[Zach]

People must be buying it all day long if what WBL says is true. Funny story, there was a collateral based working capital lender here in Orange County called Blackstone, that charged crazy, insane rates, like 4 year deals with the borrower putting up every last piece of equipment they owned as collateral, and paying back FOUR times the funded amount over 3 or 4 years.

Only a very small percentage were desperate enough to take the offers from them. They were always very "busy" but they literally funded only 5 or 6 deals a YEAR, and had hundreds, if not thousands of applications annually.

They were also highly profitable.

I understand that the factor rate is high - no doubt about it. But that factor rate is roughly the same APR as a 1.38 for 6 months.

Why is a lender who does a 6 - month 1.3 fine and dandy, but one who does a 12-month 1.6 evil and wrong? It's the same rate. We just happen to extend 12-month terms to Yellowstone/Pearl type deals. Also, our loan size is most likely 2-3X what other other lenders would offer.

Admittedly I am being perhaps a bit defensive here, but it is a very common misconception about our product line. We offer longer terms on high-risk deals than any of our competitors, with similar rates as many of them. Due to the lengthening of the term, the factor rate will definitely be higher.

Imagine if Everest, Knight, Pearl, or Yellowstone did 12-month deals. Their 1.35-1.45 factor rates over 4-6 months would equate to 1.90-2.10 over 12 (or even higher).

If you sold our deal at 6-months you are looking at a 1.38 (and probably a much larger loan size) with a weekly payment. Not too shabby for a high risk deal, right?

[FUNd]

I understand that the factor rate is high - no doubt about it. But that factor rate is roughly the same APR as a 1.38 for 6 months.

Why is a lender who does a 6 - month 1.3 fine and dandy, but one who does a 12-month 1.6 evil and wrong? It's the same rate. We just happen to extend 12-month terms to Yellowstone/Pearl type deals. Also, our loan size is most likely 2-3X what other other lenders would offer.

Admittedly I am being perhaps a bit defensive here, but it is a very common misconception about our product line. We offer longer terms on high-risk deals than any of our competitors, with similar rates as many of them. Due to the lengthening of the term, the factor rate will definitely be higher.

Imagine if Everest, Knight, Pearl, or Yellowstone did 12-month deals. Their 1.35-1.45 factor rates over 4-6 months would equate to 1.90-2.10 over 12 (or even higher).

If you sold our deal at 6-months you are looking at a 1.38 (and probably a much larger loan size) with a weekly payment. Not too shabby for a high risk deal, right?

There is no comparison. Your deal is backed by real estate, the lenders you mentioned, have virtually no recourse in case of default.

[JoeLepkoski]

There is no comparison. Your deal is backed by real estate, the lenders you mentioned, have virtually no recourse in case of default.

Agreed, a 6 month 1.45 with Yellowstone, EBF, Knight, etc with no collateral is more enticing than a 6 month 1.38 that requires the merchants home to be put up as collateral.

[Zach]

Agreed, a 6 month 1.45 with Yellowstone, EBF, Knight, etc with no collateral is more enticing than a 6 month 1.38 that requires the merchants home to be put up as collateral.

Keep in mind that our loan size is going to be much larger as well. $50K might be more enticing to the merchant than $15K. Plus we will probably give them the option to go out to 12-36 months.

[pmoney]

Keep in mind that our loan size is going to be much larger as well. $50K might be more enticing to the merchant than $15K. Plus we will probably give them the option to go out to 12-36 months.

Exactly. If a merchant needs $150k but a MCA will only get them $60k it then becomes a major decision that they have to make. Do they take 60% less than they need going an unsecured route, or do they pledge a property they own as collateral to get that extra $90k? Ultimately every consumer is different.

[Zach]

There is no comparison. Your deal is backed by real estate, the lenders you mentioned, have virtually no recourse in case of default.

To clarify, because we have collateral, we have to offer:

1. 2-3X the size of our competitor's offer
2. Longer terms than any of our competitors
3. Lower rate

We have to beat the competition in every single category for our product to be viable? No way!

We beat our competition on loan size and term every time, and in many cases the rate as well (1.73 for 12 is much better than 1.45 for 4).

[FUNd]

To clarify, because we have collateral, we have to offer:

1. 2-3X the size of our competitor's offer
2. Longer terms than any of our competitors
3. Lower rate

We have to beat the competition in every single category for our product to be viable? No way!

We beat our competition on loan size and term every time, and in many cases the rate as well (1.73 for 12 is much better than 1.45 for 4).

Nobody is challenging the fact that you must make certain concessions - to win deals. You would be out of business in an hour if you just offered the same deals YSC or Pearl was offering, that's common sense. It's the rate that's kind of out there. I'm not saying you guys aren't all rolling in the dough and pushing $100,000 sports cars, like you say you are, not at all. I think a few people on here are surprised to see a 1.7--anything---on deals collateralized by a very strong instrument, real estate.