[1StopFunding]

Craig McGrain, president of Durham Commercial Capital is hammering the MCA space during this State of Lending Today panel. "A business who primarily uses MCA's to fund their business is a business that will be going out of business." He says rates are high as 75%.
Who is funding merchants at 75%???

[Sean Cash]

Cheryl, I'm in the same room listening to the same speech. Let's meet up

[1StopFunding]

Mike Rabin, VP of Finding Circle, "Regulation is coming for MCA's."

[1StopFunding]

Ok Sean sounds good. I'll email you my cell number. Let's met up at the coffee break.

[1StopFunding]

Thomas Zernick, Pres of SBA lending of First Home Bank, as it relates to regulation, "overkill will kill the industry"

[1StopFunding]

Craig- stated he would not regulate the MCA industry.

[J.Celifarco]

Thanks for the updates keep them coming

[Zach]

In terms of APR, 75% would be on the "low end" of MCA.

On Deck is around 55% APR (1.28 over 12)

Everest is around 130% APR (1.35 over 6)

Yellowstone is closer to 325% (1.45 over 3)

[mcaguru]

I am for informing the merchant of the true cost. its done on evrey funding call.

lets also remember that merchants are businessman they are buying supply's all day long and can tell you in a deep sleep when they get an advance for 100k and payback 1.30 over 6 months costs are to the business. so disclosure is great but one can think from all the discussion that business owners are not aware of costs of capital and they are like crash victims signing documents while they are being rushed into an ambulance while in a semi coma.

At the same time Should STARBUCKS remind repeat customers the following: "Sally hows your morning going? BTW your drink is $6.39 and just keep in mind that if you keep returning to our cafe you will be paying us $191.70 a month and $2,300.4 a year and if you Love our coffee so much Sally (BTW love your shoes) you will be spending $23,004.00 over the next decade..now did you want 1 or 2 sweet and lows>? ......

[skideeppow]

I am for informing the merchant of the true cost. its done on evrey funding call.

lets also remember that merchants are businessman they are buying supply's all day long and can tell you in a deep sleep when they get an advance for 100k and payback 1.30 over 6 months costs are to the business. so disclosure is great but one can think from all the discussion that business owners are not aware of costs of capital and they are like crash victims signing documents while they are being rushed into an ambulance while in a semi coma.

At the same time Should STARBUCKS remind repeat customers the following: "Sally hows your morning going? BTW your drink is $6.39 and just keep in mind that if you keep returning to our cafe you will be paying us $191.70 a month and $2,300.4 a year and if you Love our coffee so much Sally (BTW love your shoes) you will be spending $23,004.00 over the next decade..now did you want 1 or 2 sweet and lows>? ......

I am going to call you out on your bull**** all day long. You do not tell your customers the "true" cost of money on your funding calls.

[J.Celifarco]

I am going to call you out on your bull**** all day long. You do not tell your customers the "true" cost of money on your funding calls.

I am going to have to agree with Skid on the I am will bet that you do not tell someone they are paying upwards of 300% APR, EVER.. So yeah Marcus I agree and call BULL**** on that statement. Nobody or almost nobody here sells using APR even A paper banks going out over a year with APR's under 25% dont use APR


Now everyone wait for Marcus to give some crazy example and try to explain how APR is not the true cost of capital

[Eagle Funding]

Can someone just live stream it on Periscope and let us know the username you're using

[HDF]

so disclosure is great but one can think from all the discussion that business owners are not aware of costs of capital and they are like crash victims signing documents while they are being rushed into an ambulance while in a semi coma

Happy to pile on.

Being a commercial lending professional, it is incumbent to make SURE the business owner knows the costs and fees involved. Relying on busy individuals and their businesses to figure it out entirely by themselves is irresponsible and is getting riskier by the day to the hacks and chop shops.

[J.Celifarco]

Happy to pile on.

Being a commercial lending professional, it is incumbent to make SURE the business owner knows the costs and fees involved. Relying on busy individuals and their businesses to figure it out entirely by themselves is irresponsible and is getting riskier by the day to the hacks and chop shops.

Agreed 100% i dont believe in hiding any fees ever I just stay away from using APR unless asked specifically about it

[LoanFunder]

I can see how that would play out. "The True cost of capital on this is advance will be 325%, closer to 400% if you throw in the junk fees. That's at a factor rate of 1.45 over 3 months, meaning you repay us $1.45 on the dollar. So we're extending $20,000 to you and you repay us back $29,000 in less than half a ye... Hello? Hello?"

I would be surprised if ya'll covered anything other than amount funded, daily payment, and term.

[jotucker1983]

Why do they continue to use APRs when discussing cash advances is the question? The "true cost" of the cash advance is based on the purchase/sell arrangement that was structured. There's no "term".

[J.Celifarco]

Why do they continue to use APRs when discussing cash advances is the question? The "true cost" of the cash advance is based on the purchase/sell arrangement that was structured. There's no "term".

on deals with a daily payment there is a term though and those are the deals the majority of the industry is doing now

[Zach]

Why do they continue to use APRs when discussing cash advances is the question? The "true cost" of the cash advance is based on the purchase/sell arrangement that was structured. There's no "term".

The reason why APR is calculated for these products is because it gives us a baseline, universal method of measurement of the cost of capital.

Just like in equipment leasing, which also has no APR (according to salespeople), you can calculate the APR to compare products in a uniform manner.

The reason they indicate that there is no APR is strictly for sales and marketing.

[mcaguru]

Prior to funding on the interview-call underwriter goes over in detail "funding amount and the payback amount".

[J.Celifarco]

Prior to funding on the interview-call underwriter goes over in detail "funding amount and the payback amount".

which makes your last statement of going over the "TRUE COST OF FUNDING" with the merchant untrue

[jotucker1983]

John and Zach,

I understand what you guys are saying. Me personally though, I stay away from discussing interest rates at all unless the deal is structured as an alternative business loan. I do know the MCA deals with a daily payment are "tricky" from a legal standpoint though, but I still don't mention anything about interest rates even when I have those deals on the table.

When a merchant brings up an APR on an MCA, I just move the conversation back to the "cost for capital" of the individual deal we are doing. So if that's a $50k deal with a 1.20 factor over 6 months, I pinpoint that the "cost" of this transaction is $10,000.

[Zach]

John and Zach,

I understand what you guys are saying. Me personally though, I stay away from discussing interest rates at all unless the deal is structured as an alternative business loan. I do know the MCA deals with a daily payment are "tricky" from a legal standpoint though, but I still don't mention anything about interest rates even when I have those deals on the table.

When a merchant brings up an APR on an MCA, I just move the conversation back to the "cost for capital" of the individual deal we are doing. So if that's a $50k deal with a 1.20 factor over 6 months, I pinpoint that the "cost" of this transaction is $10,000.

Agreed -- that is universally agreed upon as the best way to sell the transaction.

The APR comments were in reference to the tirade brought upon us by Mr. Craig McGrain regarding 75% interest being unsustainable to small businesses.

[J.Celifarco]

John and Zach,

I understand what you guys are saying. Me personally though, I stay away from discussing interest rates at all unless the deal is structured as an alternative business loan. I do know the MCA deals with a daily payment are "tricky" from a legal standpoint though, but I still don't mention anything about interest rates even when I have those deals on the table.

When a merchant brings up an APR on an MCA, I just move the conversation back to the "cost for capital" of the individual deal we are doing. So if that's a $50k deal with a 1.20 factor over 6 months, I pinpoint that the "cost" of this transaction is $10,000.

Joe I do the same thing and completely agree with you.. The only time I ever say anything about APR is if asked specifically and have no choice.. The only reason I brought it up was the ridiculous statement by Marcus that he tells the merchants "THE TRUE COST OF FUNDING" on funding calls, which was obviously untrue

[jotucker1983]

Agreed -- that is universally agreed upon as the best way to sell the transaction.

The APR comments were in reference to the tirade brought upon us by Mr. Craig McGrain regarding 75% interest being unsustainable to small businesses.

Yeah I know. Craig should know better though, I mean after all his main business is factoring.

[1StopFunding]

Alex Matini from Rapid is up speaking about businesses and alternative business lending industry. He's speaking now about who RapidAdvance is and what they do.He will also introduce the keynote speaker, Tim Wackel from The Wackel Group.