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08-30-2016, 09:23 AM #1
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A few questions to ask when you have a file like this.
When was the last advance taken? If in the last 30 days, the Merchant may want to reconsider. Especially if the track record for the stacked advances are from multiple originators and very close together (time wise). There is absolutely NO reason for a Business to have 7 advances other than the fact that they willingly knew what they were getting in contract for and was swayed into taking each one. Probably with super high factor rates/commissions.
Any respected Investor/Funder will not take a risk on $150k in balances. The risk is too high in most situations where the positions were taken with knowledge of the damage it can do to the Company.
Don't let anyone tell you otherwise - There is a lot of "enabling" happening where "direct" companies are telling you they can- but can't. A Syndicated advance with multiple investors can possible assist but remember, any syndicated consolidation will not go out long term and each investor expects a return. Also, if an investor knew he was taking out that high in balances they would pull out of the deal. You're now looking at 9 months at over a 1.4X and possibly only a FEW balances would be taken out- leaving a consolidated daily payment and multiple stack payments. Also- that minimal consolidation of balances may come with clauses in a contract or your agreement that state the Merchant cannot go anywhere and you cannot help him further.
Does the Business have collateral? Tie in real estate to the deal and now you have something to stand on. No collateral = No consolidation.
If you want to review the deal, reach out. I can assist you in looking at the possible (i say that lightly) options and how to explain these options to your Merchant so they do not go onto the next and hit a dead end with the same issue!
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