MCA Brokers are predatory in their actions and we have written extensively about what they have made delivering multiple cash advances or loans behind the MCA companies back. We call it the "art of stacking."
Stacking is when brokers give more than one (some times many) cash advances to one small business owner within a day or so of the each MCA. This is never usually good for the small business owner as they are most certainly going to default because they will not be able to afford paying for the receivables they have sold and are responsible to pay.
Were you stacked? In recent months, MCA companies like AKF dba Fundkite have gone after brokers for stacking. Recently, AKF dba Fundkite sued Seed Financial for their alleged predatory broker actions. In this article, we review the case and the implications associated with the actions of the MCA company and the broker.
By Thomas Tramaglini, Chief Operations Officer
Partner, The Center for MCA Research
Case Overview
In recent months, Fundkite sued FirstPoint Funding for $150,000 for stacking on them. In the process, the client who was stacked by FirstPoint defaulted and provided tons in information to AKF which served as a smoking gun in court proceedings. On May 8th, FirstPoint settled for $50,000 (settlement here) indicating a victory for the MCA company. Another case we have highlighted is Fora Financial Advance LLC v. 4 Pillar Consulting for their actions.
In the new case filed in New York County on May 10, 2024, Fundkite is suing Seed Financial (broker/predator) for $114,189.00 for stacking which violated their ISO agreement.
The current case is a bit less with evidence using texts, however the complaint details how the broker stacked. On August 2, 2022 Seed Financial funded La Casa, a NY Corporation for $107,900. The same week, Amsterdam Capital Solutions funded the same company, without consent of Fundkite. The client, La Casa subsequently defaulted on their MCA and were sued in Nassau County receiving judgement on 2/8/2024. In the complaint against Seed, the client La Casa provided indication that Seed had funded them with Amsterdam behind Fundkite, ultimately or partially leading to their default on both agreements (an violation of the their ISO agreement.
In the complaint, AKF (Fundkite) is asking for $114,189.00 to be awarded, including the $10,790 the brokerage received for funding the deal.
So What?
As we have detailed in depth, stacking is a bad idea resulting in just about everyone to get damaged, however in most cases, not the broker who pulls the strings.
AKF (Fundkite) is one of the few MCA companies willing to hold brokers accountable for their actions. At a minimum, brokers who prey on fragile business owners should be put on notice that some companies like AKF will be coming for them if they try to stack them.
Dr. Thomas Tramaglini is the Director of Operations and Negotiation for Beacon Client Solutions, a company that supports small businesses on a host of fronts, especially MCA debt. Thomas has been a small business owner for many years, as well as held leadership positions in several organizations and companies. Thomas holds a B.A. in History, as well as Masters and Doctorates in Organizational Leadership from Rutgers University, The State University of New Jersey.
Disclaimer: Beacon Client Solutions is not an accountancy, or a law firm. We are business consultants. While Beacon works with outstanding attorneys and accountants, we cannot and do not provide legal or tax advice. All of our work is connected to those who are legally certified to give such advice. Beacon does have a longstanding body of work in MCA resolution and understands what small business owners deal with, specific to MCA. Beacon Client Solutions serves clients in all 50 states, Puerto Rico, Mexico and Canada.
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