not post requests like these in anything other than the Deal Bin

[Fundyman]

please do not post requests like these in anything other than the Deal Bin

Got it. Sorry. Didn't realize it was that improbable to get such a deal funded in the MCA space..

[admin]

Got it. Sorry. Didn't realize it was that improbable to get such a deal funded in the MCA space..

It's okay. It wasn't about whether or not it was an MCA fundable deal, all discussion about any deals should be in the Deal Bin, no matter what kind they are. No talking about who can fund certain deals in this sub-forum

[Fundyman]

It's okay. It wasn't about whether or not it was an MCA fundable deal, all discussion about any deals should be in the Deal Bin, no matter what kind they are. No talking about who can fund certain deals in this sub-forum

Oh! Gotcha. Thanks.