No, we here at CHB are not going into the MCA business.
But – we need to bring this to your attention!!!
If your client has taken out an MCA and it can be seen on their bank statements or in the Paynet in the UCCs – tell us the story. We need to know that the business does not have cash flow problems.
MCAs take daily and weekly payments, automatically, out of the applicant’s account to have the obligation covered. Usually the “fees” for these types of loans are highly questionable and can hurt the borrower financially. When digging through the bank statements, we can see a huge cash deposit that props the cash flow up through tough times.
The MCA industry usually charger a 2% – 4% fee for every payment. This can add up to a loan with an interest rate in the 30% to 50% or more. Please consult with your clients about the use of MCAs and how it can have an overall effect on their cash flow and impact their business. It is critical to know that lenders, who look at the bank statements, will take into consideration the use of MCAs in their decision to extend your client credit for their business. We are in the business of Lending Money for businesses, but when an MCA is being used and there has not been a conversation about it – it tends to give us a reason to pause and then ask additional questions.
Please feel free to share any Input // Ideas that you may have.
I am looking forward to hearing what you have.
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