[isaacdstern]

http://debanked.com/2016/04/scorched-earth-controversial-bill-could-eliminate-marketplace-lending-merchant-cash-advance-and-nonbank-business-loans-in-illinois-and-starve-small-businesses-in-the-process/

[isaacdstern]

The CFC needs your support in making sure that small businesses have continued access to nonbank alternatives in the State of Illinois. The Small Business Lending Act affects nonbank lenders, marketplace lenders and merchant cash advance companies alike. For more information contact Mary Donahue at mdonohue@commercialfinancecoalition.com or reach out to me directly, thanks!

[AndyYSCISOdept]

Im sure everyone on this forum can agree that the following is true; losing states to blank legislation is a terrible idea. Even if you have never funded a deal in Illinois, the idea that one state would ban our type(s) of funding for merchants would set a bad precedent and it behooves us all to take action to make sure that any legislation regarding this industry is well understood and documented.

[Funder Mark]

While Andy is definitely correct, there is another way to look at the situation. If the small businesses in Illinois start suffering due to a lack of working capital, eventually the merchants will complain, and force changes to be made. At that point, we will have proof of what happens when alternative financing is locked out of a state, and we will have strengthened our case about how much we are needed in the economy.

[AndyYSCISOdept]

While Andy is definitely correct, there is another way to look at the situation. If the small businesses in Illinois start suffering due to a lack of working capital, eventually the merchants will complain, and force changes to be made. At that point, we will have proof of what happens when alternative financing is locked out of a state, and we will have strengthened our case about how much we are needed in the economy.

I like the angle you're taking but are we as an industry willing to sacrifice a state with a big city like Chicago to prove our point?

[J.Celifarco]

Nothing good can come from this.. This sets a terrible precedent. As an industry we need to everything we can to stop this. If if it did get overturned or reversed later the damage would be done once it passes. Hopefully this goes nowhere

[Funder Mark]

Nothing good can come from this.. This sets a terrible precedent. As an industry we need to everything we can to stop this. If if it did get overturned or reversed later the damage would be done once it passes. Hopefully this goes nowhere

Absolutely true, my point was to try and find the silver lining.

[AndyYSCISOdept]

Absolutely true, my point was to try and find the silver lining.

Knowing that this legislation is trying to eliminate a bunch of opportunities for funding in our industry I don't see much of a lining silver or otherwise.

[mcaguru]

Brokers keep in mind when looking to place a deal that the funding companies in the LINK below are spending serious money to make sure the wheels on our industry can keep spinning and be able to fund your files pay you commissions and of course allow your clients to have access to capital.

https://www.commercialfinancecoalition.com/about-cfc/

[Michael I]

Brokers keep in mind when looking to place a deal that the funding companies in the LINK below are spending serious money to make sure the wheels on our industry can keep spinning and be able to fund your files pay you commissions and of course allow your clients to have access to capital.

https://www.commercialfinancecoalition.com/about-cfc/

wouldn't this thing affect the a lenders also ? why is it only the c d lenders on it ?

[AndyYSCISOdept]

wouldn't this thing affect the a lenders also ? why is it only the c d lenders on it ?

It will affect everyone, just because the so called "A Lenders" aren't on this now doesn't mean that they don't need to pay attention

[isaacdstern]

It will not only effect ALL Merchant Cash Advance direct providers...it will also effect Factoring companies, all marketplace lenders....basically any company that is not a traditional bank in Illinois

wouldn't this thing affect the a lenders also ? why is it only the c d lenders on it ?

[Cfairbank]

wouldn't this thing affect the a lenders also ? why is it only the c d lenders on it ?

This has been going on for weeks in Illinois and A, A/B and marketplace folks have been all over this. For folks interested in a non-CFC angle, feel free to reach out.

Anyone at LendIt, I am here if you want to discuss.

[mcaguru]

If regulation comes it will affect A Lenders the same way. I spoke to a lobbyist who explained that many times its like after crime goes down one guy decides to help authorities and then is puzzled why hes facing the same punishment. we are all in the same boat denial is powerful.

my point is many A guys are yapping away with regulators thinking it will some how spare them not realizing that once they get back to there offices it takes an entire life of its own.

[AlexSMF]

If regulation comes it will affect A Lenders the same way. I spoke to a lobbyist who explained that many times its like after crime goes down one guy decides to help authorities and then is puzzled why hes facing the same punishment. we are all in the same boat denial is powerful.

my point is many A guys are yapping away with regulators thinking it will some how spare them not realizing that once they get back to there offices it takes an entire life of its own.

I do not necessarily agree with this. The guys that are engaged in the dialect are usually the ones that have the most input over the drafting and ultimate outcome of the proposed legislation. People put politicians on a pedestal which is a mistake. They are very much influenced by input, especially when that input comes along with potential money and mobilization of groups that would have an interest in this. I have worked for 3 politicians in the past (1 US congress member and 2 NYC council members). I can recall many times when legislation was proposed and co-sponsored and either heavily amended or killed all together due to pressure from stake holders of the legislation. The name of the game here is mobilization and information. You write letters, make phone calls, and make insinuations that whoever the elected official is running against next will be heavily funded by this industry unless they play nice nice. Should the "rational persuasion method" not work, then you increase pressure by funding attacks AD's. "So and so politician who has accepted money from Chase and Citi bank is now proposing legislation that will make it difficult or impossible for small business owners to obtain financing. So and so, bought by major banks is selling main street down to wall street...call so and so and tell him that small businesses are the back bone of this country."

Get a consulting firm to produce that AD and play it on the local TV and Radio channels in the district of the elected officials sponsoring this legislation and see how fast that bill gets amended or dropped. I have personally seen this work on far more important issues. As I have said in prior posts, if people in this industry want to have a say in their destiny then they need to come together and mobilize.

[aredmond]

Brokers keep in mind when looking to place a deal that the funding companies in the LINK below are spending serious money to make sure the wheels on our industry can keep spinning and be able to fund your files pay you commissions and of course allow your clients to have access to capital.

https://www.commercialfinancecoalition.com/about-cfc/

They obviously are not spending "serious" money on this website. It looks like a 6th grader put this together.

[isaacdstern]

A few like minded companies have started the CFC (Commercial Finance Coalition) to be able to have a voice when stuff like this happens. Regulation is not something that may or may not happen in 5 or 10 years, its happening right on front of our eyes TODAY! If you have interest in getting involved reach out to me or any one of our members.

[AndyYSCISOdept]

As a side note, any of you that want just the most basic information give me a call and I'll help get you pointed in the right direction and hopefully youll see why the CFC is going to be such an important part of our industry

[mcaguru]

Larger ships turn slower perhaps... the B/C lenders are more the Mark Zuckerbergs of the world kind of people that get things done on the ASAP mode.

[FUNd]

Maybe if funders weren't doing 5th position 4 month 1.59s with 10% in junk fees, our space wouldn't be getting so much of this negative attention. Once the word 'predatory' comes into play, well, we all remember 2008. Everyone was a "victim" of the big bad banks. Politicians can play the hero role to their constituents by saving them from these loans, without anyone really understanding that valuable access to capital has been taken away, for no good reason, by another bureaucrat trying to call the shots.

[AndyYSCISOdept]

Maybe if funders weren't doing 5th position 4 month 1.59s with 10% in junk fees, our space wouldn't be getting so much of this negative attention. Once the word 'predatory' comes into play, well, we all remember 2008. Everyone was a "victim" of the big bad banks. Politicians can play the hero role to their constituents by saving them from these loans, without anyone really understanding that valuable access to capital has been taken away, for no good reason, by another bureaucrat trying to call the shots.

I don't see how what type of funds being offered to the merchant has anything to do with this. This would make it so I couldn't give them funds at any cost....more important than our weekly sparring match about which company has the worst rates I believe.

[FUNd]

I don't see how what type of funds being offered to the merchant has anything to do with this. This would make it so I couldn't give them funds at any cost....more important than our weekly sparring match about which company has the worst rates I believe.

Was just pointing out that uber-hign interest rate 'easy credit' loans gather the attention of would-be regulators. If we were all doing 10-15% APR term loans with monthly payments, nobody would care.

[AndyYSCISOdept]

Was just pointing out that uber-hign interest rate 'easy credit' loans gather the attention of would-be regulators. If we were all doing 10-15% APR term loans with monthly payments, nobody would care.

What merchants do you get submitted to you that qualify for 10-15% APR? If its enough to offset your monthly income and that of your employees then god bless, but most of us aren't in that boat.

[J.Celifarco]

Maybe if funders weren't doing 5th position 4 month 1.59s with 10% in junk fees, our space wouldn't be getting so much of this negative attention. Once the word 'predatory' comes into play, well, we all remember 2008. Everyone was a "victim" of the big bad banks. Politicians can play the hero role to their constituents by saving them from these loans, without anyone really understanding that valuable access to capital has been taken away, for no good reason, by another bureaucrat trying to call the shots.

I agree with this that the 3rd position and further out deals for 60 days at 1.49 factors and 10% in fees is why we have this problem but I also disagree that a 10% APR loan is the answer.. Most of our customers don't qualify for that.. There is somewhere in between these 2 extremes where everyone can make money and we as an industry dont look like the predators that we are going to be portrayed as in these hearing that are going on in NY and in Illinois.. Like everything there is a middle ground where we can all survive if there could ever be a common sense consensus made between the lenders.
Problem is the likelihood of this is slim to none and we as an industry are going to be subject to whatever laws are passed because we sat back for way to long and did nothing to fix the problems in the industry ourselves.. Now we can now wait and hope we are destroyed from the outside because we never fixed ourselves from the inside.

[mcaguru]

Lets not forget that many brokers in the MCA space have a marketing expense that is very costly YET they continue the monthly spend because they are able to make an ROI on funding subprime deals (for lack of better term) IF HOWEVER (for example) ONLY the A paper lenders operated (not because the B was forced out of business but we all retired today) the brokers would only be able to fund a specific number of deals and be out of luck with THE HOUSES to FUND the B / C paper and simply wont be able to survive on just funding the Best In class (A Paper) and in no time they will STOP Marketing forcing the A paper lenders out of deal flow!!!!