[WestCoastFunding]

For what it's worth, business lending as a whole have been down for the past 6 months. Commercial and industrial lending was down by $2B in the final 3 months in 2016, and data released today shows a drop in commercial real estate loans. Doesn't seem to be tighter lending than it does demand. I wonder what the effect of slowing in the conventional lending markets has on MCAs.

[MCNetwork]

Here's my 2 cents as to what's happening in the industry.:

First position funders are seeing client retention rates dropping due to the proliferation of stacking. Four years ago, these funders boasted 80% renewal rates. Nowadays, it's probably closer to 40-50%. This is because many "A" paper merchants turn into "D" merchants within months (thanks to stacking) and become ineligible for renewals at the first funder. So the first position guys, who were counting on a 70+% renewal rate to offset their high client acquisition cost, are now losing money on their marketing. This causes them to slash their marketing budgets, thus reducing their new deal flow. A lot of the top funding companies that self-originate are living off their dwindling renewal books. Competition for merchants is fierce and new deal originations are way down. That's why you're seeing a lot of consolidations and mergers among these first position firms. The weaker hands are getting shaken out and the smart money is cashing out.

Meanwhile, in Stackerland, the B-F paper funders are passing the same tired merchants off to each other like the village bicycle and believe that the industry is booming. But there's a trickle down effect from the slowdown in first position fundings. Soon there will be no village bicycles left for them to ride as merchants go out of business or go to Debt Relief companies and the On Deck/CAN Capital UCC lists dry up. They will have to learn how to self-originate without UCC lists which is no easy task. Right now, they're in an artificial bubble partying like it's 1999 but only the savvy players can see the writing on the wall. I'd think twice before signing that lease on a new Bentley...

As for me? Things have slowed down to the point where I've dabbled in the Dark Side and brokered a bunch of second positions and even (gasp!) the occasional third. I'm not happy about it but desperate times call for desperate measures. Principles won't pay the phone bill.

[GSilverman]

It's slow for almost everyone. Truth is - Few have a chance to hit goal. Approvals and (ofcorse) Renewals are down down down. Losses are up. CAN's demise will not be an isolated incident. Most will lie and tell you it's the best April ever.

[GSilverman]

Expert analysis from MCANetwork. Right on, Brother. Spot on. The ship is sinking without the help of Hillary and the Dems. Took us all offguard.

[GSilverman]

Thank you Jesus for second position saviors...Quarterspot and IOU.

[jotucker1983]

How's the 2017 Busy Season treating everyone? Willing to be truthful?

There's really no generic answer to this question, because it all depends upon how someone's business is structured as well as, their target markets, marketing budgets, if they are a 1 man shop or 100 man shop, etc.

From an industry standpoint, as I've been saying for awhile now, I believe the guys with the biggest marketing budgets, best strategic networks, and exclusive data records are in position to do well now and into the future.

The firms (no matter their size) who don't have good marketing budgets, and/or don't have exclusive data, and/or are running their business off UCCs, Aged Leads and randomly cold-calling folks out of the Yellow Pages.....are going to burn out. It's not if they burn out, it's when.

First position funders are seeing client retention rates dropping due to the proliferation of stacking. Four years ago, these funders boasted 80% renewal rates. Nowadays, it's probably closer to 40-50%. This is because many "A" paper merchants turn into "D" merchants within months (thanks to stacking) and become ineligible for renewals at the first funder. So the first position guys, who were counting on a 70+% renewal rate to offset their high client acquisition cost, are now losing money on their marketing. This causes them to slash their marketing budgets, thus reducing their new deal flow. A lot of the top funding companies that self-originate are living off their dwindling renewal books. Competition for merchants is fierce and new deal originations are way down. That's why you're seeing a lot of consolidations and mergers among these first position firms. The weaker hands are getting shaken out and the smart money is cashing out.

100% Agree.

Meanwhile, in Stackerland, the B-F paper funders are passing the same tired merchants off to each other like the village bicycle and believe that the industry is booming. But there's a trickle down effect from the slowdown in first position fundings. Soon there will be no village bicycles left for them to ride as merchants go out of business or go to Debt Relief companies and the On Deck/CAN Capital UCC lists dry up. We're all in an artificial bubble partying like it's 1999 but only the savvy players can see the writing on the wall. I'd think twice before signing that lease on a new Bentley...

100% Agree.

Excellent, excellent, analysis! Glad to see you talking fundamentals/numbers/market data Archie, rather than "The Law Of Attraction" or "superior sales skills"

[Michael I]

Targeting everyone, but seems like especially stackers - many of whom start with A paper and end up taking highest rate positions. So it's really everyone at risk. Let's not pretend many B-F funders don't salivate at the thought of coming behind OnDeck.

They are cold calling thru ucc and the such. It happens to be they get better response from the stacked merchants .But I have already came across a couple with only one position

[WestCoastFunding]

Here's my 2 cents as to what's happening in the industry.:

First position funders are seeing client retention rates dropping due to the proliferation of stacking. Four years ago, these funders boasted 80% renewal rates. Nowadays, it's probably closer to 40-50%. This is because many "A" paper merchants turn into "D" merchants within months (thanks to stacking) and become ineligible for renewals at the first funder. So the first position guys, who were counting on a 70+% renewal rate to offset their high client acquisition cost, are now losing money on their marketing. This causes them to slash their marketing budgets, thus reducing their new deal flow. A lot of the top funding companies that self-originate are living off their dwindling renewal books. Competition for merchants is fierce and new deal originations are way down. That's why you're seeing a lot of consolidations and mergers among these first position firms. The weaker hands are getting shaken out and the smart money is cashing out.

Meanwhile, in Stackerland, the B-F paper funders are passing the same tired merchants off to each other like the village bicycle and believe that the industry is booming. But there's a trickle down effect from the slowdown in first position fundings. Soon there will be no village bicycles left for them to ride as merchants go out of business or go to Debt Relief companies and the On Deck/CAN Capital UCC lists dry up. They will have to learn how to self-originate without UCC lists which is no easy task. Right now, they're in an artificial bubble partying like it's 1999 but only the savvy players can see the writing on the wall. I'd think twice before signing that lease on a new Bentley...

As for me? Things have slowed down to the point where I've dabbled in the Dark Side and brokered a bunch of second positions and even (gasp!) the occasional third. I'm not happy about it but desperate times call for desperate measures. Principles won't pay the phone bill.

This is spot on. I would also add that merchants are becoming hip to the game. They are getting good at bypassing brokers and going directly to funders. Or, working with 3 or 4 brokers at once.

I'd also add, definitely seeing an increase is fraudelent files.

[MCNetwork]

Pardon my rambling. It's still happy hour in New York and a few IPAs makes me wax poetic and loosen my fingers on the smartphone. I'll probably regret what I wrote in the morning...

[GSilverman]

No regrets. You're the smartest guy in the room. Most people on here bull**** about ever increasing submissions/approvals/commissions.

[Karen37a]

I did well in March and April is good so far. expect to finish strong. I really do have huge pipeline coming .December banks crushed me...


**huge for me

My 2 cents. When people make bad business decisions , like thinking they can expand expand expand, then they price too low or act like Madoff, to get more money in to cover the expansion that should have never happened its is not indicative of the performance of ALL companies.

It does make investors-credit lines take pause and think, wtf if these people go under who is safe. But a few companies bad decisions or greed does not make the product bad.

When tech stocks burst it didnt bankrupt microsoft and alot of others. It was a temporary hiccup.

People will survive and thrive. Money, the need for it and cash flow isnt ever going away

[MCNetwork]

Good for you Karen! I'm treading water. Credit card residuals and MCA renewals are keeping me in decent shape. Cutting down on my live transfers because they've been hit or miss lately. SEO isn't really working so I cut back on that too. Watching my expenses and playing defense is the name of the game for me!

[happysales]

Here's my 2 cents as to what's happening in the industry.:

First position funders are seeing client retention rates dropping due to the proliferation of stacking. Four years ago, these funders boasted 80% renewal rates. Nowadays, it's probably closer to 40-50%. This is because many "A" paper merchants turn into "D" merchants within months (thanks to stacking) and become ineligible for renewals at the first funder. So the first position guys, who were counting on a 70+% renewal rate to offset their high client acquisition cost, are now losing money on their marketing. This causes them to slash their marketing budgets, thus reducing their new deal flow. A lot of the top funding companies that self-originate are living off their dwindling renewal books. Competition for merchants is fierce and new deal originations are way down. That's why you're seeing a lot of consolidations and mergers among these first position firms. The weaker hands are getting shaken out and the smart money is cashing out.

Meanwhile, in Stackerland, the B-F paper funders are passing the same tired merchants off to each other like the village bicycle and believe that the industry is booming. But there's a trickle down effect from the slowdown in first position fundings. Soon there will be no village bicycles left for them to ride as merchants go out of business or go to Debt Relief companies and the On Deck/CAN Capital UCC lists dry up. They will have to learn how to self-originate without UCC lists which is no easy task. Right now, they're in an artificial bubble partying like it's 1999 but only the savvy players can see the writing on the wall. I'd think twice before signing that lease on a new Bentley...

As for me? Things have slowed down to the point where I've dabbled in the Dark Side and brokered a bunch of second positions and even (gasp!) the occasional third. I'm not happy about it but desperate times call for desperate measures. Principles won't pay the phone bill.

Excellent analysis. Wish it wasn't though. :-)

[golf2014]

Biggest issue with mca is not giving merchants time to use money. Give him 40k Thursday and then 3 days later on Monday you achieve him 5 days a week. Merchants should get 3 weeks to utilize money. It might make mcas go up...first issue I get is payment is too high etc...credit card doesn't bill you for 30 days. As to debt condolidations....doesn't a lender have right to say no to them??

[Karen37a]

I had a drop off on my renewal ratios BUT I am 2 years into the game now

I had a 70%-80% renewal, but then from those renewals and those only , 50% or 60%, renewed again...then it dropped to 30%- 40%..to 20% ( And they became my client after their 1st-3rd renewals or they were stacked and I pulled them into 1 position ). I always have new sales going into the pipeline so my overall renewals stay higher than 70%, I cant even quantify it anymore.

So if they renew once..all of them,is that 100% renewals?

The reason for the drop offs are not a huge negative thing... How many cash advances are merchants going to need? They either fix themselves and get cash flush or bankrupt themselves. This isnt cheap money. It was supposed to be used for a specific purpose., its expensive money and not perpetual.

I consider myself a trusted "adviser/broker" to these people, so if they fix themselves wasn't that the purpose?If they ever need money in the future, i would assume/hope they come back

[jotucker1983]

Money, the need for it and cash flow isnt ever going away

I agree, businesses will always need "capital", but I have always believed there was only so much volume our alternative financing space was ever going to do. Put it like this.....who mainly uses the MCA? It's mainly (not all, but mainly) the business owner that's unsophisticated:

- The guy with poor/fair credit, with ranges from 500 - 640, which is considered poor/fair credit.

- The guy that's unorganized and does piss poor planning, which leads to the business getting behind on various expenses/projects (such as rent, taxes, payroll, etc).

- The guy who is over his head in a number of ways.

You do have those merchants who are sophisticated and just hit a temporary bump in the road, but those are the guys that are going to do this usually one time (two times max), pay it off, and stop.

The guys that keep renewing, stack on top of a 1st position, and jump back/forth between different companies, are mainly (not all, but mainly) the unsophisticated merchants that I outlined above. It's also these unsophisticated merchants that are the easiest to take advantage of, through lies, manipulation, etc., which is why they stack 7 positions and then call me saying:

"Hey John, can you help me? My annual sales are $600,000 but I have 7 balances with outstanding amounts due at around $100,000! These payments are killing me John! These cash advance companies are crooks! John, can you help me?"

Hell no I can't help you, smh.

[happysales]

I tweaked a couple of things in my strategy so my (small) team brought in almost double their usual submissions in the last few weeks-

March was good-not great though-got more than the usual problem or useless files-beautiful bank statements with huge losses on the financials, overleveraged stackers, shoppers looking to beat their 12 mo. 1.14, and several frauds (including 1 joker who sent legit statements because he "learned his lesson" by getting declined last month when he sent out fakes)

April is shaping up to be good if a few of the juicy ones close, but as I can only count on what has already funded, meh.

[Christian]

Good for you Karen! I'm treading water. Credit card residuals and MCA renewals are keeping me in decent shape. Cutting down on my live transfers because they've been hit or miss lately. SEO isn't really working so I cut back on that too. Watching my expenses and playing defense is the name of the game for me!

Defense!!! Love that. That's me too right now.

[MCNetwork]

-- repeat

[MCNetwork]

Excellent, excellent, analysis! Glad to see you talking fundamentals/numbers/market data Archie, rather than "The Law Of Attraction" or "superior sales skills"

Believe it or not John, this Law of Attraction mumbo jumbo and rituals like daily meditation and thinking positive are the only things that keep me sane in this topsy turvy industry. I'd be a mental and physical wreck without it! I truly believe your thoughts create your destiny.

[GSilverman]

http://debanked.com/2017/04/the-secr...ding-business/

[MCNetwork]

Great read! Thanks!

[WestCoastFunding]

Believe it or not John, this Law of Attraction mumbo jumbo and rituals like daily meditation and thinking positive are the only things that keep me sane in this topsy turvy industry. I'd be a mental and physical wreck without it! I truly believe your thoughts create your destiny.

Smoking weed works for me.

[newtomcabiz]

It's been very slow this month. Manager told me that April is historically one of the slowest months of the year for MCA

[GSilverman]

We're all forced into stacking deals to feed our families. Sad but true.