We knew we were right, that’s always where our trouble starts. Always has and probably always will. We’re just funny that way when it comes to right and wrong, which again ties into that ignorance is bliss stuff. lol
Here is the quote from our first day in the behind the scenes world of the unregulated funding industry: “These guys are all crooks!” True fact!
The reality though, quickly learned, was that yes, thank goodness there are some good companies in the industry. Some, not many… The bad guys, the sharks, probably outnumber the good guys 10 or more to 1. Yes it is horrible! The worst part though is that the good guys all know the bad guys and some even do business with them. Money makes for strange bedfellows they say!
How did it happen? How does such a thing ever happen!
Merchant Cash Advance, when it began, was very legitimate, and helped lots of business owners when it first came about. The Funder would figure out how much they would risk on the business, usually no more than a month or so of their monthly revenue, or about 10-14% of the yearly revenue of the business. The deal was then done through the Merchant’s credit card processing company. The way the Funder got their money back was by credit card payments to the merchant that went through the processing company, which would send the percentage owed The Funder to the Funder and the rest to the Merchant so the Funder would only get whatever percentage they had funded the Merchant each time someone paid with a credit card. If the Merchant received payment in cash or check or even with chickens the Funder got nothing! The Funder only got paid when a credit card was swiped and the processing company was involved. As an example, a business doing 100k per year in revenue would be funded 10k and then owe say 14k, the cost of the 10k being 4k. The day the Merchant receives the 10k, which would come to them through the processing company, which is how the system would be tested, from that day forward every time a credit card is swiped for payment by the Merchant 10% of that amount would be sent to the Funder, and the 10% would be taken out of every transaction until the 14k was paid. The Merchant may pay it off soon if everything comes in more by credit card instead of by check or cash, but if say, the Merchant takes more cash and checks and less credit cards well of course it will take longer to pay back the 14k.
It was a fair deal at least. Expensive, but fair because the Funder took the risk of when they would get their money back, and of course some Merchants would take advantage by going out of their way to take cash or checks instead of credit card, which slowed down repayment, but at least these original MCA’s did not destroy businesses the way the industry does today.
From the above credit card split as it is called, the sharks, the bad guys, opened the flood gates on how to get as much money as they could from every desperate business owner they could.
Now, daily payments come directly from the Merchant’s business bank account, a set amount no matter how much revenue comes in that day or week or even month, and the percentage stated on the pretend contracts these days means nothing. The risk is gone for the Funders and the sharks just eat the revenue. They use predatory pressure sales tactics, bait and switch, promise term loans and lines of credit that never come about. They tell Merchants they are Funders but they are really brokers who will shop the deal out adding even more costs and credit inquiries without permission, or they are brokers white labeling for a real Funder. Merchants, desperate to resolve their cash flow troubles have no idea the system is what it is, and are just trying to get the money that need.
Merchants end up stuck in a cycle of having to get another funding again and again to pay for the ones they already have and can’t afford. Yep, more money they can’t afford each and every time! You can see that it doesn’t take long before the crooks are playing what they call “Hot Potato” to see who will be the one to give the Merchant the deal that will sink them, the daily payment deals on shorter and shorter terms at higher and higher costs until the Merchant is unable to pay, the revenue just isn’t there. The business closes or files for bankruptcy… One less Merchant, and the sharks could care less!
Every business day in America today there are over 300 business related bankruptcies filed in the courts, and almost every single one of them have these cash advances that most certainly helped put them there.
The crooks in this unregulated industry are allowed to destroy small businesses non stop, eating away at the middle class, destroying small communities, and nobody is even trying to stop them.
Until now!
It’s obvious with the banks now backing some of these crooks that regulation is not coming. It’s obvious the industry is not going to police itself like the consumer debt settlement industry attempted to do just before regulation came to that industry. It’s obvious that somebody has to do something, and that if nobody does something more and more businesses will fall prey to these crooks. It should also be obvious then that if we can do something we must, and so of course that is what Güldies is doing, go figure.
We know they’re crooks, and more importantly know how to prove it!
We’re stopping them, one client at a time, creditor by creditor, and are certainly cray cray enough to think we can get rid of the bad guys and “fix” the industry. But that’s for another ramble…
Stick around kiddies, this adventure is just beginning…
Peace