Predatory MCAs disguised as A/R assets, sold and securitized, repeating 2007’s mistakes.
They’re securitized MCAs, sold as A/R assets when in fact they were predatory, 50% loans to unsuspecting Shopify orgs. They required no background checks and only 3months of bank statements. The loans were immediately sold to banks like synchrony , tranched with BBB and AAA…
— 5280APE (@5280Ape) October 20, 2024
MCAs (Merchant Cash Advances) are a form of financing where businesses receive a lump sum upfront in exchange for a percentage of their future sales or revenues. Instead of traditional loans with fixed payments, MCA providers take a cut of daily or weekly sales until the advance and fees are fully repaid. These advances often come with high fees or interest rates, sometimes equivalent to 50% or more, making them predatory in certain cases. They typically target small businesses that may not qualify for conventional loans.
Looks like the delinquency rates are highly concentrated in Consumer Loans and Commercial Real Estate.
Notice how we saw the same pattern in 2008.The data is from April, 6 months behind reality. If these were updated with the current data it would look catastrophic. https://t.co/glBbqzrkx2 pic.twitter.com/FEOXLt9InC
— Financelot (@FinanceLancelot) October 16, 2024