[TedFundy]

Well..... For some time now I have been watching ignorant and helpless business owners get coaxed into accepting fast money in return for brutal rates and terms. I only call them ignorant because they are unaware of all options available. And I only call them helpless because they are unable or unwilling to explore all options of financing their business. The majority of small businesses are ONLY being exposed to one solution to their financial duress: a Merchant Cash Advance. Is this a viable solution sometimes (.01% of the time), yes. Are there FAR better avenues of securing capital for these businesses? Yes.

Let's all act like we are all honest and intelligent here. This cancerous nuisance known as an MCA is an unhealthy, obstructing, encumbering, mickey mouse "loan" that is knowingly bankrupting companies everyday. Show me just one halfwitted business that was completely satisfied with their Merchant Cash Advance and I will show you 1,000 businesses that curse and spit on this uninvited loophole in the system.

There are 4 reasons for this plague:

1. Marketing. Not to mention the call centers, if you type "business loan" in google, you all know what happens.
2. Brokers. MCA uneducated brokers far outweigh any other industry and they push only one product.
3. Time. MCA's fund in a few days at most.
4. Credit. Liens, bad credit, other loans, UCC's, no worries.

Don't get me wrong, there is indeed a time and a place for an MCA, we have all surprisingly seen it work in a business's favor. But our firm has gotten to the point where the majority of small businesses are infected. All I ask is that you brokers explore other options before getting your tool erect for 11 points on a $27,000 merchant cash advance when you knew damn well they could have benefitted from a factoring company.

I am not complaining. I am just pointing out facts. I enjoy competition so we are going to change. We can fund fast now. 3 days is what we shoot for. We can fund with a UCC in place. We can fund with loans and LOC's in front. Tax liens require a payment plan. We can fund with no credit. Bad credit is fine, too. As long as their customers are commercial businesses with decent credit, the vault will open.

Factoring rates are literally one tenth of the cost of an MCA. The upfront commission is less, but the commission is residual. And you are less likely to be covered in an oozing, foul, slimy mucus at the end of the day.

Now let's talk commission numbers. Correct me if I am wrong:

Scenario 1: You obtain XYZ Company an MCA for 20k which pays around 2k in commission. XYZ is now encumbered in 20,000 dollars of debt which they have to repay so quickly they do not even get to use the full amount of the funds. More than likely their growth is now hindered due to their daily MCA payments.

Scenario 2: With accounts receivable factoring, we can usually secure three times the capital of an MCA (sometimes more, sometimes less). So, we finance 60k in receivables for XYZ Company. At 3% per month, your commission is around 200 per month. With that company stagnant, you will reach your 2k in commissions before the year is over. If XYZ grows, obviously you will make more money. Oh, also, XYZ Company will probably give you referrals and this will create more revenue for you. And less slime on your suit.

I'm not telling you to stop pitching MCA's to Dr. Happy Smiles, Jiffy Lube, or Paco's Taco Truck. I am just telling you to have an intelligent, meaningful, and creative conversation with the B2B business owners that are looking to secure capital. If you're lucky enough to get one of them to trust you, don't **** them over because it's quick and easy. Explore other options and use the plethora of resources that are available to you.

Best Regards,

Ted Fundy

[Funder Mark]

After reading this I need to take shower, I just realized how much I disgust myself.

FYI, I do tell the brokers I work with when there may be a better company for them, and I have suggested to several brokers they arrange factoring instead of cash advances for specific clients. But considering how you present yourself, I would never advise an ISO to go with you.

[Michael I]

i half a agree with you.
Issue with factoring is
.1. they need to have volume to get decent rates. 2. they need to deal with factor approved people 3.they require everything to be done with them. 4.when you break down an A lender mca to cost per month it gets pretty similar.5. you have the restaurant , auto repair and similar retail shops which is a lot of this industry. 6. most larger companies i get already has factoring and needs money
With commission you are way off a 60k is 6k average which will take 3 years your way.

[TedFundy]

i half a agree with you.
Issue with factoring is
.1. they need to have volume to get decent rates. 2. they need to deal with factor approved people 3.they require everything to be done with them. 4.when you break down an A lender mca to cost per month it gets pretty similar.5. you have the restaurant , auto repair and similar retail shops which is a lot of this industry. 6. most larger companies i get already has factoring and needs money
With commission you are way off a 60k is 6k average which will take 3 years your way.

1. Our rates start at 2.5%
2. Not difficult to find "factor approved" business
3. Not true. We have no minimum usage.
4. Define similar please
5. I agree and stated this
6. Sounds like poor business decision making

Im not saying 60k in commish compares to an MCA commission. I am saying an MCA may approve for 20k when a factor can get them 60k.

[TedFundy]

After reading this I need to take shower, I just realized how much I disgust myself.

I LOL'd... and I am glad you are suggesting to several brokers to arrange for factoring. You don't have to advise an ISO to go with me. We are a very niche lender. We specialize in construction but we will touch anything aside from medical, staffing, and trucking. But most of the time, brokers come to us because we are the ONLY ones that CAN actually fund the deal.

[WestCoastFunding]

After reading this I need to take shower, I just realized how much I disgust myself.

FYI, I do tell the brokers I work with when there may be a better company for them, and I have suggested to several brokers they arrange factoring instead of cash advances for specific clients. But considering how you present yourself, I would never advise an ISO to go with you.

LMAO. I know, I was thinking he shouldn't expect many referrals from here. With that having been said had an ISO send me a deal where he stacked 8 advances for $700K on a company that could have gotten factoring easy.

[bdshaw]

Most factors become a credit depatment for their clients. If a factor won't buy invoices from a particular debtor, that's what they're called, you should strongly think about not doing business with them. All of we factors would like to advance as much money as possible but if our credit folks turn your client you may still do business with them and carry the collection yourself.
Tedfundy is correct that its not difficult to find approved debtors.
Bob Shaw
Iron Horse Credit
rshaw@ironhorsecredit.com
734-929-3800

[Michael I]

Do you have a long term contract that they need to sign?is there any personal guarantee? Do you pay 10 or 15 % of the pr?
Pm me your contact info

[TedFundy]

Do you have a long term contract that they need to sign?is there any personal guarantee? Do you pay 10 or 15 % of the pr?
Pm me your contact info

A one year term is standard. But we are negotiable. We pay 10% for the first deal, 11% for the second, etc... but you can charge a line fee if you do most of the work and prep.

[bdshaw]

Is this a construction compa
ny ? If someone we can't help but we pay higher commissions than you mentioned. Our contracts are month to month .
Bob Shaw
Iron Horse Credit
rshaw@ironhorsecredit.com
734-929-3800

[Yankeeman07]

Well..... For some time now I have been watching ignorant and helpless business owners get coaxed into accepting fast money in return for brutal rates and terms. I only call them ignorant because they are unaware of all options available. And I only call them helpless because they are unable or unwilling to explore all options of financing their business. The majority of small businesses are ONLY being exposed to one solution to their financial duress: a Merchant Cash Advance. Is this a viable solution sometimes (.01% of the time), yes. Are there FAR better avenues of securing capital for these businesses? Yes.

Let's all act like we are all honest and intelligent here. This cancerous nuisance known as an MCA is an unhealthy, obstructing, encumbering, mickey mouse "loan" that is knowingly bankrupting companies everyday. Show me just one halfwitted business that was completely satisfied with their Merchant Cash Advance and I will show you 1,000 businesses that curse and spit on this uninvited loophole in the system.

There are 4 reasons for this plague:

1. Marketing. Not to mention the call centers, if you type "business loan" in google, you all know what happens.
2. Brokers. MCA uneducated brokers far outweigh any other industry and they push only one product.
3. Time. MCA's fund in a few days at most.
4. Credit. Liens, bad credit, other loans, UCC's, no worries.

Don't get me wrong, there is indeed a time and a place for an MCA, we have all surprisingly seen it work in a business's favor. But our firm has gotten to the point where the majority of small businesses are infected. All I ask is that you brokers explore other options before getting your tool erect for 11 points on a $27,000 merchant cash advance when you knew damn well they could have benefitted from a factoring company.

I am not complaining. I am just pointing out facts. I enjoy competition so we are going to change. We can fund fast now. 3 days is what we shoot for. We can fund with a UCC in place. We can fund with loans and LOC's in front. Tax liens require a payment plan. We can fund with no credit. Bad credit is fine, too. As long as their customers are commercial businesses with decent credit, the vault will open.

Factoring rates are literally one tenth of the cost of an MCA. The upfront commission is less, but the commission is residual. And you are less likely to be covered in an oozing, foul, slimy mucus at the end of the day.

Now let's talk commission numbers. Correct me if I am wrong:

Scenario 1: You obtain XYZ Company an MCA for 20k which pays around 2k in commission. XYZ is now encumbered in 20,000 dollars of debt which they have to repay so quickly they do not even get to use the full amount of the funds. More than likely their growth is now hindered due to their daily MCA payments.

Scenario 2: With accounts receivable factoring, we can usually secure three times the capital of an MCA (sometimes more, sometimes less). So, we finance 60k in receivables for XYZ Company. At 3% per month, your commission is around 200 per month. With that company stagnant, you will reach your 2k in commissions before the year is over. If XYZ grows, obviously you will make more money. Oh, also, XYZ Company will probably give you referrals and this will create more revenue for you. And less slime on your suit.

I'm not telling you to stop pitching MCA's to Dr. Happy Smiles, Jiffy Lube, or Paco's Taco Truck. I am just telling you to have an intelligent, meaningful, and creative conversation with the B2B business owners that are looking to secure capital. If you're lucky enough to get one of them to trust you, don't **** them over because it's quick and easy. Explore other options and use the plethora of resources that are available to you.

Best Regards,

Ted Fundy

I did not realize this was the Soapbox Forum! This is the Deal Bin.

Forum: Deal Bin

Find a home for your deal(s) here. Let funders and lenders come to you. The only subforum where you can post potential deals.

[BB_Cooper]

Not sure why so much time is being spent comparing MCA's to traditional factors? Doesn't the latter require a merchant to have some earned A/R? MCA's are a different product class that aren't priced on A/R.

[mcaguru]

Well..... For some time now I have been watching ignorant and helpless business owners get coaxed into accepting fast money in return for brutal rates and terms. I only call them ignorant because they are unaware of all options available. And I only call them helpless because they are unable or unwilling to explore all options of financing their business. The majority of small businesses are ONLY being exposed to one solution to their financial duress: a Merchant Cash Advance. Is this a viable solution sometimes (.01% of the time), yes. Are there FAR better avenues of securing capital for these businesses? Yes.

Let's all act like we are all honest and intelligent here. This cancerous nuisance known as an MCA is an unhealthy, obstructing, encumbering, mickey mouse "loan" that is knowingly bankrupting companies everyday. Show me just one halfwitted business that was completely satisfied with their Merchant Cash Advance and I will show you 1,000 businesses that curse and spit on this uninvited loophole in the system.

There are 4 reasons for this plague:

1. Marketing. Not to mention the call centers, if you type "business loan" in google, you all know what happens.
2. Brokers. MCA uneducated brokers far outweigh any other industry and they push only one product.
3. Time. MCA's fund in a few days at most.
4. Credit. Liens, bad credit, other loans, UCC's, no worries.

Don't get me wrong, there is indeed a time and a place for an MCA, we have all surprisingly seen it work in a business's favor. But our firm has gotten to the point where the majority of small businesses are infected. All I ask is that you brokers explore other options before getting your tool erect for 11 points on a $27,000 merchant cash advance when you knew damn well they could have benefitted from a factoring company.

I am not complaining. I am just pointing out facts. I enjoy competition so we are going to change. We can fund fast now. 3 days is what we shoot for. We can fund with a UCC in place. We can fund with loans and LOC's in front. Tax liens require a payment plan. We can fund with no credit. Bad credit is fine, too. As long as their customers are commercial businesses with decent credit, the vault will open.

Factoring rates are literally one tenth of the cost of an MCA. The upfront commission is less, but the commission is residual. And you are less likely to be covered in an oozing, foul, slimy mucus at the end of the day.

Now let's talk commission numbers. Correct me if I am wrong:

Scenario 1: You obtain XYZ Company an MCA for 20k which pays around 2k in commission. XYZ is now encumbered in 20,000 dollars of debt which they have to repay so quickly they do not even get to use the full amount of the funds. More than likely their growth is now hindered due to their daily MCA payments.

Scenario 2: With accounts receivable factoring, we can usually secure three times the capital of an MCA (sometimes more, sometimes less). So, we finance 60k in receivables for XYZ Company. At 3% per month, your commission is around 200 per month. With that company stagnant, you will reach your 2k in commissions before the year is over. If XYZ grows, obviously you will make more money. Oh, also, XYZ Company will probably give you referrals and this will create more revenue for you. And less slime on your suit.

I'm not telling you to stop pitching MCA's to Dr. Happy Smiles, Jiffy Lube, or Paco's Taco Truck. I am just telling you to have an intelligent, meaningful, and creative conversation with the B2B business owners that are looking to secure capital. If you're lucky enough to get one of them to trust you, don't **** them over because it's quick and easy. Explore other options and use the plethora of resources that are available to you.

Best Regards,

Ted Fundy

I am not sure you realize the profile of typical business taking funding. We fund sophisticated business owners that have real revenues/leases/employees/ accountants / traditional banking relations / etc.

[TedFundy]

I am not sure you realize the profile of typical business taking funding. We fund sophisticated business owners that have real revenues/leases/employees/ accountants / traditional banking relations / etc.

I fully understand the profile. I am not saying you are preying on the weak. I am just asking brokers explore other options of financing before you shove an MCA down their throat. I am not saying you are personally doing it. But I have seen too many potential factor clients who stacked MCA's but do not know what factoring is. (But let's be honest, most MCA shops are preying on the weak, desperate, and uninformed).

Not sure why so much time is being spent comparing MCA's to traditional factors? Doesn't the latter require a merchant to have some earned A/R? MCA's are a different product class that aren't priced on A/R.

Listen carefully, I am spending time to compare an MCA to factoring because I want to show you brokers that it is possible to make a decent commission on factoring. I am not telling you send a Taco Truck merchant to a factor. I am precisely asking you to have an honest and constructive convo with the business owner and see what is best for them. I have just seen TOO MANY perfect clients for us (factoring) get WAY behind due to MCA's. And in an effort to get a subordination- when I speak to MCA brokers, they don't know what a subordination or inter-creditor agreement. It becomes frustrating- I spoke to CAN Capital trying to get a subordination and they went through 3 different lawyers in 3 weeks. It was embarrassing.

[TedFundy]

I did not realize this was the Soapbox Forum! This is the Deal Bin.

Forum: Deal Bin

Find a home for your deal(s) here. Let funders and lenders come to you. The only subforum where you can post potential deals.

Yankeeman, any thoughts on the actual content in the post? Nobody cares about the location of this thread.

[mcaguru]

[QUOTE=TedFundy;66866]I fully understand the profile. I am not saying you are preying on the weak. I am just asking brokers explore other options of financing before you shove an MCA down their throat. [QUOTE}

Whose shoving down throats MCA? We have 1000+ vendors that submit files that are extremely professional. Yes i am sure the factoring world have aggressive sales people as in evrey industry for example, my mom has a cousin that owned a restaurant in lower Manhattan he would grab people by the arms walking by and seat them for a meal! was that a reflection on the restaurant business ?!

[HDF]

"for example, my mom has a cousin that owned a restaurant in lower Manhattan he would grab people by the arms walking by and seat them for a meal! was that a reflection on the restaurant business ?!"

Another bad analogy. Business owners don't eat (seek funding) three meals/day every day. The majority don't need money at all.

So yes, if enough businesses that get swept up in the MCA world and have a negative experience then YES. It paints the whole industry.

There often is a better option. (and yes, the business owner needs to be educated despite some unfortunate addicted ones that try to play the system that will ultimately take them down in many cases)

[ChuckM]

Most factors become a credit depatment for their clients. If a factor won't buy invoices from a particular debtor, that's what they're called, you should strongly think about not doing business with them. All of we factors would like to advance as much money as possible but if our credit folks turn your client you may still do business with them and carry the collection yourself.
Tedfundy is correct that its not difficult to find approved debtors.
Bob Shaw
Iron Horse Credit
rshaw@ironhorsecredit.com
734-929-3800

Well said Bob.

[AndyYSCISOdept]

[QUOTE=Funder Mark;66844]After reading this I need to take shower, I just realized how much I disgust myself.

QUOTE]

Hilarious

[TedFundy]

Listen, most people on this forum are informed and trying to do the best for their clients. That is why you are on this forum- to stay well versed and around as many resources as possible. But just know as an MCA broker, whether you choose to acknowledge it or not, you are flying in circles with the vultures. And as many times as you say you're not a vulture, you sure look like one.