[freeprocessing]

Over the last few months, i'd estimate easily half of my new apps in from merchants who had previous advances, have had their payments lowered. A lot of these are very strong businesses that either were told by the funder they could lower the payments because of COVID (even though the bank statements show they didnt need to) or businesses that because of the shut down in April had to temporarily lower payements but that was months ago and their businesses have been back on track for a while already.

My question is, why are funders treating these deals the same as deals froma year ago that had payments lowered. Its not the same at all. Im having merchants that had great 12-18 month deals in the past, struggling to get anything besides the short term 100 day 1.49's. These businesses are more or less in the same financial situations they were a year ago, but because they lowered payments during the shutdowns, they cant get approved for anything normal. Why are funders not adjusting their guidelines for these situations? When i explain to the merchants why they arent getting the approvals they've come to expect most are dumbfounded.

I'd love to hear from some funders the thought process over here.

In my experience most funders are calling back to try to get the payments raised so it looks shady that they have not changed it back to normal. Also I have never had an issue getting a quality deal done as long as it doesn't look like lowered payments. Meaning as long as it seems like a believable daily/or weekly (not 50$) and the payment has been the same in all the statements you are sending to the funder, it's easy.

[Winning]

oohh

I was saying that these merchants are asking to take on more cash advance debt by seeking a 2nd or 3rd position when it appears they aren't taking their current cash advance debt serious by getting back on normal payments when their business can handle it.

So do you really feel as if the merchants owe a debt to the Cash Advance company that took a gamble by purchasing a percentage of the future receivables based off of past performance? Shouldn't the golden rule of the MCA Companies be "Past performance is no guarantee of future results"?

...After dealing with thousands of deals and plenty of defaults...

What seems to be a little concerning is that after being in the industry as long as you have been, and doing thousands of deals, you still in your heart think of the MCA as a loan, and that the merchant is in debt to the MCA company.. So if you feel that way in your heart, when a default occurs, your actions will be governed by how you truly feel about deal. And I guess that is where MCN is coming from when he stated "The problem is too many "funders" act like "Lenders".

If I told you I went to a casino and placed a bet for 100K on Floyd Mayweather winning a future boxing match, in which he loses, and I come to you and tell you I feel as if the casino still owes me money, you would think that I clearly must have misunderstood the fundamental concept of gambling. But then I tell you that I have been gambling for years, you would be somewhat puzzled.

[pcfunder]

So do you really feel as if the merchants owe a debt to the Cash Advance company that took a gamble by purchasing a percentage of the future receivables based off of past performance? Shouldn't the golden rule of the MCA Companies be "Past performance is no guarantee of future results"?



What seems to be a little concerning is that after being in the industry as long as you have been, and doing thousands of deals, you still in your heart think of the MCA as a loan, and that the merchant is in debt to the MCA company.. So if you feel that way in your heart, when a default occurs, your actions will be governed by how you truly feel about deal. And I guess that is where MCN is coming from when he stated "The problem is too many "funders" act like "Lenders".

If I told you I went to a casino and placed a bet for 100K on Floyd Mayweather winning a future boxing match, in which he loses, and I come to you and tell you I feel as if the casino still owes me money, you would think that I clearly must have misunderstood the fundamental concept of gambling. But then I tell you that I have been gambling for years, you would be somewhat puzzled.

isn't your entire point invalid since these merchants revenue went back to normal... since we bought future receivables and their receivables are back to normal, doesn't that mean they should be paying back to normal as well?

Also maybe this is new to you but funding companies are not in the business of charity? We fund off of future receivables because it enables us to provide businesses money without usury laws but you do know that we still expect our money back right? We don't really look at these cash advances as a casino gamble lol.

So lets say we take your points into consideration and were all just gamblers hoping for the best. Why would we gamble on a company who lowered payments on his first position? Am I supposed to fund them just because the merchant doesn't "owe" a "debt" to the first position and its mean of me to deny them more money?

If you don't understand these concepts, it might be time to close your business and brush the dust off your resume.

[Winning]

isn't your entire point invalid since these merchants revenue went back to normal... since we bought future receivables and their receivables are back to normal, doesn't that mean they should be paying back to normal as well?

I was not discussing the amount of the future revenue. I understand if there are future receivable, yes the MCA is owed a percentage of those receivables, what ever that amount is. If there are $0 in future receivables, the MCA is owed $0. My point I was speaking to was on the fundamental mindset, understanding, and expectation of what the MCA & Merchant is agreeing too and gambling with and that there is no debt, just a future revenue sharing contract.

Also maybe this is new to you but funding companies are not in the business of charity?

Do you feel if a gambler is in the business of charity? Some professional gamblers make millions of dollars, some gamblers loose a lot more than they win. But at the end of the day the core of who they are is the same. So some funding companies that loose more than they win could be looked at like a charity yes, and the ones that win more than they loose would not be looked at as a charity. So that is a subjective question.

We fund off of future receivables because it enables us to provide businesses money without usury laws but you do know that we still expect our money back regardless of "future receivables" right?

Correct me if I am wrong, but I thought MCA's fund off of historical receivables? They use the historical revenue data, as well as other data points, to establish risk and set dollar amount that they are willing to fund (gamble with)? Once funded (bets placed), the fight starts, every ACH repayment draft is similar to a boxer winning rounds. But just as in boxing, you never know when a knockout may come and completely turn the tables.. Hopefully the MCA won enough rounds to maybe break even, maybe not.. That is the nature of gambling.

So are you saying that MCA's are using cash advances to really lend money with a contracted guaranteed return as if they were giving out loans like a bank? Wouldn't that be fraud?

[MCN]

oohh

MCN was saying that a lot of these merchants who lowered payments didn't have to they just did it because the funding company was offering lowered payments to all merchants. Or they lowered in April because they had to but their business went back to normal and they decided to stay on lowered payments because they were able to get away with it.

I was saying that these merchants are asking to take on more cash advance debt by seeking a 2nd or 3rd position when it appears they aren't taking their current cash advance debt serious by getting back on normal payments when their business can handle it.

In retrospect, I can understand why some merchants would want to stay on lowered payments as long as the funding company doesn't declare a default but coming from someone who has been working with direct funders for a few years now, funding companies deal with a lotttttttttttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttttttttt of lies and games that both brokers and merchants play. After dealing with thousands of deals and plenty of defaults, its pretty clear as day that merchants will say anything to get a deal funded and brokers will do anything to get a deal funded. Take all of the "normal" risk that goes into a cash advance and add on top a merchant who lowered payments from a cash advance for 9 months even though their business is back to normal and they are seeking more money, its pretty clear that no one in their right mind should want anything to do with this deal. Save these type of deals for the funders who are desperate. You also have to take into consideration that the merchants cash flow is increased due to the payments being lowered, yet they are still seeking expensive capital.

I think your juding these people really harashly. Look when COVID was in full swing in April i called my CRM company and asked them to lower by rate per user. They said sure we'll do it for a few months until things pick up again. Now its 8 months later, business is back to normal for me, but im still paying the lower amount. Am i doing the wrong thing by not calling them back and saying raise it back? I knows its supposed to be higher. Everyone would do exactly what these merchants did when they wered offered to have payments lowered. Its a bit ridiculous to call that a default.

[pcfunder]

Winning this is a lot to respond to I honestly recommend you call someone to help you

MCN your right but there is too much uncertainty. I can't imagine that any MCA company would keep someone on lowered payments for 9 months straight, that's basically the term of an MCA. I know that they would, but only to merchants who need help and those merchants should not be seeking more positions.

Maybe I'm wrong but this scenario screams D/F funder high risk to me. Let me know if anyone has funded a merchant whos been on lowered payments for 9 months with someone else due to covid. Has it worked out for you?

[Winning]

Winning this is a lot to respond to I honestly recommend you call someone to help you

MCN your right but there is too much uncertainty. I can't imagine that any MCA company would keep someone on lowered payments for 9 months straight, that's basically the term of an MCA. I know that they would, but only to merchants who need help and those merchants should not be seeking more positions.

Maybe I'm wrong but this scenario screams D/F funder high risk to me. Let me know if anyone has funded a merchant whos been on lowered payments for 9 months with someone else due to covid. Has it worked out for you?

I'm good, I am not currently seeking additional MCA's or a second position.. It's just that the debt comment you made intrigued me and made me want to understand on a deeper level why you would refer to it as a debt. When I thought I understood that MCA's are not debt but more along the lines of a well placed bet.

[pcfunder]

I'm good, I am not currently seeking additional MCA's or a second position.. It's just that the debt comment you made intrigued me and made me want to understand on a deeper level why you would refer to it as a debt. When I thought I understood that MCA's are not debt but more along the lines of a well placed bet.

I mean yes but that's such a basic concept that I never imagined it would be questioned lol. After understanding that basic concept, you can start to think a little bit past those concepts. No one is saying that MCA's are debt or that they aren't funding companies buying future receivables but its ok to look at someone giving someone 50k for 70k worth of receivables as a form of "debt" and analyze how they managed that "debt" so you could come to a conclusion on how they will handle your own payments.

[MCN]

Winning this is a lot to respond to I honestly recommend you call someone to help you

MCN your right but there is too much uncertainty. I can't imagine that any MCA company would keep someone on lowered payments for 9 months straight, that's basically the term of an MCA. I know that they would, but only to merchants who need help and those merchants should not be seeking more positions.

Maybe I'm wrong but this scenario screams D/F funder high risk to me. Let me know if anyone has funded a merchant whos been on lowered payments for 9 months with someone else due to covid. Has it worked out for you?

You may be right in certain cases where they try to call the merchant to have them raise the amount and they refuse. But youd be surpised how often they dont bother doing that. Especially when your dealing with the bigger companies in the space.

[Winning]

I mean yes but that's such a basic concept that I never imagined it would be questioned lol. After understanding that basic concept, you can start to think a little bit past those concepts. No one is saying that MCA's are debt or that they aren't funding companies buying future receivables but its ok to look at someone giving someone 50k for 70k worth of receivables as a form of "debt" and analyze how they managed that "debt" so you could come to a conclusion on how they will handle your own payments.

A basic concept to you because you operate in this space... But not a basic concept to a merchant or judges that are against MCA's. I am on the outside looking in, and I would say please be more careful when using the term debt as it relates to a merchant repaying a Cash Advance. Unless the merchant has did some sort of fraudulent activity and attempting to not pay the percentage of the received revenue, there is technically no debt.

[pcfunder]

A basic concept to you because you operate in this space... But not a basic concept to a merchant or judges that are against MCA's. I am on the outside looking in, and I would say please be more careful when using the term debt as it relates to a merchant repaying a Cash Advance. Unless the merchant has did some sort of fraudulent activity and attempting to not pay the percentage of the received revenue, there is technically no debt.

debt

[TheUnderwritingProdigy]

You are absolutely right. The problem is too many "funders" act like "Lenders". A cash advance is a partenership it is NOT a loan.

yeah, unless your "partner" opens up a new bank account that you don't know about and starts funneling 99% of their deposits into.. you would have to be naive to think any of these merchants consider us as "partners"... we are the debt collectors, just like they look at VISA when they owe them an outstanding balance.. have you ever once thought? oh yeah, i'm a partner with VISA? NO...

[MCN]

yeah, unless your "partner" opens up a new bank account that you don't know about and starts funneling 99% of their deposits into.. you would have to be naive to think any of these merchants consider us as "partners"... we are the debt collectors, just like they look at VISA when they owe them an outstanding balance.. have you ever once thought? oh yeah, i'm a partner with VISA? NO...

who cares what they consider you, according to the law thats you are. Better make sure you get your legal jargon down correctly or would hate to be you when the feds come knocking.

[pcfunder]

who cares what they consider you, according to the law thats you are. Better make sure you get your legal jargon down correctly or would hate to be you when the feds come knocking.

were shaking in our 1.499 future receivables boots

[MCN]

were shaking in our 1.499 future receivables boots

lol whatever makes you happy. As long as you understand what business you are really in.

[brandon_]

Because you want to fund a deal that doesn't have payment mods. When you fund a 12 month term deal and the customer now knows if they have trouble they can lower payments, now your 12 month deal turns into an 18-24 month deal with the same return. The funder can avoid that situation by declining that merchant and funding someone who never modified payments. Which route would you go?

[pcfunder]

Because you want to fund a deal that doesn't have payment mods. When you fund a 12 month term deal and the customer now knows if they have trouble they can lower payments, now your 12 month deal turns into an 18-24 month deal with the same return. The funder can avoid that situation by declining that merchant and funding someone who never modified payments. Which route would you go?

eggxactly

so put that in your 1.499 60 days 15% fees pipe and smoke it.

[mistamca]

who cares what they consider you, according to the law thats you are. Better make sure you get your legal jargon down correctly or would hate to be you when the feds come knocking.

You sound like a clown.

#1 - MCA is a debt.
#2 - Moral Hazard. This economy took a big hit starting in March and impacted a majority of businesses and everyone needed to contribute in one aspect or another. If a business owner thinks that the economy stalls again, then they will have the ability to lower payment without repercussions then why not risk it. This is a risk that is held on the funder side. This is simply human nature and I understand that.
#3 - MCA contracts are pretty airtight. If you are not paying back based on the specified rate, then yes you are in default. Most people are not signing an addendum to this payment decrease because they adjusted payments based on decreased revenue. (original contract is still valid and enforceable)
#4 - While strong merchant relationships are partnerships, let's not kid ourselves with this one. MCA is not a sustainable long term financing option for any business. This product was designed to be a 7-9 month product. There are very few industries (read profit margin) that can sustain a 30%+ rate

[Winning]

#1 - MCA is a debt.

Ok!!!
So is MCA a Debt or not a Debt? Who decides? Is there more case law that says it is a debt or more case law that says it isnt?

#4 - While strong merchant relationships are partnerships, let's not kid ourselves with this one. MCA is not a sustainable long term financing option for any business. This product was designed to be a 7-9 month product. There are very few industries (read profit margin) that can sustain a 30%+ rate

There are a few companies doing MCA's for 1.06 to 1.09 for 12 to 18 months.. So would you say those types of deals are sustainable for businesses?

[MCN]

You sound like a clown.

#1 - MCA is a debt.
#2 - Moral Hazard. This economy took a big hit starting in March and impacted a majority of businesses and everyone needed to contribute in one aspect or another. If a business owner thinks that the economy stalls again, then they will have the ability to lower payment without repercussions then why not risk it. This is a risk that is held on the funder side. This is simply human nature and I understand that.
#3 - MCA contracts are pretty airtight. If you are not paying back based on the specified rate, then yes you are in default. Most people are not signing an addendum to this payment decrease because they adjusted payments based on decreased revenue. (original contract is still valid and enforceable)
#4 - While strong merchant relationships are partnerships, let's not kid ourselves with this one. MCA is not a sustainable long term financing option for any business. This product was designed to be a 7-9 month product. There are very few industries (read profit margin) that can sustain a 30%+ rate

cool. You dont know what the hell you are talking about

1. MCA is not a Loan. Its a partnership on future receivables
2. Yes i understand that side. This has been discussed already. That doesnt change the fact that plenty of funders think they are lenders.
3. Yes they are pretty tight, and in most cases working out a lower payment plan becuase revenue has dropped is not legally a default. Blocking payments would make it a defaut.
4. Thats a very narrowminded view of the product. Yes taking multiple 60 day 1.49 deals to keep your business from going under is unsustainable, but consistently taking 9-18 month deals at a 1.20-1.40 is very sustainable with a good business plan

[pcfunder]

Ok!!!
So is MCA a Debt or not a Debt? Who decides? Is there more case law that says it is a debt or more case law that says it isnt?



There are a few companies doing MCA's for 1.06 to 1.09 for 12 to 18 months.. So would you say those types of deals are sustainable for businesses?

"So do you really feel as if the merchants owe a debt to the Cash Advance company that took a gamble by purchasing a percentage of the future receivables based off of past performance? Shouldn't the golden rule of the MCA Companies be "Past performance is no guarantee of future results"?

Quote Originally Posted by pcfunder View Post
...After dealing with thousands of deals and plenty of defaults...

What seems to be a little concerning is that after being in the industry as long as you have been, and doing thousands of deals, you still in your heart think of the MCA as a loan, and that the merchant is in debt to the MCA company.. "



You were just so confident that MCA is not debt. Literally one post later from mistamca and your questioning the meaning of MCA and life?

[Winning]

"So do you really feel as if the merchants owe a debt to the Cash Advance company that took a gamble by purchasing a percentage of the future receivables based off of past performance? Shouldn't the golden rule of the MCA Companies be "Past performance is no guarantee of future results"?

Quote Originally Posted by pcfunder View Post
...After dealing with thousands of deals and plenty of defaults...

What seems to be a little concerning is that after being in the industry as long as you have been, and doing thousands of deals, you still in your heart think of the MCA as a loan, and that the merchant is in debt to the MCA company.. "



You were just so confident that MCA is not debt. Literally one post later from mistamca and your questioning the meaning of MCA and life?

I thought most industry types were on the same page in regards to what MCA are, but perhaps this is not the case. That is why I would like to hear more about this topic from both sides, people that think they are not debts and people who think they are. This is what is great about internet forums (a place, meeting, or medium where ideas and views on a particular issue can be exchanged.)!

[pcfunder]

I thought most industry types were on the same page in regards to what MCA are, but perhaps this is not the case. That is why I would like to hear more about this topic from both sides, people that think they are not debts and people who think they are. This is what is great about internet forums (a place, meeting, or medium where ideas and views on a particular issue can be exchanged.)!

A merchant cash advance is a friendly product at which one may take out capital or "funding" in exchange for love, guidance, and overall perspective of future receivables. I like to use this analogy for my friends to really sum up what an MCA is: Girls are like phones. They love to be held and talked to, but if you press the wrong button you'll be disconnected.

[RickyR3712]

A basic concept to you because you operate in this space... But not a basic concept to a merchant or judges that are against MCA's. I am on the outside looking in, and I would say please be more careful when using the term debt as it relates to a merchant repaying a Cash Advance. Unless the merchant has did some sort of fraudulent activity and attempting to not pay the percentage of the received revenue, there is technically no debt.

When you took multiple positions

[Winning]

A merchant cash advance is a friendly product at which one may take out capital or "funding" in exchange for love, guidance, and overall perspective of future receivables.

The way you used Perspective in that sentence I really enjoyed! Did I arrive at the correct understanding of how you used the word?

Here is how I worked through that statement.

• A merchant cash advance is a product. (I follow you).

• A product that lets a merchant get capital. (I follow you).
• In exchange for the merchant getting capital, the merchant gives love to the investor. (Sarcasm perhaps?).
• In exchange for the merchant getting capital, the merchant gives guidance to the investor. (Sarcasm perhaps?).
• In exchange for the merchant getting capital, the merchant gives perspective of future receivables investor. (Lost me at 1st, I couldn't make sense of the word perspective used in this context).

• A product that lets an investor give capital. (I follow you).
• In exchange for the investor giving capital, the investor receives love from the merchant. (Sarcasm perhaps?).
• In exchange for the investor giving capital, the investor receives guidance from the merchant. (Sarcasm perhaps?).
• In exchange for the investor giving capital, the investor receives perspective of future receivables from the merchant. (Lost me at 1st, I couldn't make sense of the word perspective used in this context).

Perspective
Definition at https://www.merriam-webster.com/dictionary/perspective
Synonyms at https://www.thesaurus.com/browse/perspective

• .... give/receive an overview of future receivables ... Doesn't make sense.
• .... give/receive a point of view of future receivables ... Doesn't make sense.
• .... give/receive a mind frame of future receivables ... Doesn't make sense.
• .... give/receive related future receivables ... Ahhh!! using perspective as an adjective, may work!
• .... give/receive based on future receivables ... Ahhh!! using perspective as an adjective, may work!
• .... give/receive a derivative of future receivables ... Ahhh!! using perspective as an adjective, may work!

So what you were saying on the last part should be comprehend as.
In exchange for the merchant getting capital, the merchant gives a derivative of future receivables to investor.
In exchange for the investor giving capital, the investor receives a derivative of future receivables from the merchant.

LOL!!! It's not how you get there, as long as you get there right... Until I broke it down, for some reason I could not figure out what the heck you were trying to say with the term perspective.. My brain wanted to keep thinking perspective as in "point of view"..