[skideeppow]

Have a construction company looking for 300k, would like 5 year turn. Besides funding circle, anyone else out there doing monthly payments and 5 year turns.
And not interested in putting him into Loan Me. The interst with those guys is insane.

[Triton]

I agree with the interest for LoanMe, but it's an amortized loan. If they want 5 year terms, they can set an auto payment to make double payments and have the loan paid off in 5 years which will significantly reduce the interest.

Other than that, the only other place I know of personally is Fundation but I think they max at 4 years and they are even harder to get approved than Funding Circle.

[RichardGerard]

Lots of choices... Touch base if you would like assistance..

Richard 516 510 3855

www.businesscapitalconsultants.com

775 Park Avenue Suite 255
Huntington, NY 11743

[skideeppow]

I agree with the interest for LoanMe, but it's an amortized loan. If they want 5 year terms, they can set an auto payment to make double payments and have the loan paid off in 5 years which will significantly reduce the interest.

Other than that, the only other place I know of personally is Fundation but I think they max at 4 years and they are even harder to get approved than Funding Circle.

The problem with loan me is that the payments are like 99% interest, each payment does not pay any principal down. It is unreal. I will see what fc says, i have it out to them now. Thanks Triton

[LoanMe]

I agree with the interest for LoanMe, but it's an amortized loan. If they want 5 year terms, they can set an auto payment to make double payments and have the loan paid off in 5 years which will significantly reduce the interest.

Triton-you are correct, borrowers have the flexibility to make payments above the minimum. Payments above the minimum each month are applied to principle which will reduce the balance, effectively shortening the term, saving them significantly on actual interest charged.

Use this calculator to see how making an alternative monthly payment reduces interest charged: www.loanme.com/loancalculator (scroll to bottom of page)

The problem with loan me is that the payments are like 99% interest, each payment does not pay any principal down.

This is incorrect.

Our loans are simple interest term loans. Each monthly payment does pay down a small portion of principle at the beginning of the term, and the farther into the term the more principle it pays down. (similar to a mortgage. Ex. Monthly payments on a 30 year fixed will pay down less principle during the first half of the term, and more towards the 2nd half.) That's why it's important for a borrower to make payments above the minimum or make the minimum for a short period of time and then pay off the principle balance in full.

[bdshaw]

skideeppow, I think if you contact Richard you will find several interesting options for your client.
Bob

[skideeppow]

Triton-you are correct, borrowers have the flexibility to make payments above the minimum. Payments above the minimum each month are applied to principle which will reduce the balance, effectively shortening the term, saving them significantly on actual interest charged.

Use this calculator to see how making an alternative monthly payment reduces interest charged: www.loanme.com/loancalculator (scroll to bottom of page)




This is incorrect.

Our loans are simple interest term loans. Each monthly payment does pay down a small portion of principle at the beginning of the term, and the farther into the term the more principle it pays down. (similar to a mortgage. Ex. Monthly payments on a 30 year fixed will pay down less principle during the first half of the term, and more towards the 2nd half.) That's why it's important for a borrower to make payments above the minimum or make the minimum for a short period of time and then pay off the principle balance in full.

OK, but i have a couple of merchants who on a $2,000 payment, the principal is literally $.50. That is just crazy.

[LoanMe]

OK, but i have a couple of merchants who on a $2,000 payment, the principal is literally $.50. That is just crazy.

We don’t disagree that the amount of principle paid down on the first few monthly payments are low. Unfortunately LoanMe did not create the “Simple Interest” model. What would be crazy is “Compounding Interest” like minimum monthly payments on a personal credit card...How many people make just the $25 or $35 minimum monthly payments? Not many. If they do, they do so for a short period of time. Most would pay above the minimum. Similar to how our product can be used.

Let’s apply this to an actual example, and I’ll use your example of $2k payment around 99%. I think this may help shed some light on our product and how it can actually help, given the loan structure and flexibility.

LoanMe does not have a 99% rate, our Tier C is the closest at 94%. For all of our set rates/terms please click here: https://www.loanme.com/smallbusiness/Rates Just select the state.

Using the example of Tier C 94% (By the way this is the same type of customer that would typically get a 1.35/ 6 month term in the MCA space)

LoanMe Example
$25,000 LoanMe simple interest term loan
94% annualized interest rate
120 month term
Minimum monthly payments $1,958.56

MCA example
$25,000 MCA
1.35 factor
6 month term
$267.86/daily payment = $5,625 monthly responsibility (daily x21 business days)
Total payback $33,750

So you borrower has 2 choices. A daily payment of about $268 forcing them to pay back $5,625 per month. Or a flexible term loan amortized over 120 months allowing the minimum monthly payment to be $1,958.56.

How do the above monthly payments work with their daily liquidity and day-to-day cash flow?

We won’t event talk about the $3,666.44 difference in monthly payments that could go back into the business each month, creating additional revenue.

Could a lower $1,958.56 monthly payment be more attractive? IF they understand to use it for a short period of time… say 4 months and they pay the loan off in full?

By just making the minimum monthly payments for the 4 months and then paying off the principle balance (about $25k in principle) in full, It would cost them about $7,834.24 in interest ($1,958.56 x 4). So payback here would be $32,834.24 (1.31 factor).

Maybe they don’t have a cash flow issue and they are just concerned with overall interest charged. If the monthly responsibility of $5,625 per month is what they want to apply to the LoanMe loan. They can do so. By applying the same monthly responsibility from the MCA example above ($5,625) to the LoanMe term loan example. The borrower would be making $5,625 monthly payments to LoanMe instead of the minimum payment $1,958.56. Since the $1,958.56 is automatically deducted, they can setup auto bill pay for the difference of $3,666.44. This would reduce their term on their Tier C LoanMe loan, from 120 months down to 5.67 months. The amount of interest (at 94% per annum) charged would only amount to $6,918.04; making the total payback $31,918.04 (the equivalent to a 1.27 factor).

The key to using a LoanMe business loan for your clients is this- Understand how they can benefit from using a flexible long term product like ours in a short period of time.

They can achieve this by:

a. Making minimum monthly payments for a few months while the borrowed funds help make them a profit, then pay off the loan in full with no pre-payment penalties. Interest stops there.

b. Making monthly payments above the minimum, as seen in the example above which reduces the term and reduces their interest charged.

If you have ever sold a 1.35 factor/6 month term MCA, then a 94% annualized interest rate on a term loan is not crazy. Unfortunately as a direct lender offering a Loan, we cannot package it as attractively as a 1.35 factor.

Remember- Not everyone is a Tier A customer and not everyone is a Tier C, D or E customer.

If you would like to give us a call to go over your specific customer (sounds like you have some with LoanMe), we would be more than happy to help you understand how and when our Loans make sense in their individual business situations. If it does not make sense, we will be the first to tell you to have them look elsewhare.

[ksmo1309]

Check out dealstruck. Ask for Jason hes the man over there.

[RichardGerard]

Dealstruck HATES construction- especially GC's.. Important to know who does what..

[bdshaw]

Richard is correct. It's mistake to think that only advances are the solution to financial needs. This discussion, like others seem to be talking about who won't do the deal, not who will.
There are a number of other vehicles that may fit.
I've seen too many ISO's beat a deal to death finding an advance that will pay them as much as possible and by the time they realize they are not going anywhere they lose a perfectly doable deal.
it's also quite possible that those of us in the ABL arena have a habit of increasing the size of deals to yield more in commission.
The brokers who bring these types of deals to me earn an average of $7,500, probably the same with Richard.