If you are currently paying excessive annualized rates on a 6 to 12-month payback period for business funding such as merchant cash advance (MCAs) or short-term business loans, you are not stuck, you are misinformed and have been misled. Many business owners with strong personal credit (680, 700 and higher) and a stable operating history are placed into expensive, short-term financing not because it is their best option, but because it is the fastest and most profitable option for the broker who arranged it.
This article pulls back the curtain on the specific tactics these brokers use, from the bait and switch to the fake “unsecured” loan pitch to the commission structure that quietly decides which lender gets your business. If you are currently shopping for capital, or you already have a deal on the table, understanding these tricks could save your company from a financing decision you cannot undo.
The critical error occurs when this temporary emergency capital becomes a permanent fixture on the corporate balance sheet. High-frequency payment structures, such as daily or weekly ACH withdrawals, create a highly volatile environment where capital behaves remarkably like a tightly stretched rubber band. The moment revenue enters the business operating accounts, it immediately snaps back to the aggressive creditors, leaving the operation starved for the very working capital it initially borrowed. This continuous, rapid outflow of cash paralyzes future growth, prevents strategic investment and places immense psychological strain on the leadership team trying to manage the daily chaos of low business liquidity.
You may be feeling the squeeze of business financing that was supposed to help you grow. Many business owners discover too late that the money they borrowed came with hidden costs that drain cash, disrupt operations and leave them more vulnerable post-transaction. The problem is rarely just the interest rate. It is the short payback period. The disconnect starts with the people and processes that stand between you and the longer-term, affordable business capital you need.
Business “funding” brokers present themselves as your advocates while collecting commissions from the lenders. Cash-flow lenders approve funding deals with underwriting that prioritizes volume over sustainability. The result is financing that extracts every available dollar of free cash flow and sometimes forces you to plug gaps with personal equity or high-interest credit cards. In the worst cases, you end up stacking new business debt just to service the old (reverse Ponzi scheme). This article explains how those dynamics work and what you can do to protect and fix your business balance sheet.
Let’s dismantle the most pervasive, dangerous and financially destructive myths currently surrounding business financing. By forcefully exposing the deceptive tactics and misleading rhetoric often employed by business funding brokers and aggressive alternative lenders, our primary goal is to empower you with the essential knowledge required to make highly informed and strategic business financial decisions. From exploring the dangerous illusion surrounding interest rates to uncovering the heavily disguised traps of revenue purchase factor rates and hidden broker commissions, we will systematically explore the critical nuances that ultimately dictate the true cost and operational impact when taking on business debt. Armed with the unvarnished and objective truth, you can more confidently and safely navigate the complex capital markets.
FACT: MERCHANT CASH ADVANCES (MCAs) DESTROY BUSINESSES.
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Excerpt from our latest report on the dangers of MCAs…
“…a majority of small businesses have just enough cash flow to pay its operating expenses…
Excerpt from our latest report on the dangers of MCAs…
“…The reason the vicious cycle of MCAs can sustain itself for some period of time is because of one simple word in the industry, “stacking”. MCA “stacking” is to put a second MCA on top of a first MCA
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Visit our post and download our latest FREE FULL MCA REPORT-
“The Critical Dangers of Merchant Cash Advances”
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Solutions are available to get you and your business out of the destructive MCA cycle.
MERCHANT CASH ADVANCE SOLUTIONS:
MCA Debt Refinance-
https://www.kanjorskipartners.com/merchant-cash-advance-refinancing-consolidationMCA Restructuring-
https://www.kanjorskipartners.com/merchant-cash-advance-and-business-debt-restructuring-services
Excerpt from our latest report on the Merchant Cash Advance (MCA) Industry…
MERCHANT CASH ADVANCE (MCA) Receivables Purchase Agreement structure has 6 critical parts which all add up to a HUGE and UNSUSTAINABLE, even predatory cost for this type of expensive and short-term financing:
1) PURCHASE AMOUNT: Amount of future accounts receivables and/or sales deposits purchased
LOWER YOUR PAYMENTS: MERCHANT CASH ADVANCE RESTRUCTURING
Merchant Cash Advance restructuring can be a simple process. Your creditors will not tell you this though.
Avoid bankruptcy. Stop harassing and stressful collection activity. Solve your business’ Merchant Cash Advance (MCA) debt situation.
Restructuring services are provided by New Horizons Restructuring LLC, a Kanjorski Partners related restructuring service entity.
View our FREE white paper report on Merchant Cash Advance (MCA) Restructuring:
“THE CRITICAL DANGERS OF MERCHANT CASH ADVANCES”
Our extensive experience in MCA contract review, accounting reconciliation and our vast knowledge of legal collections throughout the US can help your business potentially get refunds and/or credits from either temporary or permanent over-payments owed to you contractually from the MCA companies.
Construction Contractor - Electrical & Remodeling
MCA Total Balance: $225,595
Total Daily & Weekly MCA Payments Per Month: $48,955
Working Capital Given to Borrower at Closing: $30,000
New Refinanced Term Loan Payment: $14,623
Monthly Debt Service / Cash Flow Savings: $34,332
(plus $30,000 of working capital received at closing)
Small businesses that are struggling with predatory merchant cash advances. Daily and weekly payments and effective APR of 60% up to 200%+ are crushing small businesses across the nation as we post this.
Kanjorski Partners LLC, has been refinancing small businesses across the US and providing additional working capital since Sept 2019.
Refinance of the entire MCA capital stack for a business and refinances it into a term loan resulting in a reduction of total monthly debt service payments by 50% to 90% for small business owners.
We are proud to be a part of an initiative and provide this solution to small businesses to help them deleverage and exit of predatory merchant cash advances positions and restore liquidity and equity to their balance sheet.
$57mm billed charges out-of-network
$13mm billed charges w LOPs in place
$70mm total billed charges
Multi-state and multi-site portfolio
Registrations Process:
1) execute fee agreement / NDA / non-circumvent
2) provide proof of closing funds
3) execute NDA/Conf. Agreement compliant with Health Insurance Portability and Accountability Act of 1996 and Enforcement Rules at 45 CFR Part 160 and Part 164 prior to receiving due diligence data
Bidder registration cutoff Wed, Jan 22nd at 4 PM EST
Indicative Bids due Wed, Jan 29th by 4 PM EST
Email sbernarsky@kanjorskipartners.com for registration
$88mm medical surgery center personal injury claims
All claims have Letter of Protection in place
80-90% auto (MVA); 10-20% slip and fall (Premises advanced at 50% of MVA rates)
Seller is current servicer (winning bidder can stay with current servicer or take over servicing rights)
Bid floor is $19mm (21.5% of Unresolved Receivable)
Must execute NDA and Conf. Agreement compliant with Health Insurance Portability and Accountability Act of 1996 and Enforcement Rules at 45 CFR Part 160 and Part 164 prior to receiving due diligence data
Proof of closing funds due after NDA execution
Forward flow (right of first refusal) on a monthly flow of approx $8 to $10mm (contract available to winning bidder)
Bidder sign up cutoff Monday 11/18/2019 at 4 PM EST
Bids due Thursday 11/21/2019 by 4 PM EST
Contact us for registration information
Kanjorski Partners is pleased to announce the launch of our Small Business Refinance Program focused on refinancing Merchant Cash Advances and other Small Business debt. Below are the general program details:
Pre-Qualification Requirements (answer in 24 to 48 hours):
• Names of all MCA Companies owed
• Total Amount Owed to each MCA company
• Daily Payments to each MCA company
• Status with each MCA company (current, default or currently in seizure/garnishment)
• A current AR aging report
• A current AP aging report / debt schedule
• Interim P/L and Balance Sheet and previous year P/L and Balance Sheet
• Last 12 months of bank statements
• Completed loan application (all listed requirements on last page)
MCA & Business Debt Refinancing General Loan Terms (typically 5 to 10 business days for full underwriting):
• Refinance all of your current merchant cash advances into one monthly or bi-monthly payment
• Save up to 60% on your total current monthly payment amounts
• Re-amortize your advances to a 1 to 3 year amortization and term
• Possible approval for additional working capital at closing
• Loan size (all outstanding advances must total a minimum of $50k up to $1mm; can refinance larger amounts through syndication)
• Anticipated annual interest rate (25% to 30%)
• Anticipated average loan terms (1 to 3 year term with 1 to 3 year amortization)
• Personal & Spousal Guarantees required by all owners with more than 20% interest in Company
• Stock pledge & UCC-1 lien filing
• Sufficient receivable and/or asset coverage for the loan (determined in underwriting)
• End of term refinance program options to renew or qualify for a new operating line of credit or term loan
Visit here to apply:
https://www.kanjorskipartners.com/refinance
Our private and master-serviced nationwide legal collection network will advance court costs to litigate on your legal collection claims.
Place your accounts to one centralized placement point for litigation collection strategy and receive one detailed monthly collection and accounting report.
More information here…
Become our referral partner for helping businesses get loans in the range of $500,000 to $5,000,000
Please contact us here for more information on our referral program:
Revolving Credit Facilities
Term Loans
Senior-Secured Financing
Mezzanine Financing
Interest Rates mid-teens to mid-twenties annualized (pending underwriting and position)
Flexible Terms and Traditional Loan Terms
Facilities can open within 30 days or less from application submission
New loans can sit behind SBA loans in the cap stack
$1mm to $5mm loan sizes
Inquire here: https://www.kanjorskipartners.com/business-loans
(see “Disclaimer” at the bottom of this website)
Kanjorski Partners, LLC can assist consumer debt buyers and collection agencies in refinancing their purchased consumer debt portfolios and with financing for their future purchases.
Eliminate fixed monthly payment amortization and remit monthly on a gross cash flow percentage basis.
Both equity and debt financing structures are available for refinancing existing purchases or for financing new purchases.
For a FREE portfolio appraisal and a quote for financing or refinancing, contact us today to setup a consultation.
SELL YOUR CONSUMER DEBT JUDGMENT ACCOUNTS
Our consumer debt purchasing clients are seeking judgment portfolios for acquisition.
Consumer debt judgments (credit card, consumer loans, auto loans, etc).
Older judgments, dormant judgments and any size is OK.
Please contact us if you have consumer debt judgment portfolios for sale.
Bernarsky Partners recently entered into a monthly service agreement with a collection law firm for payer identification and account scoring services of all existing and newly placed inventory.
Chance of Collection (tm), our payer identification scoring model is able to identify which defaulted, charged off or judgment accounts will pay in the future. Our collection law firm client uses the Chance of Collection (tm) model to determine which newly placed accounts go to the top of the workflow pile for their attorneys and paralegals to begin reviewing and processing.
We also reviewed all dormant judgment accounts in the law firm’s inventory to determine the most profitable course of action for post judgment remedies by identifying which judgments have the highest propensity to pay.
Here is a white paper on our Chance of Collection (tm) analytics model services
Bernarsky Partners recently assisted a subrogation, collection and creditor rights law firm in reviewing their dormant judgment inventory. Chance of Collection (tm), our proprietary analytics model, was able to identify concentrated and specific portions of the total creditor judgment inventory out of a large pool of dormant judgments that will pay in the near future. Our Chance of Collection (tm) model also identified assets such as bank accounts, brokerage accounts, other personal property and places of employment to aid in post-judgment executions and remedies.
This dormant judgment inventory review has enabled our client, the collection law firm, to focus their resources and production time specifically on the judgment accounts that will produce maximum fee revenue and net back to their clients.
Here is a white paper on our Chance of Collection (tm) analytics model services
Bernarsky Partners, LLC announces its exclusive agreement with “Chance of Collection” (tm), a proprietary predictive algorithmic scoring model that identifies accounts in a defaulted or charged off status that have a high propensity to pay.
The “Chance of Collection” (tm) scoring model is customized client-by-client to produce results through back tested, predictive analytics in the following areas:
(1) COLLECTION AGENCIES- prioritizes accounts by propensity to pay, estimated percentage of payment in each score tranche and also estimated amount and/or term of payments to be expected; increases profitability and efficiency by enabling a collection agency to work less accounts and collect more for their clients
(2) CREDITORS- identifies delinquent accounts that have the highest propensity to “cure” prior to charge off as well as which accounts to keep internally and which accounts to outsource/sell; segments accounts by propensity to fall into delinquency; identifies accounts that are in danger of future bankruptcy; provides recommendations on which accounts to send to litigation with the highest chance of recovery to produce optimal net charge off rates for credit issuers
(3) COLLECTION LAW FIRMS- identifies which accounts in the paralegal’s queue to pursue first for litigation; pinpoints specifically which judgments to focus on monetizing and provides judgment debtor asset information as well as place of employment for judgment execution
Download an overview from the link below of how the “Chance of Collection” (tm) scoring model works:
Bernarsky Partners LLC has secured a $100mm senior credit facility for one of our clients to purchase semi-performing and non-performing defaulted consumer credit receivables assets. We sourced this credit facility for our client from our network of alternative asset finance and capital partners.
Bernarsky Partners LLC is also contracted to source, analyze and price assets for acquisition with this revolving senior credit facility.
Business Finance & Strategy Advisors
Refinance. Restructure. Rebuild.
Help with Business Debt, Loans and Merchant Cash Advance (MCA)
