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09-07-2016, 05:37 PM #13
- Join Date
- Apr 2014
- Location
- Washington DC
- Posts
- 421
Marcus, what does that have anything to do with my previous post about the impact of a short term high cost advance stacked on a longer term, lower cost loan? If we give someone an 18 month loan at a 1.25 factor rate and you stack me and keep turning your capital, what do you expect to happen to my loan or to that business? How many companies can survive (much less thrive) on 600%+ capital that keeps turning for a year or more? Not very many, and that's why more and more lenders are and will increasingly allocate money towards addressing the stacking problem. And its also a reason why, in the broader industry, the only metric that will ultimately matter to outsiders is default rate on a CUSTOMER basis, not a dollar or unit basis -- you can keep turning them until they are driven into the ground, and be playing with the houses money by advance number 3.
Carl Fairbank
Founder & CEO boldMODE
www.boldmode.com
Carl@boldmode.com
Founder & former CEO of Breakout Capital (sold to SecurCapital in 2019)
www.breakoutfinance.com
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