[Finance1]

Bloomberg's NFIB Small Business Optimism report came out pretty strong today. 2013 is likely going to be the most stable economy for our industry since 2007. What's everyone seeing out there with their clients?

Defaults and slow pays in our portfolio have definitely decreased in the last year but we haven't been acquiring nearly as aggressively as 2010-12 so it's not a good gauge of current conditions. We are getting reading to push hard again increase the portfolio. I'm feeling pretty optimistic in both demand and quality compared to previous years. Most of the really weak businesses have been flushed. Sure, there's plenty of poorly run and "doomed" businesses out there but that's just part of the game we play.

What's everyone seeing out there with the various SIC codes? Are you seeing better or worse quality and performance in 2013 compared to the last couple?

[ISELLCASH]

This year is definitely off to a great start. The drop in rates and longer terms being offered to the more premium clients is keeping their businesses healthy and definitely aiding the increase in funding totals. At least from what I am seeing on my end. A happy merchant is a well paying merchant and repeat customer. I have also seen some companies, like Snap Advance, Strategic, and first merchant stretch to 9 month options on less premium accounts to get the deals closed.

One big obvious problem is all of the seconds being funded. This, although it is increasing funding totals rite now, will hurt all of us in this industry eventually. Not only are some pigs sucking up all of the profit, they are cutting into the merchants principal. It needs to slow down and eventually stop for CA to grow properly.

[Capital Stack]

This year is definitely off to a great start. The drop in rates and longer terms being offered to the more premium clients is keeping their businesses healthy and definitely aiding the increase in funding totals. At least from what I am seeing on my end. A happy merchant is a well paying merchant and repeat customer. I have also seen some companies, like Snap Advance, Strategic, and first merchant stretch to 9 month options on less premium accounts to get the deals closed.



One big obvious problem is all of the seconds being funded. This, although it is increasing funding totals rite now, will hurt all of us in this industry eventually. Not only are some pigs sucking up all of the profit, they are cutting into the merchants principal. It needs to slow down and eventually stop for CA to grow properly.

ISellCash, well said!

[cashguy]

9 month or longer deals are worse for the rep and the merchant as there will only be one funding per year. That mean less renewal income for rep and merchant has less access to funds.

[isaacdstern]

It also makes it more likely that the merchant will have no choice but to take a grasshopper

[Sean Cash]

forget about the renewal income for the rep cashguy. What's good for the merchant should be the most important thing to consider. Read Jeremy Brown's Working Capital vs. Permanent Capital article. I don't think 9 months is too long but there does come a point where a long term program can negatively impact a merchant with a short term working capital need. We've all seen this happen and as Isaac mentioned, it can lead to a stack, which aggravates the problem

[Finance1]

From what I've seen, the 12 month deals we've brokered the last year or so have done pretty well. No stacking and consistent renewals @ 50% paydown. I think they do better overall irt stacking because typically only fairly solid businesses get approved for 12 months.

The thing I like about the 12 month deals are they are bigger than the shorter deals and the merchants can handle the payments. We aren't direct funding anything over 10 months right now and probably won't jump to the 12 month space because there are plenty of sources to broker apps if needed.

12 month deals pay twice a year instead of 3 times if merchants choose to renew. Commissions shouldn't be a concern with the longer deals. They are just a piece of the residual pie and an important piece at that.