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09-08-2016, 03:16 PM #32
Reputation points: 24139
- Join Date
- Apr 2014
- Location
- Washington DC
- Posts
- 421
Hold on, Marcus - this whole conversation began in response to your statement that Jeremy should be more focused on the "other Rapids" instead of the stackers, and I provided a pretty clear, mathematical example as to WHY the vast majority of the stacks in the space are so damaging to both the merchant and the security of the first position lender's capital. It is true that the vast majority of the stacked products are predatory, but that doesn't have to be the case; it is actually possible to create a consumer or business loan (or other type of financial alternative such as a cash advance) for a higher risk / sub-prime merchant without creating a debt trap or offering completely untenable rates/terms. But that's not what happens, and the whole concept of "risk-based pricing" in the high risk stacking space is a complete farce; it's priced on a pool performance basis. and typically up-sold as high as humanly possible. And the stackers aren't just crushing businesses; they are raising defaults and the cost of capital across the space.
And I still am looking for ANY high risk/stacking company to answer this simple question: how do you support a product featuring a 600% cost of capital as a sustainable solution for a business since you are constantly driving the merchant to renew and double dip? Give it to them once and walk away? No problem, but that's not what happens. I am genuinely curious, and would love to hear any explanation. I've tried hard to understand it, but the pesky laws of math just keep getting in the way.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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