[Triton]

I have a client who was suckered into stacking from a broker when he started his business 3 years ago.

He has been nickle and dimed to death by the bottom feeders (Yellowstone, etc.). On top of that, his broker hooked him up with a factoring company that is holding over 50% of his invoices. He generates approx. $800k a month in invoices but is only being given $250-350 and the rest is being put into a lockbox. Because of all this he is always in need for capital and has to keep going back to these lenders for additional capital. It has also led him to NUMEROUS overdrafts. In Sept. he had over 50. He is doing better this month (I have MTD) and is working his balances down. He does not want to go back to them and is looking for a lender who will give him $250k.

I have had this file for a while and having a hard time placing it because of his history of stacking. He is willing to sign a declaration with any consequences the lender deems fit to prevent him from stacking behind whomever gets him out of this mess.

Here are the details:

Global Merchant: $3k
New Era: $18k
WG: $12k
Yellowstone: $9k

Average monthly gross: $320k
CC Volume: $200k monthly

[Michael I]

Do you know how he's credit is ?I realized that all those positions are bottom guys .
First step will probably be better to get him into a normal factoring deal . That will free up cash flow to pay all those off and then it's a lot easier to get him funding .

[Triton]

Do you know how he's credit is ?I realized that all those positions are bottom guys .
First step will probably be better to get him into a normal factoring deal . That will free up cash flow to pay all those off and then it's a lot easier to get him funding .

The credit is mid 600's.

They do not want to move into factoring until I can clean this up.
He is skeptical of brokers because of this whole ordeal

[jotucker1983]

I 100% agree with what Michael said. Because of all of the stacking going on in the industry, decent Funders are just less likely to fund someone who has a history of insane stacking like that.

You could try some of the guys who focus on doing true consolidations, but the NSFs are going to be a problem though as they most likely are going to want to see a couple of months with those NSFs under 10 a month at least.

I agree with Michael in trying to structure a better Invoice Factoring deal for him right now. That seems to be one of the only options in terms of the alternative space.

[bdshaw]

Triton- do you know why the factor is holding 50% of their invoices without advancing agains them.
If that could be resolved he could payoff or at least partially payoff the advances.
Please give me a call, or your number. I may be able to be helpful.
Bob Shaw
rshaw@advancecredit.com
734- 929-3800

[Michael I]

He owes only 40 k but can free up 500k if he's in a normal invoice factoring.
Something is not adding up .
Also the issue with nsf and current advances is officially he is in default with all of them .
Paying all off and waiting a month with out nsf and you can get it done .

[John Galt]

Doesn't make sense, a normal factor will advance 80-90% like Crestmark, AGR or Wells. unless a restricted industry. Lots of small factors out there too. Generally not too worried about his score too unless its miserable.

[ChezkyGCG]

hello, good evening i pm you with my info and stating on how i can get this done , reach out to me when posible

best regards

[golf2014]

with all those nsfs a mca will not consolidate them. obviously easier to give him a smaller advance then be the first lender on a much bigger advance.

[Triton]

with all those nsfs a mca will not consolidate them. obviously easier to give him a smaller advance then be the first lender on a much bigger advance.

He won't accept another position. He could just go back to any of the 7 lenders who have been nickle and diming him.

[AndyYSCISOdept]

He won't accept another position. He could just go back to any of the 7 lenders who have been nickle and diming him.

There is a reason for that, a lot of the details on this deal are not adding up. If a merchant truly wants to consolidate there are plenty of options out there, but by the time a merchant has 7 positions etc., that shows a fundamental flaw in the business.

[JoeLepkoski]

Advance companies are not going to fund a business they don't believe can pay them back, the real "bottom feeders" you should be referring to are the reps and brokers that are convincing this merchant to take advance after advance and coaching the merchant into saying whatever they need to to convince an advance company that the business can sustain the payments. These brokers are the ones "nickel and diming" the merchants business so they can make multiple commissions on the deal, knowing they are putting the business in a bad situation.

[jotucker1983]

Brokers are indeed apart of the problem, but Merchants have to take personal responsibility for their own foolish decisions.

It takes literally 5 minutes to pull out a calculator to calculate how much of your monthly gross sales is going to go towards paying back solely cash advance payments. If the first position is already taking about 7%, you calculate that the second will bring that up to 15%. By the time you are on the 4th you might be up to 35% and the 5th you are up to 45% of your gross sales. How in the hell do you pay vendors, employees and yourself for goodness sakes?

It's not enough of an excuse that you kept getting cold-calls by some guy named Larry at PiggyBack Capital who kept "pitching" you to take another advance stack. Tell Larry at PiggyBack Capital the answer is hell no, I'm already in one advance or two at best, I'm already paying 7% - 15% of my gross sales to advance companies, I'm not taking out another one until I'm paid down!

[#1closer]

are all those postions ach ? is any a split ?

[FUNd]

Who was the one who said MCA is the equivalent of financial crack? That was funny, but in many cases true. These programs can be used responsibly and then abused in some cases.

I refuse to put all the blame on the broker unless they are lying to get the deal done, which I'm sure many do. A lot of them promise better loans just around the corner if they 'prove' themselves by paying this one high interest advance back on time.

There is certainly a predatory component in MCA, but in the end, it is the business owner's responsibility to make sure he can afford the payments, regardless of what Johnny No-Thumbs tells him from his office in New Yawk. It's easy money for people with ****ty credit, and we all know how that works out in the end. (See mortgage crisis of 2007)

[Triton]

I agree with all of you.

It was obviously the slick talking of a broker who got him into this mess. All of the advances are ACH so there is blame on the lenders as well. He generates over $200k a month in sales and is paying a total of $40k between the advances and the factoring. So he can more than afford the advances but based on the statements, he receives large deposits on an irregular basis. So it's not hard to believe that he would suffer NSF charges.

Either way, I will be contacting those who have pm'd me your info.

Thanks!

[Chambo]

Who was the one who said MCA is the equivalent of financial crack? That was funny, but in many cases true. These programs can be used responsibly and then abused in some cases.

I refuse to put all the blame on the broker unless they are lying to get the deal done, which I'm sure many do. A lot of them promise better loans just around the corner if they 'prove' themselves by paying this one high interest advance back on time.

There is certainly a predatory component in MCA, but in the end, it is the business owner's responsibility to make sure he can afford the payments, regardless of what Johnny No-Thumbs tells him from his office in New Yawk. It's easy money for people with ****ty credit, and we all know how that works out in the end. (See mortgage crisis of 2007)

Same rhetoric was used in mortgages and payday loans. We all k now how that turned out.

[GMFunding]

Try Fusion Capital

[Michael Jagiello BGF]

Shoot me an email and we'll see what we could get done!

[bdshaw]

This has an obvious solution. Find out what the problem is with the factor and fix it.
From your numbers that will be the only thing that will help and resolve the MCA issues at the same time.
Bob Shaw
rshaw@advancecredit.com
734.929.3800