Interestingly enough, the business examined by this article (Access Funding LLC) is Better Business Bureau accredited. [1] What kinds of businesses aren't BBB accredited these days?
The owner and CEO of Access Funding LLC, Lee J. Jundanian, started a business called Rapid Advance LLC in 2005. [2] This company specialized in structuring advances "on terms that experts say most small businesses, especially distressed ones, would have little hope of meeting", doing a large amount of business during the financial crisis. The advances are not considered loans because there is no set payback period; therefore, "the industry is completely unregulated, and companies can charge customers whatever they want."
Calculating the cost of an MCA [merchant cash advance] is a bit complicated. Because it doesn’t accrue interest over time, the more quickly one repays the advance, the more expensive it is.
For example, if a merchant agrees to pay $70,000 for a $50,000 advance, and it pays it off in six months, the effective annual interest rate is 80 percent. If paid off in three months, the rate jumps to 160 percent. Pay the advance off in a month and the rate skyrockets to 480 percent.
Funnily enough, Mr. Jundanian was awarded with the prestigious "Entrepreneur of the Year Award" by Ernst & Young in 2008 for growing Rapid Advance so quickly. Clearly they were impressed with his ability to find such a profitable way to use questionable accounting to legally prey on vulnerable business owners.
Seems like he's found a new avenue for his talents.
Lol. In UK there are short term loans which are publicly advertised as having an APR of at least 1500%(wonga.com), up to 3500% for larger sums. Fully legal.
In PL wonga.com advertises strictly to elderly (using famous older actors for added nostalgia and trust factor), they intensify ad campaign during holiday season, 'your family deserves good holiday with great gifts!'.
The owner and CEO of Access Funding LLC, Lee J. Jundanian, started a business called Rapid Advance LLC in 2005. [2] This company specialized in structuring advances "on terms that experts say most small businesses, especially distressed ones, would have little hope of meeting", doing a large amount of business during the financial crisis. The advances are not considered loans because there is no set payback period; therefore, "the industry is completely unregulated, and companies can charge customers whatever they want."
Calculating the cost of an MCA [merchant cash advance] is a bit complicated. Because it doesn’t accrue interest over time, the more quickly one repays the advance, the more expensive it is.
For example, if a merchant agrees to pay $70,000 for a $50,000 advance, and it pays it off in six months, the effective annual interest rate is 80 percent. If paid off in three months, the rate jumps to 160 percent. Pay the advance off in a month and the rate skyrockets to 480 percent.
Funnily enough, Mr. Jundanian was awarded with the prestigious "Entrepreneur of the Year Award" by Ernst & Young in 2008 for growing Rapid Advance so quickly. Clearly they were impressed with his ability to find such a profitable way to use questionable accounting to legally prey on vulnerable business owners.
Seems like he's found a new avenue for his talents.
[1] http://www.bbb.org/washington-dc-eastern-pa/business-reviews...
[2] http://www.bizjournals.com/washington/stories/2010/07/19/sto...