[Goliathfunding]

Looking for a lender that will fund a merchant that has very very few low balance days typically 1-2 every month currently has 15k out, monthly revenue 35k, looking for anything.

[iso@wallfunding]

Wall can get it done, reach out for our ISO agreement.

[Zach]

WBL can put together loans for borrowers with low average balances, negative days, and NSF's.

[AdvanceFund]

Looking for a lender that will fund a merchant that has very very few low balance days typically 1-2 every month currently has 15k out, monthly revenue 35k, looking for anything.

There are a few types of deals that we out-compete our competitors. This is one of them. Feel free to reach out and I will get you a quick answer.

[PJLamar38]

You can get this done literally anywhere.

[Phil T]

Yellowstone will give you a very aggressive offer, minimal stips and fast funding.

Team OBS
ISO Development – Funding Department

Yellowstone Capital LLC
Direct: (646) 774-4805
Fax: (978) 367-0504
Submissions@Yellowstonecapllc.com
www.yellowstonecap.com

[Funder Mark]

Yellowstone will give you a very aggressive offer, minimal stips and fast funding.

Team OBS
ISO Development – Funding Department

Yellowstone Capital LLC
Direct: (646) 774-4805
Fax: (978) 367-0504
Submissions@Yellowstonecapllc.com
www.yellowstonecap.com

And charge a higher rate with higher fees.

[Cfairbank]

Yellowstone will give you a very aggressive offer, minimal stips and fast funding.

Team OBS
ISO Development – Funding Department

Yellowstone Capital LLC
Direct: (646) 774-4805
Fax: (978) 367-0504
Submissions@Yellowstonecapllc.com
www.yellowstonecap.com

Very curious: what defines an "aggressive" offer from YSC? Are you talking about the ISO commission? Because I'm pretty sure most shops would beat your average deal (at least your average deal from your production in 2015 -- 66 day 1.45x with 10% in upfront fees). Or are you guys trying to go "up market" and offer better products?

This is not meant to be a joke, or just to call you guys out (though the fact that your average deal is that expensive I find nuts given the volume you guys do) -- I am genuinely curious what a "very aggressive offer" means in the high risk space in today's market. Despite my involvement in this space for over a decade as an M&A banker first and then lender, I still am trying to figure out what the end goal is for the high risk / stacking product -- in the past several years, as stacking got crazier and crazier with more and more stacking shops popping up and pumping out pretty substantial volume, I always assumed that, eventually, increased competition should lead to a better product; strangely enough, it's had the opposite effect; the products actually have somehow gotten worse. I guess it's just too hard to price shop, and given how expensive all the high risk options are, commission rate and trust between the ISO and funder in many ways becomes the primary driver of placement (i.e. a high risk product is a true commodity even from a pricing standpoint since the pricing boxes are generally so tight).

This is where I give Marcus credit -- his value proposition is clear, and he won't let you forget those double digit commissions!

[AndyYSCISOdept]

Very curious: what defines an "aggressive" offer from YSC? Are you talking about the ISO commission? Because I'm pretty sure most shops would beat your average deal (at least your average deal from your production in 2015 -- 66 day 1.45x with 10% in upfront fees). Or are you guys trying to go "up market" and offer better products?

This is not meant to be a joke, or just to call you guys out (though the fact that your average deal is that expensive I find nuts given the volume you guys do) -- I am genuinely curious what a "very aggressive offer" means in the high risk space in today's market. Despite my involvement in this space for over a decade as an M&A banker first and then lender, I still am trying to figure out what the end goal is for the high risk / stacking product -- in the past several years, as stacking got crazier and crazier with more and more stacking shops popping up and pumping out pretty substantial volume, I always assumed that, eventually, increased competition should lead to a better product; strangely enough, it's had the opposite effect; the products actually have somehow gotten worse. I guess it's just too hard to price shop, and given how expensive all the high risk options are, commission rate and trust between the ISO and funder in many ways becomes the primary driver of placement (i.e. a high risk product is a true commodity even from a pricing standpoint since the pricing boxes are generally so tight).

This is where I give Marcus credit -- his value proposition is clear, and he won't let you forget those double digit commissions!

Well, given that YSC is providing funding at such a large volume to merchants that for the most part aren't being approved anywhere else Id say the answer to your question is self explanatory. However, I can get more in-depth if you'd like.

[Michael I]

And charge a higher rate with higher fees.

to be fair the above lenders are not much better if better at all .what i learnt with yellowstone and pearl is the ridiculous fees are the individual rep not the company . you need to find yourself a good rep .

[AndyYSCISOdept]

to be fair the above lenders are not much better if better at all .what i learnt with yellowstone and pearl is the ridiculous fees are the individual rep not the company . you need to find yourself a good rep .

TRuer words have never been spoken. As Ive said many times my team doesn't add any additional fees. I know that for the brokers out there this is a very important factor.

[Cfairbank]

Well, given that YSC is providing funding at such a large volume to merchants that for the most part aren't being approved anywhere else Id say the answer to your question is self explanatory. However, I can get more in-depth if you'd like.

Andy, I'd love additional insight because I have banked a lot of the high risk companies and know how profitable they are -- margins in the high risk space are very strong (as you know), well above any form of risk-adjusted cost of capital in an efficient market. If merchants are priced at what they are willing to pay (as you stated) instead of what their risk adjusted price should be, that shows you the market is flawed. So here's what I want to understand if you are willing to provide feedback:

Take your average deal of 1.45x over 3 months, 10% fee -- that is an annualized cost of capital of 410%. Let's assume a 40% renewal rate to be conservative and the advances are refied at 2/3 paid down. Since you guys deduct the remaining balance (including the factor/margin income -- i.e. double dipping), your annualized return on those deals that pay back goes up to over 610%. Isaac, if I remember properly, stated your default rates are 13%. Now lets annualize that rate to compare apples to apples and assume the losses are evenly distributed (this is admittedly simplified (and flawed) math, but it illustrates the magnitude of the the net return) and you get to 98%. So you are looking at net annualized returns of over 300% on non-renewals, and over 500% on renewals.

Or, if you want to forget about annualizing it, just look at factor rates plus origination fee and deduct the default rate. Under any scenario, those are much higher returns than would be expected for the risk you are taking on. What am I missing? Why can't the high risk provide a true risk adjusted product with that much excess margin?

[HDF]

to be fair the above lenders are not much better if better at all .what i learnt with yellowstone and pearl is the ridiculous fees are the individual rep not the company . you need to find yourself a good rep .

This, in and of itself, is a big problem.

[AndyYSCISOdept]

Andy, I'd love additional insight because I have banked a lot of the high risk companies and know how profitable they are -- margins in the high risk space are very strong (as you know), well above any form of risk-adjusted cost of capital in an efficient market. If merchants are priced at what they are willing to pay (as you stated) instead of what their risk adjusted price should be, that shows you the market is flawed. So here's what I want to understand if you are willing to provide feedback:

Take your average deal of 1.45x over 3 months, 10% fee -- that is an annualized cost of capital of 410%. Let's assume a 40% renewal rate to be conservative and the advances are refied at 2/3 paid down. Since you guys deduct the remaining balance (including the factor/margin income -- i.e. double dipping), your annualized return on those deals that pay back goes up to over 610%. Isaac, if I remember properly, stated your default rates are 13%. Now lets annualize that rate to compare apples to apples and assume the losses are evenly distributed (this is admittedly simplified (and flawed) math, but it illustrates the magnitude of the the net return) and you get to 98%. So you are looking at net annualized returns of over 300% on non-renewals, and over 500% on renewals.

Or, if you want to forget about annualizing it, just look at factor rates plus origination fee and deduct the default rate. Under any scenario, those are much higher returns than would be expected for the risk you are taking on. What am I missing? Why can't the high risk provide a true risk adjusted product with that much excess margin?

Id love to give you more accurate and detailed information, so please private message or shoot me an email. The fact remains that YSC provides a service and we make no apologies for providing such, having said that we have always been and will always be open to those that ask for information (personal requests)

[Cfairbank]

Id love to give you more accurate and detailed information, so please private message or shoot me an email. The fact remains that YSC provides a service and we make no apologies for providing such, having said that we have always been and will always be open to those that ask for information (personal requests)

Andy, I'm just trying to understand how the math makes sense from two perspectives:

1) given the stated "low" default rate of 13% (relative to what you would expect for lenders charging those types of rates), what justifies charging the merchants that much? How does the market become more efficient so the products are properly priced so the risk-adjusted returns achieved by funders accurately reflects and prices the actual risk?;

2) explain how renewing (and double dipping) a cash advance at those rates is sustainable for a business, and won't ultimately kill the business -- the math makes no sense. I don't know of any clients in this market that are operating at a combination of margin and growth rate that is in excess of 600%. The one time deals are fine -- it's the renewals that are the problem. If you have the answers, I'd gladly speak with you off-line, but not sure what the "secret" sauce you'd be disclosing on this forum given that Isaac already has disclosed the default rate (and your deal stats are your deal stats and pretty consistent with other high risk lenders). My full contact info is in my signature.

Again, this isn't solely a YSC question, if anyone can defend this type of product with math, I'd love to hear it. Products structured like this are predatory (unless you can explain to me how they aren't), and threaten the entire market -- the small businesses that receive the capital, the 1st position lenders being stacked (with the stackers frequently turning their capital multiple times before the first position even recovers principal), and the reputation of the whole space if painted with a single, high risk cash advance brush.

[Cfairbank]

Well, given that YSC is providing funding at such a large volume to merchants that for the most part aren't being approved anywhere else Id say the answer to your question is self explanatory. However, I can get more in-depth if you'd like.

And to the original question, I am still curious what a "very aggressive" offer means -- are you guys going up market, or is that based on ISO commission?

[AndyYSCISOdept]

Andy, I'm just trying to understand how the math makes sense from two perspectives:

1) given the stated "low" default rate of 13% (relative to what you would expect for lenders charging those types of rates), what justifies charging the merchants that much? How does the market become more efficient so the products are properly priced so the risk-adjusted returns achieved by funders accurately reflects and prices the actual risk?;

2) explain how renewing (and double dipping) a cash advance at those rates is sustainable for a business, and won't ultimately kill the business -- the math makes no sense. I don't know of any clients in this market that are operating at a combination of margin and growth rate that is in excess of 600%. The one time deals are fine -- it's the renewals that are the problem. If you have the answers, I'd gladly speak with you off-line, but not sure what the "secret" sauce you'd be disclosing on this forum given that Isaac already has disclosed the default rate (and your deal stats are your deal stats and pretty consistent with other high risk lenders). My full contact info is in my signature.

Again, this isn't solely a YSC question, if anyone can defend this type of product with math, I'd love to hear it. Products structured like this are predatory (unless you can explain to me how they aren't), and threaten the entire market -- the small businesses that receive the capital, the 1st position lenders being stacked (with the stackers frequently turning their capital multiple times before the first position even recovers principal), and the reputation of the whole space if painted with a single, high risk cash advance brush.

I think the biggest issue is you are using numbers that are of your own making, and that is probably because most people aren't forthcoming ( even your so called A paper lenders) with the real cost of their money

Secondly, the renewal process of re-fi'ing a balance has been a long established practice.

Im not sure what answer your after, we provide a service just like any other business but it seems to me that some people love to play the "holy than thou" card while getting their hands dirty at the same time.

Don't get me wrong, our model isn't perfect but show me one that is and Im ready to poke holes in it

[AndyYSCISOdept]

And to the original question, I am still curious what a "very aggressive" offer means -- are you guys going up market, or is that based on ISO commission?

Very aggressive is a fluid term based on the quality of merchant. YSC has always tried to give the best offer (most $, best commission, longest term) given the type of files we receive. Pretty sure that isn't the first time anyone is hearing that.

[Cfairbank]

I think the biggest issue is you are using numbers that are of your own making, and that is probably because most people aren't forthcoming ( even your so called A paper lenders) with the real cost of their money

Secondly, the renewal process of re-fi'ing a balance has been a long established practice.

Im not sure what answer your after, we provide a service just like any other business but it seems to me that some people love to play the "holy than thou" card while getting their hands dirty at the same time.

Don't get me wrong, our model isn't perfect but show me one that is and Im ready to poke holes in it

You are welcome to pick numbers, and I'll run the same analysis -- More than anything, I am focusing magnitude here, but if you want to cut those annualized rates in half, you will still have a difficult argument to support (especially with double dipping) -- namely, how does the business support it and what are you in your practices doing to avoid creating debt traps? Regardless, I'm quite confident in the validity of your deal profile both from broader market intel and validated by the times we are stacked by YSC. Again, do a deal once and move on, you have a fine product. It's the cycling that is killer

But you are exactly right, no product is close to perfect and in no way am I playing the "holier than thou" card -- what I can do though is defend our business model, and in deals where we are higher priced, explain how our product is specifically designed to NOT create a debt trap -- again, it's no where close to perfect -- we can and will improve it. But there are also inherent issues in the space (i.e. stacking) that, until they are wiped out, will make products "worse" and higher priced throughout the market.

Last point, then we can take this offline if you want but no reason to keep beating a dead horse on a public forum unless you guys will go through the basic math exercise with me -- just because double dipping has been the "normal" practice since the beginning (and you are right, it has), doesn't mean it is a "good" practice. it's one of the most damaging practices in the space, especially on short term high cost capital. If lenders/advance companies don't regulate themselves and remove it from their products, the CFPB or another party will -- it absolutely is a massive (hidden) driver of debt traps -- the CFPB will have a FIELD DAY with double dipping.

[HDF]

Very aggressive is a fluid term based on the quality of merchant. YSC has always tried to give the best offer (most $, best commission, longest term) given the type of files we receive. Pretty sure that isn't the first time anyone is hearing that.

Best commission. LOL.

[AndyYSCISOdept]

Best commission. LOL.

and? I find that a lot of people have questions and negative comments but most f you still submit a ton of business to YSC, so which is it...are we total crooks and thieves or are we the most necessary funders out there( if you say anything other than necessary then you're lying)

Peace Rabbit Im out!

[Michael I]

This, in and of itself, is a big problem.

agreed , i wonder if yellowstone and pearl know how much business they lose because of their own greedy reps

[Michael I]

and? I find that a lot of people have questions and negative comments but most f you still submit a ton of business to YSC, so which is it...are we total crooks and thieves or are we the most necessary funders out there( if you say anything other than necessary then you're lying)

Peace Rabbit Im out!

still waiting for the ones that will do high risk and not double dip . till then keep up the good work

[Michael I]

You are welcome to pick numbers, and I'll run the same analysis -- More than anything, I am focusing magnitude here, but if you want to cut those annualized rates in half, you will still have a difficult argument to support (especially with double dipping) -- namely, how does the business support it and what are you in your practices doing to avoid creating debt traps? Regardless, I'm quite confident in the validity of your deal profile both from broader market intel and validated by the times we are stacked by YSC. Again, do a deal once and move on, you have a fine product. It's the cycling that is killer

But you are exactly right, no product is close to perfect and in no way am I playing the "holier than thou" card -- what I can do though is defend our business model, and in deals where we are higher priced, explain how our product is specifically designed to NOT create a debt trap -- again, it's no where close to perfect -- we can and will improve it. But there are also inherent issues in the space (i.e. stacking) that, until they are wiped out, will make products "worse" and higher priced throughout the market.

Last point, then we can take this offline if you want but no reason to keep beating a dead horse on a public forum unless you guys will go through the basic math exercise with me -- just because double dipping has been the "normal" practice since the beginning (and you are right, it has), doesn't mean it is a "good" practice. it's one of the most damaging practices in the space, especially on short term high cost capital. If lenders/advance companies don't regulate themselves and remove it from their products, the CFPB or another party will -- it absolutely is a massive (hidden) driver of debt traps -- the CFPB will have a FIELD DAY with double dipping.

fully agree here and it is majority of lenders , not just the f paper ones . track record got to count for something . till today can is the best with that . they will go way out of their box to keep a good client .

[Cfairbank]

and? I find that a lot of people have questions and negative comments but most f you still submit a ton of business to YSC, so which is it...are we total crooks and thieves or are we the most necessary funders out there( if you say anything other than necessary then you're lying)

Peace Rabbit Im out!

Those two statements aren't mutually exclusive. You guys exist because you fill a need in the market, there's no doubt about it. But you absolutely CAN offer a "better" product to merchants, that is (at least somewhat..) transparent, lower rate, fewer junk fees, and doesn't create debt traps due to the excess margin that exists in the high risk model. Problem is, you choose not to. And that choice is ultimately going to be the difference between maximizing near term returns (which, if you've followed any of the CFPB enforcement action, may very well eventually get clawed back by the government) versus building a company that is truly sustainable.

This is very straight forward -- someone, anyone, show me mathematically how a merchant can sustain on a high risk cash advance that renews and renews, double dipping each time. Just one single example and I'll jump on the high risk bandwagon.