[Sean Cash]

Yes or NO? Whether the conversation is better suited for behind closed doors or not, the situation is real. Many merchants are getting an advance against their future credit card sales and shortly after getting financing of some sort that is repaid via daily bank debits. Is this okay?

[miked]

Well I think a lot depends on whether or not the original funder's agreement allows merchants to obtain secondary financing.

[Nickshades]

I think it would absolutely have to start with whether the original funder allows secondary financing, but collecting on two advances from the same merchant only jeopardizes the merchant's sustainability to have enough cash flow to operate their own business. Most merchants looking for another advance after receiving financing are seeking an advance equal to or greater than what they have already received. This so called piggyback program only forces the merchant to drive more sales so they can pay back what they owe. It is a bad move on the merchant and usually a breach of their agreement.

[Capital Stack]

I agree with nick. Its bad business for the merchant and lender community. But we just funded a merchant last week for $25k. The ISO funded the merchant several times and his balance was $150k. Our office spoke with the funder and they agreed to wanting to keep the merchant on the books. They gave us the go forward on the 2nd.

Although it is a strict policy of ours not to stack. additionally every month we have performing merchants that stack on us and we decline them for renewal.

In short stacking is bad business you'll hurt your merchants and the funders you stack on.

[fundyoutoo]

Although it is a strict policy of ours not to stack. additionally every month we have performing merchants that stack on us and we decline them for renewal.

In short stacking is bad business you'll hurt your merchants and the funders you stack on.[/QUOTE]

Yet you are named capital stack lol

[CraaaCraaa Radio]

Although it is a strict policy of ours not to stack. additionally every month we have performing merchants that stack on us and we decline them for renewal.

In short stacking is bad business you'll hurt your merchants and the funders you stack on.

Yet you are named capital stack lol[/QUOTE]


Very Hard to stop stacking, extremely hard!!
Unless you have control of your merchants!!! That takes a certain skill set & talent!!!




It doesnt matter what they saaaaaaaaaaaaaaayyyyyyyy!!!!!!!!!!!!!!!!!!!

[Mr. Amilli]

AA

[Karen37a]

Yet you are named capital stack lol

Capital Stack...omfg what a **** lender...stulman & rubin such scumbags

[/QUOTE]


Tell them all what you think about them....its the Holidays...purge your soul

[MCNetwork]

Short stacking is okay as long as you're not the funder being stacked on

[Chambo]

Exactly....there are funds who stack all day, but Lord help you if you stack on them!

[Finance1]

If anyone here saw my post on the MCA forum about Pearl stacking one of our clients I can update it. The merchant has gone out of business and stuck us with a decent balance. Pearl was filing legal action for default and the merchant closed up and filed bk. So, I voted f*ck no.

The ONLY way I can see it being ok is if the stack funder really takes the health of the business and ability to repay. Basically, stack funder has enough ethics and analysis to feel comfortable that the 2nd won't jeopardize the 1st AND merchant in any way. Unfortunately I have zero faith in the stack funders out there caring in any way. They want in and out quick and for a very high price. They simply do not care about anyone except themselves and their dollars.

If there are any other funders out there who have taken a hit because of a Pearl 2nd that violated their contract and want to sue let me know. It will take more than just my company to shut those guys out of the deliberate violation of existing contract stacking business.

[Sean Cash]

Pearl's name always seems to come up in conversations about stacking.

[AndyYSCISOdept]

Pearl's name always seems to come up in conversations about stacking.

I have noticed that, but they are hardly the only ones. We have done it and continue to, BUT we also have a large list of companies we wont stack on top of and A HUGE STIFF penalty if you do....email me if you wanna know the penalty its a doozy

[EBLM]

I have noticed that, but they are hardly the only ones. We have done it and continue to, BUT we also have a large list of companies we wont stack on top of and A HUGE STIFF penalty if you do....email me if you wanna know the penalty its a doozy

BUMP - As we head into the New Year I just wanted to reminisce about a simpler time. This thread is an eye opener about how far down the rabbit hole this industry has gone. 2012.

[J.Celifarco]

I cant believe things have changed so much in this industry that we are actually looking at stacking at being OK. If the lender taking the second position had underwriting in place that took the original advance into account and did not put the merchant in a position that their cash flow would be jeopardized then there would be no problem with stacking. The issue is that very very few companies that are willing to take second positions have underwriting in place that takes the original advance into account.. Because of that stacking is 100% a bad thing

[miked]

Everything is okay until you run into a situation like Finance1 described. And this has happened to everyone at some point I'm sure. Funders spend a lot of money on underwriters and cash flow analysis to determine the safest amount of money the merchant can afford to repay each month. Then another funder hops in a week later and doubles that amount. I have heard a lot of complaining in this industry about this and not enough suing. Strange, for an industry that is very litigious when it comes to merchants. So now that it may be funder vs. funder, funders are either not confident that their contracts and UCC-1s are perfected, they'd rather not spend the time and energy on it, they don't want their business to go through the scrutiny of the courts, or they don't want to create negative goodwill in the industry.

I know everyone hides their UCC-1s under aliases or doesn't file them at all to deter UCC hunters, but you may be shooting yourself in the foot when a stack funder comes along. They can claim that they did DD and argue that there was no public lien that prevented the merchant from secondary financing.

[MCA Pioneer]

Stacking, in my view, is very similar to a 2nd mortgage ... a smaller funded amount at a higher rate IF THE MATH MAKES SENSE. There is too much hysteria about this issue dating back years ago during my days as a Director at Advanceme. If one additional funding is added to a customer's overall debit load and the combined payments are an est. 17% or less of the average deposit volume, then it can make sense in many cases. The problem is when funders over-extend the customer with high payments and fees clearly placing the first pos deal at risk as well as their own second. I have long considered creating an association whereby one of the functions is to create "best practices" and see what percentage of the industry members might follow some sort of a formula to more appropriately apply second pos deals to a merchant.

Can you imagine if many of the first position mortgage companies demanded that their borrowers never obtain a second mortgage? They would be laughed at, and frankly that should be the attitude toward Advanceme, On Deck, Principis, and others when they demand to be the only funder in the mix. Again, it is about math and responsible funding.

This from Bob Gaskin, going into my 15th year in this industry and formerly a Director at Advanceme and the creator of the AMI Telesales Dept.

[jbrown]

Bob, you know better. 17% of total deposits? How many transactions did CAN/AMI do in all your years there? What does their data show about the maximum revenue split and the correlation to loss?

We all know that merchants mostly max out on a deal with the first position funder. Stacking is a short term game and not sustainable for most merchants.

All this blather about "2nd mortgages" overlooks the fact that mortgage lending is a REGULATED industry and there are strict guidelines about debt/income ratios in mortgage lending.

[achcash]

All this blather about "2nd mortgages" overlooks the fact that mortgage lending is a REGULATED industry and there are strict guidelines about debt/income ratios in mortgage lending.

And when Mastercard approves someone for a personal credit card, Amex, Visa and the rest don't come like hungry animals to give them more credit(regulated or not). Ye ok. It's a survival of the fittest game in a highly competitive industry. Anyone who is against stacking, like Jeremy Brown's company, I would bet heavily that is only b/c their credit facility doesn't allow them to do it.

[funding pro]

Bob, you know better. 17% of total deposits? How many transactions did CAN/AMI do in all your years there? What does their data show about the maximum revenue split and the correlation to loss?

We all know that merchants mostly max out on a deal with the first position funder. Stacking is a short term game and not sustainable for most merchants.

All this blather about "2nd mortgages" overlooks the fact that mortgage lending is a REGULATED industry and there are strict guidelines about debt/income ratios in mortgage lending.

Why even bother??? At this point it appears there are two groups of people in this industry. Folks that still think it is 2007, where we are providing financing to sub-prime business owners only and can say whatever they have to say so they can sleep better at night and then there are people doing meaningful business that see the big picture. As far as I am concerned its good vs evil and the line has been drawn. Sounds overdramatic just writing it out, but facts are facts. Opportunistic is just another way of calling someone greedy. Responsible stacking is an oxymoron. The responsible thing to do is educate, advise and implement the best strategy for the business owner. Not calling a UCC lead that was filed in the last 30 days to tell them you can get them funded on top of their advance, that it is "ok" and doesn't breach their current agreement and that everything will be fine since you've done it 1000 times before. All you can do is hope that as things continue to progress as they have and higher quality applicants continue to flood the marketplace the bottom end will continue to trickle out and take these folks with them. I cant see things going well when On Deck is doing a 24 month deal and 3 months in the business owner has 5 advances in place and wont qualify for a renewal for another 12 months...

[Chambo]

True...if these were taken to litigation, then all these clandestine UCC filings would be revealed. The whole point of suing different names would be tossed out the window.

[MCAVeteran]

the reason these smaller funding companies are stacking is because they cant compete head to head with the larger funders on the rates, offers, turns, to land a deal. they have to come in behind these funders and give small lumps of cash as a stack. see if any of these stackers will give $50k, $75K, $100K to a merchant over 12 months with a 30-35% rate...Dont think so. they are relying on two things to stay operating : 1- merchant needs cash sooner than when a renewal can occur, 2-the broker needs commissions and is willing to bring the deal to them to give more cash to merchant and train merchant on how to make it happen.

[Chambo]

curious to know if there is (what seems to be) such a distaste for stacking, why has it become so prevalent?

[funding pro]

curious to know if there is (what seems to be) such a distaste for stacking, why has it become so prevalent?

In general "drug use" has a negative connotation, yet it is still a booming business for those that are willing to engage it.

[Chambo]

In general "drug use" has a negative connotation, yet it is still a booming business for those that are willing to engage it.

Good point...