AUSTIN, Texas, Dec. 14, 2017 /PRNewswire/ -- 1st Commercial Credit offers invoice factoring services and lately has experienced a large number of clients seeking invoice factoring with stacked MCA loans for additional working capital.
Raul Esqueda, President of 1st Commercial Credit says, "It is unbelievable to see what has happened and continues to evolve with the MCA lending industry. Business owners have been misled, and in my opinion misinformed about the type of financing they entered into based on the loan agreements I have reviewed. These loan agreements are disguised as factoring agreements with a buyer/seller clause involving receivables (not invoices), however at the end of the agreement it finalizes like a loan with a fixed payment and a term with yields over 120% in some cases."
Based on the inquires made in 2017, 1st Commercial Credit has encountered now over 30% of businesses seeking invoice factoring having some type of MCA loan with UCC-1 filed on all assets. This is a significant increase from only 5% in 2016. It has been very difficult trying to help these businesses because the MCA lenders do not want to give up 1st position lien rights on the accounts receivable.
In recent inquires, some business owners had three stacked loans with daily or weekly draws from their bank account exceeding their retained earnings. Anytime a company seeks 2 to 24 month financing that exceeds their net profit every month on an ongoing basis will go broke. Incredibly, there are MCA lenders lined up to give this type of business owner more money even though they can predict the final outcome.
Some of these business owners were originally looking for a factoring company and stumbled on these MCA lenders advertising as factoring companies. Google recently removed the MCA lenders from running ads with the phrase "Cash Advance" and now they are advertising as factoring companies in disguise.
In 2018, 1st Commercial Credit will be taking further action in helping existing clients, and clients that seek invoice factoring services for the first time. Services may include providing clients with law firms that specialize in going after MCA lenders for usury claims.
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SOURCE 1st Commercial Credit, LLC