[Kevin Henry-Seacoast]

Just out of curiosity has anyone ever had success pitching bank worthy clients on the liability aspect of it. If they take line of credit, bank loan (longer terms) etc etc how it will stay on their credit report as a liability. In case they want to do any financing for mortgage, car etc etc down the line it would be included in their debt ratios and could possibly cause denial? Where as mca do not show up on credit reports as from what i have been told. Also with bank lending at any given time throughout the line of credit banks will continually check merchants credit to make sure its still up to par. If their credit drops without notice the bank can cut off their line completely of reduce it to pennies and they would have to start making payments asap. I saw this first hand numerous times while working as Personal Banker at Chase.

Sachip,

The liability of a business owner taking out an MCA when they already have a line of credit or any other senior financing in place? It can definitely throw the Company in default as the assets are already pledged.

Best,

Kevin

[Sachip24]

Sachip,

The liability of a business owner taking out an MCA when they already have a line of credit or any other senior financing in place? It can definitely throw the Company in default as the assets are already pledged.

Best,

Kevin

didnt mean when they have the line in place already, maybe I phrased my question incorrectly. I meant when merchant says why take out MCA when they can just go to a bank.

[Kevin Henry-Seacoast]

didnt mean when they have the line in place already, maybe I phrased my question incorrectly. I meant when merchant says why take out MCA when they can just go to a bank.

Oh-I don't think it would hurt them in the future obtaining a more traditional working capital solution. What may ding them up is several entities pulling credit on the client simultaneously while they are out seeking a working capital solution.

[Michael I]

Sachip,

The liability of a business owner taking out an MCA when they already have a line of credit or any other senior financing in place? It can definitely throw the Company in default as the assets are already pledged.

Best,

Kevin

have you ever seen that happen ?

[Kevin Henry-Seacoast]

have you ever seen that happen ?

Absolutely and seeing it more and more.

[Michael I]

Absolutely and seeing it more and more.

is it with what in the mca industry we call the a lenders or even the c lenders that is not a real loan and do not file ucc

[MCNetwork]

Sachip,

The liability of a business owner taking out an MCA when they already have a line of credit or any other senior financing in place? It can definitely throw the Company in default as the assets are already pledged.

Best,

Kevin

I don't see this happening because the UCC of the MCA company is subordinated to the bank's UCC. The banks retain first position in case of default.

[Kevin Henry-Seacoast]

I don't see this happening because the UCC of the MCA company is subordinated to the bank's UCC. The banks retain first position in case of default.

MCN-That is if the senior lender knows about the MCA and there is a subordination agreement in place. I have seen dozens of case where the senior lender did not know their client took out the MCA and their was no subordination agreement in place.

[CreditGuy]

MCN-That is if the senior lender knows about the MCA and there is a subordination agreement in place. I have seen dozens of case where the senior lender did not know their client took out the MCA and their was no subordination agreement in place.

If the bank's lien is organically senior, no subordination need be executed.

[Kevin Henry-Seacoast]

If the bank's lien is organically senior, no subordination need be executed.

True, but by taking out the MCA or any other loan without the bank's knowledge that it was done could violate their agreement and throw the Company in default.

[ADiamond]

If the bank's lien is organically senior, no subordination need be executed.

using "organic" as an adjective, very hipster - circa 2009. let me find out you wear skinny jeans.