Truth Tracker: Merchant Cash Advances (Part 1)

truth tracker
Trap with stack of credit cards. Unsafe credit risk. Black background

Retirement Media Inc. Presents: The Truth Tracker. Last week you learned of a Philadelphia area sales-firm that is advertising on radio and television, guaranteeing double-digit rates of return, which is being accomplished in a confusing and very questionable manner. Supported with documentation, the Truth Tracker learned that these returns are made possible through the use of promissory notes and Merchant Cash Advances – commercial capital advances that carry incredibly unethical rates of interest. Small businesses obtain these high-risk advances when their credit is too weak to secure a loan from a traditional lending institution, such as a bank.

Last week the Truth Tracker laid out the proposed investment pattern: A Better Financial Plan takes money from an initial investor (like you) through a promissory note and lends that money to a “middle man” high-risk alternative lending company, Par Funding, which then may lend the money to high-risk borrowers (small businesses) throughout the country as Merchant Cash Advances (we emphasize this is supported by truth and documentation). The money that is paid back from the high-risk borrowers (the principal and interest) is then used to pay back the investors who were promised double-digit returns in the promissory notes which are guaranteed by A Better Financial Plan. 

Unlike bank loans, which are regulated and have protections in place for the borrowers, Merchant Cash Advances are alternative, high-risk commercial advances that are not regulated and leave vulnerable high-risk borrowers at the mercy of predatory alternative lenders. In some cases, and especially today as companies struggle with the COVID-19 pandemic, these advances carry a lethal dosage of risk.

There are hundreds of high-risk alternative lenders who deal in Merchant Cash Advances. They promise quick access to capital in as little as four hours with interest rates that can soar above 30%. High-risk borrowers pay back these advances using a percentage of their daily or weekly sales until the lender is paid-in-full (including interest). But this is where the problem comes in: with the pay-back! The Truth Tracker has learned that hundreds of high-risk borrowers that take these high-risk advances from the high-risk alternative lender are struggling to pay off the money that was lent to them.

Par Funding, a high-risk alternative lender that may frequently work with A Better Financial Plan, has opened hundreds of cases against their high-risk borrowers in the Philadelphia Court of Common Pleas to collect on missed payments. According to court filings from January 2020 to April 2020, this high-risk alternative lender has sought payment from hundreds of high-risk borrowers across the country for the amount of more than $78 million dollars.

In there lies the issue with Merchant Cash Advances: If Par Funding, the high-risk alternative lender that works with A Better Financial Plan is not being paid back from their high-risk borrowers, then THEY, in turn, cannot pay back A Better Financial Plan, who cannot pay the initial investor (you) their guaranteed returns, promised to them through an unregulated promissory note! Thus potentially leading to a series of defaults on the promissory notes that you are invested in.

The strange thing is A Better Financial Plan (which may have issued you the promissory note for Merchant Cash Advances) acknowledges that there is risk involved with their investment programs but A Better Financial Plan is not liable or responsible for any losses that pertain to your unregulated promissory notes. Given today’s terrible economic landscape, these already high-risk Merchant Cash Advances could turn lethal for the high-risk borrowers defaulting on their payments and the unregulated promissory notes sold to you, the investor.

Considering that a majority of the country has been shut down due to the COVID-19 pandemic, more and more high-risk borrowers with weak credit may begin to fold, so what does that mean for you as someone invested in these high-risk, unregulated Merchant Cash Advance promissory notes through A Better Financial Plan? It potentially could mean that your promissory note will default and the liability could be on you. But if you fully educate yourself on A Better Financial Plan and understand the dynamic between Par Funding, the high-risk alternative lenders, the high-risk borrowers, and the lethally high-risk advances being issued to the high-risk borrowers, you can avoid this nightmare altogether.