[channin19]

http://www.wsj.com/articles/online-l...ess-1443736160

[Chambo]

"The problem is it can be hard to find enough new customers for all that credit: Only 18% of small-business-loan applicants looked to an online lender for financing in the first half of 2014, according to a recent Federal Reserve survey. "

[Chambo]

Doesn't surprise me that Jeremy is leading the charge. Expect Sheinbaum to be right behind him soon enough

In May, a unit of marketplace lender Rapid Advance, which is controlled by Quicken Loans founder Dan Gilbert, filed suit in Delaware court against cash-advance lenders affiliated with Everest Business Funding, alleging that they made follow-on loans to a Rapid Advance customer that later filed for bankruptcy.

Robert Smith, a lawyer for Everest, said he couldn’t comment on a matter in litigation, but in a filing he has denied the allegations that Everest acted improperly and has moved to dismiss the complaint. The judge hasn’t ruled on that motion.

Patrick Siegfried, assistant general counsel of Rapid Advance, said the suit aims to construct a legal barrier to lenders and borrowers piling loans on top of other ones, a practice some in the industry describe as stacking. “We’re doing it to establish the precedent,” said Mr. Siegfried. “This kind of thing is happening more and more.”

[jotucker1983]

Something needed to be done about these excessive stackers a long time ago. 1st position lenders can easily fight back by adding amendments to Merchant Agreements that clearly state that if they STACK another advance on top of their advance, then an additional $5,000 or so would be tacked onto their total balance. That right there would cut down on this insanity, just like adding an Early Termination Fee to merchant account contracts, cuts down on merchants switching their merchant account every month to another ISO to "supposedly" save $5 a month.

It's just getting ridiculous, merchants are letting some "guy" on the telephone talk them into stacking a 3rd and even 4th position without doing literally any calculation on how much is coming from their monthly gross to payback the advances.

Sometimes you would see merchants paying over 40% PER MONTH of their gross sales to cash advances. Then after putting themselves in this deep hole, the merchant wants to get on the telephone crying about how they somehow got "scammed" when they refused to pull out a damn calculator, and calculate how much they were going to be paying back a month to all of these damn cash advance companies.

The 1st position lenders shouldn't just be suing the excessive stackers, hell, sue the merchant as well. Sue him for not being able to do basic math if anything.

[Christian]

I would have thought the merchant would be the first target since they sign the no-stacking addendum.

[Chambo]

that is why they go after BOTH. The merchant for breach of contract, the Stacker for Tortuous Interference

Let on eof those lawsuits gain some traction and get publicized? Stacking will become as difficult as California merchants are. BOTH will be due to someone getting hit in the pocket.

[Michael I]

I don't agree that all stacking is wrong . If an a lender caps a guy doing 900k a month at 150k because he's in construction industry is it wrong for another lender to fund 300k on top of them ?
If they are not underwriting if a merchant can handle it I understand that's wrong .
But to say no one can stack ever makes no sense .
Let me know when visa sues MasterCard for giving the same client another credit card

[Chambo]

I don't agree that all stacking is wrong . If an a lender caps a guy doing 900k a month at 150k because he's in construction industry is it wrong for another lender to fund 300k on top of them ?
If they are not underwriting if a merchant can handle it I understand that's wrong .
But to say no one can stack ever makes no sense .
Let me know when visa sues MasterCard for giving the same client another credit card

This is the same comparison folks have been using since the beginning to justify stacking (you can get more than one credit card, so....)

the end is near on these stacking shenanigans. It's not due to whether a merchant can handle it or not, it is because all the vermin in this industry have taken it too far. 4-5-6 positions? 30-50% of gross sales a month? That is all out predatory...and it has obviously gotten the Justice Department's attention.

Go use that credit card argument before a judicial panel and see how far it gets you. Or better yet, ask Rewards Network how the "it's not a loan, it's a cash advance" line worked in California

[J.Celifarco]

that is why they go after BOTH. The merchant for breach of contract, the Stacker for Tortuous Interference

Let on eof those lawsuits gain some traction and get publicized? Stacking will become as difficult as California merchants are. BOTH will be due to someone getting hit in the pocket.

it is only a matter of time before that happens.. Every day new companies are opening thinking they will make there mark on the industry by stacking.. These new companies do not have the financial capability to handle multiple lawsuits, hell I would be surprised if a lot of these companies even have a lawyer. All it will take is for 1 or 2 of the Tortuous Interference cases to be won and a clear legal precedent to be set to see all these companies start to fall like dominoes.. Out of all the stacking companies out there I would bet less then 5 have the financial resources to really put up a legal fight in these cases

[Michael I]

I agree that the vermin with the 4 plus got to go . I just feel the a lenders are vermin also for not allowing a merchant that can handle more to get more because they have a cap on their funding . All that language of can't stack should not be put into a contract when the dollar amount was decided by their caps as opposed to what they feel the merchant can handle.
I have yet to hear or understand the other side to them taking advantage to lock in one of their client s . To me this is just as bad (or close to it )

[Michael I]

Something needed to be done about these excessive stackers a long time ago. 1st position lenders can easily fight back by adding amendments to Merchant Agreements that clearly state that if they STACK another advance on top of their advance, then an additional $5,000 or so would be tacked onto their total balance. That right there would cut down on this insanity, just like adding an Early Termination Fee to merchant account contracts, cuts down on merchants switching their merchant account every month to another ISO to "supposedly" save $5 a month.

It's just getting ridiculous, merchants are letting some "guy" on the telephone talk them into stacking a 3rd and even 4th position without doing literally any calculation on how much is coming from their monthly gross to payback the advances.

Sometimes you would see merchants paying over 40% PER MONTH of their gross sales to cash advances. Then after putting themselves in this deep hole, the merchant wants to get on the telephone crying about how they somehow got "scammed" when they refused to pull out a damn calculator, and calculate how much they were going to be paying back a month to all of these damn cash advance companies.

The 1st position lenders shouldn't just be suing the excessive stackers, hell, sue the merchant as well. Sue him for not being able to do basic math if anything.

Joe take a look at swifts contracts they have that 5 k thing

[jotucker1983]

I don't agree that all stacking is wrong . If an a lender caps a guy doing 900k a month at 150k because he's in construction industry is it wrong for another lender to fund 300k on top of them ?

In terms of cashflow purposes, it depends. What are his average bank balances and monthly ending balances? Does this guy have a good amount of deposits or very few deposits? The Construction industry is an off industry with most times unstable revenues/deposits, and that's usually why their approvals are capped if they are even able to be approved at all.

The issues in terms of cashflow purposes is when the cash advance payments (1st - 5th positions) are taking too much of the merchant's monthly gross sales. Cash advance payments shouldn't go over 15% of the monthly gross, preferably no more than 10%. It gives the merchant breathing room.

Arguments can be made for a 2nd position on a case-by-case basis, but ideally, the merchant needs to just start dealing with the amounts they got from their 1st position lender. The merchant needs to fix whatever operational "issues" they are having to be in a situation of needing literally another "bridge type of loan" before the 12 month term on the first one was over.

On a 12 - 15 month deal (the ones that are usually stacked on) the merchant is up for renewal or an add-on in 6 - 7 months, why is it that the merchant even needs more money faster than that? He needs to fix whatever is wrong with his operations.

[J.Celifarco]

I agree that the vermin with the 4 plus got to go . I just feel the a lenders are vermin also for not allowing a merchant that can handle more to get more because they have a cap on their funding . All that language of can't stack should not be put into a contract when the dollar amount was decided by their caps as opposed to what they feel the merchant can handle.
I have yet to hear or understand the other side to them taking advantage to lock in one of their client s . To me this is just as bad (or close to it )

the problem with this argument is different lenders have a different idea of what a merchant can handle.. If you go to a 1st position funder they are goonna say 11%-14% of gross is what a merchant can handle depending on term. You go to a second position lender that number is 20%-25%. What a merchant can handle is to subjective an argument when you are dealing with so many different companies each with their own set of guidelines.. If the 1st position isnt enough for the merchant they shouldn't take it and look for a company that will give them more. Taking what the 1st bank is ok with then breaching that contract by stacking makes the merchant and the stacker wrong not the 1st position bank

[Michael I]

John , I am referring to sticking with the 11-14 percent and why another a lender won't stack on him .
Joe the case I am referring to the merchant honestly didn't know it wasn't allowed ,in till somehow the lender found out he was still shopping and threatened him . At the end of the day I waited a couple of weeks and funded him 480k with bfs paying off the 120k he owed .
I just don't understand why they couldn't just "stack" 300k on top .
Bottom line it's because the merchant was suckered into a contract that will make them cause a breach . This is also bad in this industry.
Merchant had to pay double on the first 100k

[TheShitzuofMCA]

Shows a lack of carelessness on the funding companies part and the merchant to some extent (stacking), most funders trying to do good business will stay within the percentages of 2nd-3rd positions (15-30%) max MCA collection. You have the predators who don't care and will go over the 30% threshold with no regard for the business in question. I've had merchants with 2 positions already at 42% MCA. An honest merchant caught in this 42% MCA collection has the option of either defaulting cause they start to overdraft too much of their monthly revenue is taken or take out another MCA advance and buy more time with the hopes of a big advance taking everyone out and having 1 payment (pipe dreams). Most I've seen with the help of smooth talking brokers fall into this trap and are stuck in a cycle of MCA's were one pays the other off every other month taking on a new advance. Ive seen many cases like this and it has gotten worse over the years. No one talks about all the fees and secondary brokerage fees that also put the funding companies money at risk some of these as high as 8% at closing. Yes eventually this bubble will burst too...

[J.Celifarco]

Shows a lack of carelessness on the funding companies part and the merchant to some extent (stacking), most funders trying to do good business will stay within the percentages of 2nd-3rd positions (15-30%) max MCA collection. You have the predators who don't care and will go over the 30% threshold with no regard for the business in question. I've had merchants with 2 positions already at 42% MCA. An honest merchant caught in this 42% MCA collection has the option of either defaulting cause they start to overdraft too much of their monthly revenue is taken or take out another MCA advance and buy more time with the hopes of a big advance taking everyone out and having 1 payment (pipe dreams). Most I've seen with the help of smooth talking brokers fall into this trap and are stuck in a cycle of MCA's were one pays the other off every other month taking on a new advance. Ive seen many cases like this and it has gotten worse over the years. No one talks about all the fees and secondary brokerage fees that also put the funding companies money at risk some of these as high as 8% at closing. Yes eventually this bubble will burst too...

how is taking 20%-30% of a merchants total revenue considered responsible.. The amount of business that can afford a payment like that and stay in business is very very short. Also once the second company takes the payments to that level it makes all the underwriting the 1st position bank did useless. They based their offer on where the merchant was and where they thought they would be financially during the course of the program they offer.. You throw a second or third position in the mix and everything the 1st position bank did to underwrite the file becomes useless.
The other side of this that drives me crazy are the amount of refi's I lose. Someone comes in behind me on a deal I funded with second or third position and now I cant get the 1st position bank to refi because they are afraid the other banks will just fund behind again.. Stacks have cost me more refi's then any other factor out there

[VFG]

Eventually the courts will rule these lenders to stop stacking!

[jotucker1983]

John Celifarco,

Yes, I have had this issue as well and it ticks me off that the Funders seemingly do nothing to stop this. So check out this logic here:

- As a Broker, I'm not allowed to do any stacks on any merchant that I bring to said Funder per my Agreement with said Funder or I might be cut off from renewals. YET, my Funder has no such agreement for the Merchant, telling them that they can't stack with a competing Broker/Funder or they might have certain fines or sanctions. The worse that can happen to the Merchant is that they won't renew him, but the Merchant doesn't care because there's 40 other companies calling him a month anyway.

- So a competing Broker down the street from me, can come in and stack on my merchant any day of the week if my Merchant accepts it, without me knowing anything about the situation until after the fact.

- Come renewal time, we request statements, and see there's two other companies stacked on top of the merchant. So my Funder declines the merchant for stacking. However, the competing Broker that stacked would either then stack him again or approve him high enough to pay off my Funder's balance and TAKE my client.

Who loses in this situation? That's right, I DO, and the Funders don't give a damn about it as I'm just "one lowly independent agent" and they have hundreds of other agents/brokers sending them deals. So THEY will be okay, it's "John Tucker" that must scramble at this point.

Every Funder needs to add a "no stacking amendment" to the Funding Agreements on a separate page that clearly states that if you stack on our deal, you would have $5k - $20k added to your total balance for EACH stack you do. So if the merchant goes out and stack 3 advances on top of our deal, he might be looking at $15k - $60k added to his total balance. Doing this would clean up the insanity overnight because the merchant isn't going to want to pay the $5k - $20k per stack.

[dpFund]

As an active debt consolidation lender, I am going to throw my hat into the ring. I see companies all the time that have stacked so heavily they are quickly on their way out of business. Really sad. Had one come to me 30 days ago looking for funding and he was already under water and could not climb out. Even with our lower payments he was still under water, so not fundable. Even sadder, a different broker just brought the same client to me AGAIN, this time with another $100k of MCA loans in the last 30 days. This poor fellow will be out of business within 90 days with the Ponzi of lenders stacking on top.

Predatory lending is just that. If all lenders (and the brokers that bring deals to them) don't care a lick about their clients, they will put them out of business.

All that stated, I've helped clients to get out from underneath crack of MCA stacked loans and sail off into the sunset with renewed profitability. But they have to realize what is happening in time to save their business.

[Chambo]

until these stackers have to take out their checkbooks, nothing will change.

I've always said, you want folks to REALLY change? Hit in pocketbook......they'll never do it again

[J.Celifarco]

John Celifarco,

Yes, I have had this issue as well and it ticks me off that the Funders seemingly do nothing to stop this. So check out this logic here:

- As a Broker, I'm not allowed to do any stacks on any merchant that I bring to said Funder per my Agreement with said Funder or I might be cut off from renewals. YET, my Funder has no such agreement for the Merchant, telling them that they can't stack with a competing Broker/Funder or they might have certain fines or sanctions. The worse that can happen to the Merchant is that they won't renew him, but the Merchant doesn't care because there's 40 other companies calling him a month anyway.

- So a competing Broker down the street from me, can come in and stack on my merchant any day of the week if my Merchant accepts it, without me knowing anything about the situation until after the fact.

- Come renewal time, we request statements, and see there's two other companies stacked on top of the merchant. So my Funder declines the merchant for stacking. However, the competing Broker that stacked would either then stack him again or approve him high enough to pay off my Funder's balance and TAKE my client.

Who loses in this situation? That's right, I DO, and the Funders don't give a damn about it as I'm just "one lowly independent agent" and they have hundreds of other agents/brokers sending them deals. So THEY will be okay, it's "John Tucker" that must scramble at this point.

Every Funder needs to add a "no stacking amendment" to the Funding Agreements on a separate page that clearly states that if you stack on our deal, you would have $5k - $20k added to your total balance for EACH stack you do. So if the merchant goes out and stack 3 advances on top of our deal, he might be looking at $15k - $60k added to his total balance. Doing this would clean up the insanity overnight because the merchant isn't going to want to pay the $5k - $20k per stack.

I dont disagree and I think a lot of lenders want to do something along these lines. The problem lies in the legality of it and if it will hold up if taken to court. I think the outcome of the torturous interference cases in court now will determine how banks handle going forward. If it is legal and it will hold up in court I would love to see banks do something like this

[Michael I]

John Celifarco,

Yes, I have had this issue as well and it ticks me off that the Funders seemingly do nothing to stop this. So check out this logic here:

- As a Broker, I'm not allowed to do any stacks on any merchant that I bring to said Funder per my Agreement with said Funder or I might be cut off from renewals. YET, my Funder has no such agreement for the Merchant, telling them that they can't stack with a competing Broker/Funder or they might have certain fines or sanctions. The worse that can happen to the Merchant is that they won't renew him, but the Merchant doesn't care because there's 40 other companies calling him a month anyway.

- So a competing Broker down the street from me, can come in and stack on my merchant any day of the week if my Merchant accepts it, without me knowing anything about the situation until after the fact.

- Come renewal time, we request statements, and see there's two other companies stacked on top of the merchant. So my Funder declines the merchant for stacking. However, the competing Broker that stacked would either then stack him again or approve him high enough to pay off my Funder's balance and TAKE my client.

Who loses in this situation? That's right, I DO, and the Funders don't give a damn about it as I'm just "one lowly independent agent" and they have hundreds of other agents/brokers sending them deals. So THEY will be okay, it's "John Tucker" that must scramble at this point.

Every Funder needs to add a "no stacking amendment" to the Funding Agreements on a separate page that clearly states that if you stack on our deal, you would have $5k - $20k added to your total balance for EACH stack you do. So if the merchant goes out and stack 3 advances on top of our deal, he might be looking at $15k - $60k added to his total balance. Doing this would clean up the insanity overnight because the merchant isn't going to want to pay the $5k - $20k per stack.

So true it's a debate I have every day . I have yet to ever stack one of my own deals as to not hurt the relationship I have with the lenders .
But I also am getting less and less renewals statement back and not seeing a stack on them . Merchants get hundreds of phone calls and some even pose as the same company that funded them other division.
Hitting the pockets might hurt the bigger stackers but the new ones popping up out of the toilet. probably have a hundred different judgment and criminal history on them

[BB_Cooper]

Counsel can't find this suit on Pacer or DE State database. Does anyone know if this in arbitration, or if not, in what jurisdiction the suit was it filed?