[CASHCASH]

http://www.nydailynews.com/new-york/...icle-1.1788874

Interesting article, if at least for the statistics it gives. Does seem to be a little biased against our industry though. I, for one, dislike the connection that people tend to sometimes draw between MCA's and Payday lending, which this article does.

Worth the read though, figured I'd share!

[MCNetwork]

MCA's have much more in common with payday loans than they do with bank loans.

[CASHCASH]

MCA's have much more in common with payday loans than they do with bank loans.

I agree that they do share more similarities than MCA vs bank loans, I just don't like the stigma that is associated to Payday loans to be carried over to MCA's via that comparison.

[MCNetwork]

The payday loan stigma is why funders are starting to distance themselves from MCAs and migrate towards term loans and credit lines (i.e., On Deck, New Logic, Kabbage). I have a feeling that some MCA regulation will be coming down the pike...

[ChristianScuderi]

Great Article! Thanks for Sharing

[Finance1]

I have a feeling that some MCA regulation will be coming down the pike...

I kinda doubt it. This topic has been hit on since I got in the biz over 4 years ago and it's no more on the radar now than what it was back then. B2B lending (outside of real estate) in general is mostly hands off. There hasn't been a new reg across the board in many years. In my home State, there is no usury for unsecured business loans above $15k. It's been that way for decades.

Compared to other areas of lending and finance, our entire industry (loans and mcas) is absolutely tiny. Heck, a single hedge fund run by 4 cheezy dudes in a small office in northern new jersey has more cash invested than our entire industry combined.

I'm always amused that even savvy business owners look at borrowing $100k and payback $129k over 12 months as 29% interest. An amortizing loan @ 30% over 12 months would have just under $117k repayment and this is with monthly payments. In reality, a 1.29 is over 50% annualized. Probably closer to 60% with daily payments. Toss in some origination and you jack it up even further.

I'm not saying there is anything wrong with the rates at all. They are quite necessary to cover risk. Legally capping rates would mostly hurt the end user because credit would dry up pretty quick for anybody but top tier (top tier still being non-bankable in our world).

[Franklin]

I don't think regulation will be coming for alternative business lending any time soon, and I doubt ever. How do you tell an investor what type of return to make on an outlay of capital? A shark is always going to put their money with a business where they'll get the best opportunity for the biggest return.


And how would you tell a business what terms he's supposed to pay back on a capital investment. If he borrows 100K and wants to pay back 200K, because he has the opportunity to make 500K, who would have the right to stop him, how do you justify that in a capitalistic environment? With banks and payday loans, I think the key is that you're dealing with the money of every day average people (banks are responsible for caretaking the money of every day people), and payday loans have very high compounding interest, and most importantly, are taken by people who generally are not very business savvy and usually distressed, so the legislation is there to protect them.

Businesses are dealing with money with the purpose of making more money, with increases and losses part of the game and expected; risks are factored in and conscious decisions are made to move forward or back out. Businesses that are LLCs or C status also have liability protection protecting owners from becoming destitute should a disaster occur.













www.UCCRadar.com

[Chambo]

famous last words....

[Finance1]

famous last words....

True on that. But until there are victims there won't be a posse. Maybe stacking will end up being the tommy gun aimed at main street. It's possible but still pretty unlikely imo. Of course the big boys could lobby for regulation to force out the little guys. I think they teach that in American Big Business 101 in college.

[Chambo]

think it is more likely these little stackers will stretch the rubber band just one mm too far one day (7th position anyone? Let's take 90% of gross sales!) and the local Chamber of Commerce will get involved....which will lead to local councilman,....which will then make a phone call to the state attorney general.....

[Franklin]

famous last words....

Famous last words are usually 5 to 15 syllables long occurring in a single phrase or sentence, which would disqualify my 3 lengthy paragraphs.


just sayin'......




There's this one merchant named Jeff who is always extremely irate and has a reputation of stalking and harassing cash advance funders. He's threatened to call the Attorney General many times on a number of funders for constantly calling his business and pitching him money; I haven't heard of any ramifications yet; either the industry's too small to be worth the time or they don't see anything inherently wrong with soliciting a business for capital. (There are many merchants too who've threatened a call to the Attorney General by the way, and I think half of them live in Florida).

[JayBallentine]

think it is more likely these little stackers will stretch the rubber band just one mm too far one day (7th position anyone? Let's take 90% of gross sales!) and the local Chamber of Commerce will get involved....which will lead to local councilman,....which will then make a phone call to the state attorney general.....

Regulating funders so as to cap rates and legislate business models is a quick way to the Supreme Court. It's far more likely that customer acquisition methods (i.e. Brokers) are regulated.

Expect Brokers to be subject to examinations, background checks, and "entry fees."

Feds don't pick fights they know they can't win.

[cashguy]

No AG would have an issue with soliciting a business offering funding.

[Finance1]

Regulating funders so as to cap rates and legislate business models is a quick way to the Supreme Court. It's far more likely that customer acquisition methods (i.e. Brokers) are regulated.

Expect Brokers to be subject to examinations, background checks, and "entry fees."

Feds don't pick fights they know they can't win.

I disagree. The mortgage industry was decimated with over regulation. Dodd-Frank and the CFPB had no problem telling everyone what to do. Including the largest banks in country.

It's a bit apples to oranges because b2c and b2b aren't treated the same. However, I think if any regulation comes down it will be directed at the funders.

[Zach]

Cool SEO backlinking, charmaine. :P

[happysales]

Famous last words are usually 5 to 15 syllables long occurring in a single phrase or sentence, which would disqualify my 3 lengthy paragraphs.


just sayin'......




There's this one merchant named Jeff who is always extremely irate and has a reputation of stalking and harassing cash advance funders. He's threatened to call the Attorney General many times on a number of funders for constantly calling his business and pitching him money; I haven't heard of any ramifications yet; either the industry's too small to be worth the time or they don't see anything inherently wrong with soliciting a business for capital. (There are many merchants too who've threatened a call to the Attorney General by the way, and I think half of them live in Florida).

Haven't heard from or about Jeff in a couple of years- but I remember him well. I'm guessing this is the same guy. He had quite a few phone numbers and was on UCC lists, so it was almost impossible to get him off all of the call lists-

I can't imagine he had the capacity to get any Gov. agency to take him seriously-even if he had a legitimate complaint (which I don't think he had-no DNC regulations for business). He was too excitable and within 30 or 40 seconds would degenerate into much colorful language...seemed pretty unbalanced.

[brokerCompany]

Don't underestimate the idiotic nature of the government politician, they will find a way regulate what they don't understand.

[anonymous]

Regulating funders so as to cap rates and legislate business models is a quick way to the Supreme Court. It's far more likely that customer acquisition methods (i.e. Brokers) are regulated.

Expect Brokers to be subject to examinations, background checks, and "entry fees."

Feds don't pick fights they know they can't win.

$50 post

[Franklin]

Haven't heard from or about Jeff in a couple of years- but I remember him well. I'm guessing this is the same guy. He had quite a few phone numbers and was on UCC lists, so it was almost impossible to get him off all of the call lists-

I can't imagine he had the capacity to get any Gov. agency to take him seriously-even if he had a legitimate complaint (which I don't think he had-no DNC regulations for business). He was too excitable and within 30 or 40 seconds would degenerate into much colorful language...seemed pretty unbalanced.

Yeah this guy was hilarious. He'd be like... am I the only person in America that qualifies for unsecured financing?... Talking nicely and explaining to him wouldn't pacify this clown. The worst is when you promised him he was removed off the list and wouldn't be contacted again and then 9:15 am the next morning he'd be getting pitched again because someone else called one of his other 3 numbers; he'd start demanding names and threaten to come to their office... he was on a lot of aged lead lists that were sold multiple times so that was a problem.

[NewWay ISO]

I look at it like a partnership/investor. When a partner deposits 50k in a business worth 300k and gets a 10% or 20% stake, you would agree that it's business as usual, even though his 'cash in advance' of 50k will eventually get him hundreds more than he initially threw in to the business. In a sick liberal mind he would need to get 10% APR for 10 years etc. But why the 20% stake that can eventually be going up to 100% or 200% APR?

[jotucker1983]

Yeah this guy was hilarious. He'd be like... am I the only person in America that qualifies for unsecured financing?... Talking nicely and explaining to him wouldn't pacify this clown. The worst is when you promised him he was removed off the list and wouldn't be contacted again and then 9:15 am the next morning he'd be getting pitched again because someone else called one of his other 3 numbers; he'd start demanding names and threaten to come to their office... he was on a lot of aged lead lists that were sold multiple times so that was a problem.

But it's these types of situations that I'm referring to when I say the Mom and Pop Network needs to be eliminated, and the barrier to entry to sell our products/services needs to be raised. Imagine for a second if more business owners like this guy start complaining more often, of not being able to run their business because 15 guys are calling him a day about a "cash advance"?

This isn't about eliminating competition, what competition? 13 of the 15 guys calling him barely know the basics of the product because they just started reselling it less than 30 days ago. Because the guy is getting so many calls from funding companies, he shuts off any new discussions with any funding company which means we ALL are pushed out of potentially working with this guy. Furthermore, 13 of the 15 guys who called him are OUT of the industry within 60 days because they hardly made anything calling on dead UCCs, dead Aged data, or randomly out of the phone book, all strategies supplied to them by their out of touch Sales Manager.

This is a lose-lose-lose across the board. The merchant loses, the green rep loses, and the industry as a whole loses. Nobody benefits from this. We have got to increase the barrier to entry for goodness sakes and stop recruiting everybody with a damn heartbeat/pulse.

[FUNd]

But it's these types of situations that I'm referring to when I say the Mom and Pop Network needs to be eliminated, and the barrier to entry to sell our products/services needs to be raised. Imagine for a second if more business owners like this guy start complaining more often, of not being able to run their business because 15 guys are calling him a day about a "cash advance"?

This isn't about eliminating competition, what competition? 13 of the 15 guys calling him barely know the basics of the product because they just started reselling it less than 30 days ago. Because the guy is getting so many calls from funding companies, he shuts off any new discussions with any funding company which means we ALL are pushed out of potentially working with this guy. Furthermore, 13 of the 15 guys who called him are OUT of the industry within 60 days because they hardly made anything calling on dead UCCs, dead Aged data, or randomly out of the phone book, all strategies supplied to them by their out of touch Sales Manager.

This is a lose-lose-lose across the board. The merchant loses, the green rep loses, and the industry as a whole loses. Nobody benefits from this. We have got to increase the barrier to entry for goodness sakes and stop recruiting everybody with a damn heartbeat/pulse.

Agreed. The little guy is already getting pushed out though John. Without a large marketing budget and the wherewithal to risk that capital in the hopes of gainful ROI, these little shops are dropping like flies. Outbound telemarketing is becoming less and less effective, and UCC's, forget about it. Inbound marketing (across all industries) has become the standard. Qualified applicants want to be empowered, to choose, to pick up the phone and call the broker/lender of their choice.

Telemarketing was very effective 10-20 years ago because information was not readily available. Some businesses simply did not know where to go to obtain capital or financing, and inversely, brokers had a more difficult time marketing to these businesses. I mean, before VOIP, you needed a phone system and an office space to run a sales floor, and that could be $10,000 alone just for the setup, plus a very hefty landline phone bill and long distance charges.

Now, to have an ISO, you can literally be set up for $100. Website, phone, email, and fax. And if you are clever enough, professional voice-overs and testimonial videos for a few dollars more. You can appear to the unknowing consumer on the other end just as legitimate as On Deck or CAN Capital with a few bucks and a day of setup work.

The real power is getting the qualified people on the phone and closing the deals. And that takes money. These little shops don't have it, and are spinning wheels. 90% wont make it past a year, with 90% of the remaining 10% out of business before the end of year 2.

[jotucker1983]

Agreed. The little guy is already getting pushed out though John. Without a large marketing budget and the wherewithal to risk that capital in the hopes of gainful ROI, these little shops are dropping like flies. Outbound telemarketing is becoming less and less effective, and UCC's, forget about it. Inbound marketing (across all industries) has become the standard. Qualified applicants want to be empowered, to choose, to pick up the phone and call the broker/lender of their choice.

Telemarketing was very effective 10-20 years ago because information was not readily available. Some businesses simply did not know where to go to obtain capital or financing, and inversely, brokers had a more difficult time marketing to these businesses. I mean, before VOIP, you needed a phone system and an office space to run a sales floor, and that could be $10,000 alone just for the setup, plus a very hefty landline phone bill and long distance charges.

Now, to have an ISO, you can literally be set up for $100. Website, phone, email, and fax. And if you are clever enough, professional voice-overs and testimonial videos for a few dollars more. You can appear to the unknowing consumer on the other end just as legitimate as On Deck or CAN Capital with a few bucks and a day of setup work.

The real power is getting the qualified people on the phone and closing the deals. And that takes money. These little shops don't have it, and are spinning wheels. 90% wont make it past a year, with 90% of the remaining 10% out of business before the end of year 2.

I agree 200% lol!