Every day, urgent calls come in from across the country from doctors, small business owners, construction firms, trucking companies and others who have fallen into the trap of what’s known as a merchant cash advance.
Think of it as an emergency room for businesses. Instead of treating medical conditions, the team at the newly formed Wing Lake Capital Group in Farmington Hills triages struggling companies drowning in debt.
Previously known as Franklin Capital, the firm, founded in 2002, recently joined forces with Rocky Mountain Bank in Wyoming. The deal will enable the company to provide financing, consulting and restructuring services to more businesses than before, says Shaya Baum, 34, of Southfield, the company’s CEO.
“Everyone who comes to us, it’s an emergency,” Baum says. “We have to come up with a plan fast. We can rescue nine out of 10. It all comes down to timing.”
Every day, urgent calls come in from across the country from doctors, small business owners, construction firms, trucking companies and others who have fallen into the trap of what’s known as a merchant cash advance, or MCA. These predatory loans give businesses fast cash with ultra-high interest rates and terms that are nearly impossible to pay back.
Before they know it, many business owners find themselves in a bind that they simply can’t get out of alone. People often fall into the trap because they need funds, but don’t qualify for traditional bank financing.
“It’s not really the concept of the cash advance that’s the problem; it’s the collection tactics — these MCA’s freeze people’s bank accounts, file liens on your home and contact your customers,” says Baum, who often receives threatening calls, emails and text messages from the MCAs he takes on. “Often, they’ll withdraw money they’re not even owed. People have to be willing to fight, and we’ll fight with them.”
Baum adds that his firm is the only one of its kind that falls in-between merchant cash advances and bank financing.
Baum’s grandparents are Holocaust survivors. His father, Michael, is a well-known bankruptcy attorney. As a child, Shaya recalls hearing his dad’s stories about companies that were struggling. Today, he works to prevent businesses from going bankrupt.
A graduate of Yeshiva Gedolah of Greater Detroit, Shaya earned a bachelor’s degree in accounting from Wayne State University. Along the way, he was one of the founding partners of a New York-based tax preparation company, which he sold at age 19.
Baum joined Franklin, now Wing Lake, as an accountant in 2004. The firm, originally founded by Lou Glazier, started as an equity company that would invest in businesses and help restructure them. In 2017, the firm turned its attention to debt funding. Wing Lake currently has about $40 million worth of restructuring deals in underwriting, involving about 25 companies across the United States.
Dr. Paul Petrungaro, a periodontist and dental implant surgeon in Chicago, turned to the company to help to restructure his spiraling debt. He’s now building a new, 5,500-square-foot surgical facility and dental lab slated to open next year.
“Peace of mind means everything. They take you out of that bad cycle and move you into a good cycle,” he says. “They’re not investing as much in my business as they’re investing in me as a person. They’re willing to help you get to the next level.”
Merchant cash advance lenders, who reportedly provided $20 billion in funding last year alone, have increasingly come under fire in recent months. Because they’re not banks, they’re subject to lighter regulation.
The Federal Trade Commission and New York Attorney General’s Office have lawsuits pending against three MCA companies, accusing them of “illegally loaning money to small business owners at astronomically high interest rates, fraudulently charging undisclosed fees, debiting excess amounts from merchants’ bank accounts … and harassing and threatening merchants with violence and legal action, in an attempt to force them to pay off the loans,” according to a press release from the office of N.Y. Attorney General Letitia James.
“It’s like a whole other world,” Baum says. “The terms are crazy: You take out a $50,000 loan and have to pay it back in 30 days or owe $100,000.
“It becomes personal when you hear people’s stories. For us to be able to say as a group that we successfully turn these companies around, it’s very rewarding.”
Learn more at winglakecp.com.