Putting some scenarios out there that I go through weekly to better help others understand the negative aspects of our industry or see if there are ways of helping the "un-fundable"

A Merchant needs more money for her business and realizes that the last time she worked with another broker/funding company may have ruined her chances of getting funding again. Keep in mind the there is a 1st position with a good funding company on top of the below advances.

Issues

#1 - In October she was double funded within 24 hours by two different brokers working with two different funding companies. One broker stated they were a direct funder... which they are- but they broker most of their paper. The other broker, disclosed that they would be working with another funding company.

#2 - The first funding was about $20k second funding was about $18k.

Did she qualify for $40k? No.
Did she disclose that she was working with two companies? no.
1st company called off a UCC. 2nd company she contacted directly when doing research.

#3 - The first "Funding Company" Broker put about 10% fees on a est. $20k contract that sold at a max buy rate. All together after fees... She received about $17k. The second company Funded $18k with no fees (this is something she realizes now... )

This whole situation kind of bit her in the @$$. I explained that even though her financials (not included the funding she received) grew 24% in 2 months, She now has 3 positions. She has about $720 in daily payments (which the funders will soon find out that they won't receive many payments due to Neg. ending days) and now that they see that she was double funded last month and her new application is on a different Broker's app- She will get declined or just because her desperate need of capital- will be shopped, promised, and funded a small amount with more fees.

Things I mentioned in the phone call:

  • Consolidations are hard to come by and are on a case by case scenario. It all depends on the financial health of the business, credit worthiness, industry, and growth (anything that will positively or negatively affect your receivables).
  • Double Funding is frowned upon by many Funding Companies and is not allowed (by standards in the industry).
  • Non-disclosure of knowing that you were taking two advances out and answering the verification questions falsely regardless of what the "Broker" or "Funder" may have told you.
  • Not reading your contract or the fee forms you signed


Things she mentioned in the phone call:
  • Denial of most of what I mentioned
  • STOP PAYMENT



Knowing there is a huge collections debacle in the industry, I told her stopping payments would be the worse thing she could do as it will lead to more issues. This is just one of the many scenarios that I see on a weekly basis. I do not know her credit- but she was shopped multiple times last month and is a restricted industry that requires more stable documents to qualify for... whatever at this point.