[MCS Info]

OK, I read everyone's comments regarding lack of new products on the market, lot's of new lenders promoting the same thing, and on and on.

Well, what if someone came to the table (me) with a huge amount of capital to form a new product? What would that product look like. Let's start a real communication thread that will result in something worthwhile for the ISO Community!
Suggestions: (1) Longer term monthly product, such as Funding Circle, but with transparent underwriting and more approvals, (2) Longer term cash advances to 36-48 months, (3) a fund for tougher SIC codes?
Hey, this is a forum, let's bounce some ideas around.

[Chambo]

1) longer terms
2) all SIC codes
3) weekly/monthly payment options
4) when you say you do declines, MEAN IT

IMHO, this is a good start

[FCF Fund]

1) longer terms
2) all SIC codes
3) weekly/monthly payment options
4) when you say you do declines, MEAN IT

IMHO, this is a good start

I second these points, in addition consolidating a merchant to lower cost financing would be an idea.

[anonymous]

I second these points, in addition consolidating a merchant to lower cost financing would be an idea.

Should call it Default Capital

[J.Celifarco]

1) longer terms
2) all SIC codes
3) weekly/monthly payment options
4) when you say you do declines, MEAN IT

IMHO, this is a good start

I agree with #4 everyone has the banks they do the majority of their deals with but when people say they do declines most of the times they just mean they want to do deals for no longer then 2-4 months but not actual low quality files. (sub 500 credit, less then great banks, and the really tough sic codes)

[MCS Info]

"Should call it Default Capital"
LOL. Probably. The major problem of stretching deals out to longer terms? The multitude of stackers not filing UCC's but requesting COJ's to jump the line on the first position funder on the way to a judgment. The first, with a no-stack agreement, potentially can negate the COJ by suing the borrower and invalidating the claim. If I came out with a long, unlimited SIC code Product, how could I be assured that no stacking would be really in effect?

[J.Celifarco]

"Should call it Default Capital"
LOL. Probably. The major problem of stretching deals out to longer terms? The multitude of stackers not filing UCC's but requesting COJ's to jump the line on the first position funder on the way to a judgment. The first, with a no-stack agreement, potentially can negate the COJ by suing the borrower and invalidating the claim. If I came out with a long, unlimited SIC code Product, how could I be assured that no stacking would be really in effect?

HOW DO YOU STOP STACKING????? That is the question every lender wants an answer to.

[anonymous]

You want a new product with some value - come in between IOU/QS and those like Knight with regard to strong seconds. 1 year term seconds for qualified clients with strong financials, who happened to have 6 negative days over the past 3 months or fall just outside the IOU/QS UW criteria. Or take a look at the PFS debt refinancing program (interesting from an investment standpoint as you never really go out on the limb too far with these merchants). Or do 6 month 3rds in the mid 1.30's coming in behind an 18-24 month first and a 1 year second.

Provide a reasonable product with a reduced broker commission. Those who want to last in this business will flood you with clients while the others are still pitching a 1.49 over 3 months going for a 14 point rip.

You don't stop stacking, its inevitable. I can't tell you how many business I've quite literally saved from BK w/ consolidations who ended up doing the same thing all over again and are no longer in business.

[J.Celifarco]

You want a new product with some value - come in between IOU/QS and those like Knight with regard to strong seconds. 1 year term seconds for qualified clients with strong financials, who happened to have 6 negative days over the past 3 months or fall just outside the IOU/QS UW criteria. Or take a look at the PFS debt refinancing program (interesting from an investment standpoint as you never really go out on the limb too far with these merchants). Or do 6 month 3rds in the mid 1.30's coming in behind an 18-24 month first and a 1 year second.

Provide a reasonable product with a reduced broker commission. Those who want to last in this business will flood you with clients while the others are still pitching a 1.49 over 3 months going for a 14 point rip.

You don't stop stacking, its inevitable. I can't tell you how many business I've quite literally saved from BK w/ consolidations who ended up doing the same thing all over again and are no longer in business.

6 month 3rd positions the company will be out of business before they ever get going. Why anyone would want to add additional stacking products to the industry is beyond me.. Everyday you have more companies getting sued for stacking, the industry is going to go away from stacking not further into it

[anonymous]

6 month 3rd positions the company will be out of business before they ever get going. Why anyone would want to add additional stacking products to the industry is beyond me.. Everyday you have more companies getting sued for stacking, the industry is going to go away from stacking not further into it

4 month 3rd positions are funded regularly. What's another 60 days for a business that has extremely manageable payments and strong ledgers despite the amount of outstanding debt. Should that example merchant, who is looking for a small chunk for a specific project consolidate both outstanding positions to net a small percentage of that amount? Absolutely not, they would be paying interest on interest, and the net amount would be at an unrealistic rate when taking this into account.

Agree to disagree on this one bud lol.

[jotucker1983]

I believe the industry is moving away from stacking with the Funders fighting back with lawsuits to Stackers, new requirements (and penalties) towards the merchant, etc.

We can make a "case" for a 2nd position, there's absolutely no reason for a 3rd, 4th, etc. position deal. The merchant needs to wait, continuing paying off the 1st and possibly the 2nd position, and then he can look at getting more capital in a couple of months.

If these merchants on these 3rd plus stacks keep ending up with cashflow problems as a direct result of these stacks, it's going to draw negative attention to our industry and Regulators might come a calling.

How any Funder or Broker with a straight face can stack a merchant on a 3rd, 4th or 5th position deal just to make a quick buck, is beyond me.

[anonymous]

You quite clearly have no grasp on the market we work in. Save the novel-like post and unrealistic outlook for another time, thanks. I'm too busy stacking 4 positions on top of the guy who you advised against taking a second.

[CreditGuy]

I'm too busy stacking 4 positions on top of the guy who you advised against taking a second.

I hope you get sued, go broke, or both. You are greedy and lack ethics. You are a cancer on this industry. The sooner you and your ilk are drummed out, the better off this space will be.

[jotucker1983]

You quite clearly have no grasp on the market we work in. Save the novel-like post and unrealistic outlook for another time, thanks. I'm too busy stacking 4 positions on top of the guy who you advised against taking a second.

If that's the "market" you work in, maybe it would be best if you found another "market"? Just know that if a lot of your merchants start going out of business or having serious cashflow issues as a result of your four stacks, it could come back to bite you in the rear very hard.

[anonymous]

I thought people might be able to realize that I was exaggerating to make a point. Suggesting that one should "make a case" for a second position is absurd. And Credit Guy, I'm here for the long run. In all reality I run a tight ship, no junk fees, primarily A paper, and quality clients - but I will gladly issue a 3rd if it makes sense for our clients. Or yours.

[FUNd]

Monthly payments, no junk fees, -.10 on buys across the board, 24-36 month terms. Make it palatable. $5,000-$15,000 per month in payments is a very hard pill to swallow for much of the untapped market, which is one of the reasons why they don't entertain the product, regardless of how badly they need cash.

[jotucker1983]

I thought people might be able to realize that I was exaggerating to make a point. Suggesting that one should "make a case" for a second position is absurd.

No, it's not absurd.

2nd positions should be viewed on a case-by-case situation, depending on how much the payments combined with the 1st and 2nd position will be taking from the merchant's monthly gross. Under no circumstance should a merchant be getting a 3rd, 4th, etc. position, the 1st and 2nd positions should already be taking "enough" of the merchant's monthly gross sales deposits.

But like I said, if that's how you operate your shop, if these merchants run into issues as a result of your stacks, you could be in for some trouble down the line.

This is why we need to do something in terms of regulating our industry because, it's "deliberate" actions like this that do nothing but invite Regulators to come knocking on the door if more merchants fall into issues due to these stacks.

A lot of these Brokers just want to make money in an extremely competitive industry, and a lot of the Merchants doing the stacks just want to get some additional capital. It's the Funders that are funding these positions that need to be called out on the carpet so the nonsense stops.

[anonymous]

I think we are well past the point of drawing regulatory attention to the industry.

[MCNetwork]

Well, what if someone came to the table (me) with a huge amount of capital to form a new product? What would that product look like.

A true revolving line of credit where you only pay interest (or "fee" for the MCA crowd) on the amount taken. 2-3% per month. Weekly or monthly repayment.

[1StopFunding]

Kabbage has that product.

[MCNetwork]

True. But I'd probably focus it on start-ups in the retail and hospitality field.

[FUNd]

Kabbage has that product.

And pay 1 point.

[MCS Info]

I want to thank al of you for your comments. I am going to wait a few days before aggravating these ideas and offer a new product....stay tuned.