[mbradford101]

(Note: I posted this message on another forum, and then found this forum, which looks like it has a lot more activity. So I'm posting the message here as well, hoping to get as much advice as possible :) I'm mentioning this so I don't have to defend myself for posting on two forums.)

Hi,

I've been involved in online businesses for a number of years, and have dabbled in the merchant processing business, but have never booked an account. I always wanted to get into the business, but because it always seemed like a cut-throat bait-and-switch type business, I never felt comfortable trying to convince a business to switch processors -- based on 'lower rates' that I'd heard repeatedly would probably be increased within months of landing the account...

But I've been reading the Greensheet for about 10 years and ISO and Agent for a few years as well, and have been drawn to the MCA business because it seems pretty straightforward and appears, at least, to be very profitable.

Years ago, I sold printing to businesses, cold-calling, following-up, and repeat-visiting about a thousand businesses until my print and copy sales were over $50,000 per month.

So I'm wondering if I could do the same thing in the MCA industry? Are there any ISOs or salespeople on the forum who built a decent income cold-calling and canvasing businesses? If so, could you share how it worked for you?

I'm also wondering what the ratios are -- how many cold-calls it takes to get a warm lead, and then how many warm leads you need to close a deal, and what the average deal size is.

Also, I'm wondering who the best MCA lenders are? In the Greensheet, I've seen quite a few (pretty convincing) ads for Capital for Merchants, which is what finally put me over the top, to take this business seriously and give it a shot. But since there are quite a few MCA lenders out there, I'm wondering if there are one or two that are considered the best by those who sell MCAs on the street.

Any advice you can share for a newbie in the industry would be appreciated.

Thanks!
Mark

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[Finance1]

It's a numbers game for sure. One of the tough parts nowadays is competition and shopping. Expecting a full 10 points comp on every deal leads to a very low funding rate. Merchants are smarter and they will shop if they think the deal is sour no matter how good of a rapport you have.

If you're good face to face and/or on the phone you can definitely get enough leads to make some money. I would never work as an agent for a direct funder unless they are going to provide leads. By working inside for a direct funder you are seriously limited with product/price/program. Each deal has a "best" home. Different funders like different things. It's best to get set up with 5-6 funders and cover all the bases. High risk, loan programs, premium pricing, and industry types are not one size fits all.

You may want to consider finding a decent ISO that can train you. You'll have to split commissions but that's totally worth it in exchange for being trained on all the details of the industry. On the surface it looks easier or less complicated than it really is. Being efficient at identifying viable deals (chasing ghosts is a total time waster with no reward) and knowing where to place it so you don't get destroyed by competition (if you don't somebody else will likely come in do it) are probably the 2 most important things to learn as a new agent.

[funding pro]

Nothing to see here, move along...

http://www.youtube.com/watch?v=5NNOrp_83RU

On a serious note, Finance1 nailed it with this statement

You may want to consider finding a decent ISO that can train you. You'll have to split commissions but that's totally worth it in exchange for being trained on all the details of the industry. On the surface it looks easier or less complicated than it really is. Being efficient at identifying viable deals (chasing ghosts is a total time waster with no reward) and knowing where to place it so you don't get destroyed by competition (if you don't somebody else will likely come in do it) are probably the 2 most important things to learn as a new agent.

Do your research. Consider yourself the employer and your partners the employee. They have every right to interview you, but make sure you interview them just the same.

[mbradford101]

Hi Finance1, Thanks for the advice - I appreciate it. I may first try doing it on my own using the training the different MCA lenders offer. But I understand it probably is harder than it looks...

Still wondering if anyone out there has sold MCAs using door-to-door cold-calling, who can share what the typical ratios might be?

On another thread talking about cold-calling BY PHONE, I saw that MCNetwork said:

"Using a cold call approach, a good lead warmer might get 1 full application from 150-200 dials. Out of 100 full applications, you might actually fund 10-15 deals (even though you might get 30-40 approvals). If you have to pay the lead warmers an hourly wage it can be a very expensive process."

and CO1 said:

"Its not about getting in apps anymore. Its serial shoppers and the big guys trying to kill the small guys. My company in one month gets 50-60 full package but we end up funding only 25-35 at the end."

So I'm wondering if I left a flyer and business card at 100 businesses per day, what that might get me?

...Maybe a few conversations and one application, or what?

I was thinking of starting out doing this one day a week, and seeing what I could get from it. But I'd really like to have some idea of what to expect before I start.

Also, are there any important things to include on the marketing materials that businesses are looking for -- that might greatly increase the response rate?

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[funding pro]

If you are going door-to-door, you are going to have a very hard time converting a large number of deals. This business is a numbers game, and you simply cannot make as many "cold calls" going D2D as you can over the phone. The one big upside I tell people considering D2D sales for this product is that you have a huge advantage that anyone that calls in doesnt have. You can look at a business, identify a need for the capital and sell the owner on that specific job.

For example, walk into a run down restaurant and tell them you can get them $20k to remodel. Or maybe you will notice they have terrible exposure, ask them if you were able to get them $30k to put in a new sign, how much more business they would capture and then spend the rest on marketing, etc. Put yourself in their position, imagine what you would do if you were them and all of a sudden had an extra $20-50k in your bank account and sell them on THAT.

[Chambo]

Oh, by the way, funding pro, I'm new here... but I wondered from your post above if you truly are a dick, or maybe just having a bad day. So I looked at your profile and saw your other recent posts, and it appears you truly are a dick. So please butt out if you don't want to offer advice. This is a forum where these kinds of questions are meant to be posted. So even as a newbie, I don't believe asking legitimate questions like this is something you should come along and say, "Hey everybody, Don't waste your time here, Ignore this stupid post," which is essentially what you said. Other newbies will likely find this thread in the future, and could benefit from it (as I will), if good answers and advice are shared from people who are experienced at selling MCAs. No offense is intended, but I don't appreciate being treated like a village idiot asking a stupid question when I know the question is legit.

-----

I don't think he was being a dick at all, but more honest and blatant than someone else might have been.

Cold Calling or Door-to-Door will get you deals, but you will put in 10-20 times the work for the same results.

I agree with the above posts. Now is not the time to come in brand new and go at it alone. You will be eaten for lunch. Your best bet is to go work for an established ISO for a while and go through the actual process on 10-20 deals first to get your beak wet.

[mbradford101]

I JUST SENT THIS PM TO funding pro, after seeing his latest post and then deleting the portion you copied from my last post:

funding pro, I had added this to the bottom of my post, and then refreshed and saw your helpful response, which made me want to forget the ABOVE. So I removed the text below, but figured you might have seen it, and might already be responding in kind. So I wanted to let you know I removed it, so we don't need to get into a pissing contest...

"Oh, by the way, funding pro, I'm new here... but I wondered from your post above if you truly are a dick, or maybe just having a bad day. So I looked at your profile and saw your other recent posts, and it appears you truly are a dick. So please butt out if you don't want to offer advice. This is a forum where these kinds of questions are meant to be posted. So even as a newbie, I don't believe asking legitimate questions like this is something you should come along and say, "Hey everybody, Don't waste your time here, Ignore this stupid post," which is essentially what you said. Other newbies will likely find this thread in the future, and could benefit from it (as I will), if good answers and advice are shared from people who are experienced at selling MCAs. No offense is intended, but I don't appreciate being treated like a village idiot asking a stupid question when I know the question is legit."

[MCNetwork]

So I'm wondering if I left a flyer and business card at 100 businesses per day, what that might get me?
-

Sore feet and no apps!

[funding pro]

Uhhhhh, not sure what you interpreted as being a dick. In fact, I'm pretty sure both posts I made here are more than generous for a forum where we are all essentially "in competition." What I was implying is that there are a ton of sales reps in this space so I was jokingly trying to tell YOU there is nothing to see here and to just keep on walking, I even said "on a serious note" right after that. But, in all honesty, I welcome the growth of this industry and the competitors I encounter (most days).

On a separate note, I am thrilled I could offer sage advice from my years of experience to someone who seems like they didnt deserve it in the first place. Even if I was trying to be a dick, you are going to have to be more thick skinned to make it in this industry.

[funding pro]

That's now 3 pieces of advice for your first day on the forum. Those were free, the next one and I'm sending a bill.

[mbradford101]

I guess I misinterpreted MOVE ALONG, NOTHING TO SEE HERE.

I've seen similar comments on other forums, and what I've always interpreted them as meaning is, "This is a village idiot asking a stupid question. Don't waste your time even considering the question." OR "This is a troll annoying the forum. Don't feed the troll."

Since I didn't think either of those were applicable, I wanted to point that out.

I very much want to make a go of this business, so I really was hoping for good advice about cold calling. But it sounds like the consensus is that door-to-door cold calling is generally a waste of time. If that's the case, I'll have to look for other ways to market...

I appreciate any advice. I just don't appreciate being slapped in the face...

[MCNetwork]

I have to vouch for funding pro's responses. They are all truthful. There are no shortcuts to this business. You have to learn the industry inside and out and use a consultative approach to win customers. If you don't have the requisite knowledge, then you have a major uphill battle to get clients and you'll end up getting discouraged soon and quit. You can't use a shotgun approach. It is essential to have in-depth discussions with clients to understand their needs and make a personal connection. I'd rather have 3 meaningful conversations per day than drop off a 1000 meaningless flyers and business cards a day.

[MCNetwork]

Also, if you really don't want to join an ISO first, then take advantage of training offered by some of the top funders. If you become a rep for Rapid Advance, AdvanceMe or BFS, you will have access to some really solid training material. This will help you get up to speed much faster than stumbling around in the dark. The thing is...they don't really sign up complete newbies so becoming an ISO will still be a challenge.

[Sean Cash]

mbradford, know that while there is plenty of room for growth in this business, it is in many ways already very saturated. Consistently good lead sources are scarce and usually sell the same lead to multiple parties at once. These leads are then recycled and sold as aged leads later on, keeping constant pressure on your existing portfolio. Many qualified merchants aren't just funded by one lender, but by two, three, four, and even five at a time. Part of the problem is that there really aren't UNLIMITED fish in the sea so when a small business signals they need capital, everyone jumps on top of each other (stacking) to fund it.

Everyone is sending out mail, cold calling, voice broadcasting, mass texting, mass e-mailing, PPCing, and everything else. You might get some smug answers on here, but part of the reason is that to teach a newbie means grooming the competition. Margins are shrinking, marketing is becoming more expensive, and the payment processing residual model is dwindling because of the rise of ACH.

You can go door to door, but they probably get 10 calls per day already and a piece of mail every other week with an offer, and solicitations from their OWN payment processor included with every monthly statement. This doesn't mean you can't do well, it's just a really tough time for a newbie to get started. This is a 15 year old industry that is on the verge of crossing over from a relatively small niche market to a mainstream corporate sector of finance.

You can work very hard for 10 deals and all 10 can get declined in 15 minutes. You need volume and lots of it. In some cases, these deals are a multilayered close. You're not selling them 20k, getting them to sign a contract and then walking away. You need to close the merchant on how expensive this is relative to a bank loan, for split deals close them on changing their merchant account and a new rate plan, close them on new POS technology if their current technology isn't PCI compliant, close them on your service fee (if you're going to charge one), close them from not going with the 4 other companies they're talking to at the same time, close the underwriter on doing the deal, possibly close the payment processor on boarding the account if they have a history of chargebacks, close them on the fact that they may have to actually make 2 payments BEFORE they even get the money deposited in their bank account, close them on not taking a stack deal no batter how badly they want money later on, and close them on never going with a competitor instead of you in the future when 100 of them will make contact with your client in the first few months.

Some deals that are on ACH are easier, but the other competitive pressures are still there. That's the reality of this field right now. It's a bit of war zone.

[mbradford101]

mbradford, know that while there is plenty of room for growth in this business, it is in many ways already very saturated. Consistently good lead sources are scarce and usually sell the same lead to multiple parties at once. These leads are then recycled and sold as aged leads later on, keeping constant pressure on your existing portfolio. Many qualified merchants aren't just funded by one lender, but by two, three, four, and even five at a time. Part of the problem is that there really aren't UNLIMITED fish in the sea so when a small business signals they need capital, everyone jumps on top of each other (stacking) to fund it.

Everyone is sending out mail, cold calling, voice broadcasting, mass texting, mass e-mailing, PPCing, and everything else. You might get some smug answers on here, but part of the reason is that to teach a newbie means grooming the competition. Margins are shrinking, marketing is becoming more expensive, and the payment processing residual model is dwindling because of the rise of ACH.

You can go door to door, but they probably get 10 calls per day already and a piece of mail every other week with an offer, and solicitations from their OWN payment processor included with every monthly statement. This doesn't mean you can't do well, it's just a really tough time for a newbie to get started. This is a 15 year old industry that is on the verge of crossing over from a relatively small niche market to a mainstream corporate sector of finance.

You can work very hard for 10 deals and all 10 can get declined in 15 minutes. You need volume and lots of it. In some cases, these deals are a multilayered close. You're not selling them 20k, getting them to sign a contract and then walking away. You need to close the merchant on how expensive this is relative to a bank loan, for split deals close them on changing their merchant account and a new rate plan, close them on new POS technology if their current technology isn't PCI compliant, close them on your service fee (if you're going to charge one), close them from not going with the 4 other companies they're talking to at the same time, close the underwriter on doing the deal, possibly close the payment processor on boarding the account if they have a history of chargebacks, close them on the fact that they may have to actually make 2 payments BEFORE they even get the money deposited in their bank account, close them on not taking a stack deal no batter how badly they want money later on, and close them on never going with a competitor instead of you in the future when 100 of them will make contact with your client in the first few months.

Some deals that are on ACH are easier, but the other competitive pressures are still there. That's the reality of this field right now. It's a bit of war zone.

Jesus Christ almighty. Just kill me now

[Scott Williams]

Taking the Lord's name in vain definitely won't help you be successful.......

[Chambo]

Jesus Christ almighty. Just kill me now

Well, you are getting the blatant truth here, not some sugar coated sales pitch

[mbradford101]

I believe it. Guess I'll have to try it on the side, and see how it goes...

[CO1]

I was forced into this Industry by my brother and now I have a career! You have to give it a shot!

[CO1]

My brother is back to stocks, im still here!

[mbradford101]

My brother is back to stocks, im still here!

C01, what's your secret?

Can you share how you got started, how you market, and how you get 50-60 full packages, and end up funding 25-35 at the end?

If it's on other threads, I'll read them - just wondering if you can elaborate on what you do to make this happen

I've spoken with 5-6 lenders today so far (after submitting the ISO forms on their websites). So I'm getting setup with several and plan to go through the training materials on their sites. I asked one if he has many reps making 50-100K, and he said he had reps doing 500K per month making 7% ($35K per month gross). I assume at least 10K of that would go toward expenses and marketing. But that's still a lot more than I need to make. If I can even get to 5K per month net, I can pay the bills.

[mbradford101]

Also, one lender told me to focus on restaurants for MCAs, and OnDeck Capital explained that they do small business loans instead of HCAs, which he said were cheaper for the merchants and sounded like an easier sell. He also explained how low the bar was for their loans - like a 500 credit score, 3K in the bank, a couple thousand in processing, and at least a year in business, and said they dedcut by ACH, avoiding all the processing complications. (I think I remembered all this right, but details may be slightly different).

It might have been you (C01), but someone in one of the other threads said they were doing over 800K per month, mainly through ODC. So it sounds like using them may be one of the secrets. So far though, ODC is the only lender that said I'd need to pay a fee to get signed up ($95), which I guess isn't bad for being a newbie, since this probably weeds out the folks who aren't serious at all.

I'd still love to hear some more success secrets though

[CO1]

I have no secret, I have worked with a American Allied Funding, and than Capital Stack, now a company named First US Funding. And our lead source is press 1's and I am the director of ISO Relations and I do my sales as well. My secret is ISO's thats the secret to most of the big funding companies and the time when i started in this industry it was known but the ACH product was becoming more aware. And also depending on what points and the amounts you are selling and if you are putting your own fee on the deals. You need to know where to place what deal. Not all Funders might like the same deal. Some like specific ones than others. You need to place them right.

[CO1]

American Allied Funding was all UCC calling by hand.
Capital Stack was all Funding Universe AKA Lendio, Press 1 and recycled leads.
First US Funding is Press 1, UCC, Lendio, we might try Fax Blast, and mailers.

[Finance1]

Some really good posts here. This industry is far from a get rich quick scheme unless you are at the top of the food chain and even then...

I'm an ex-mortgage guy. I ran a great shop. We funded what we wanted on our warehouse lines and brokered the rest. Mostly a-paper so don't throw rocks! lol. Very profitable business and I probably don't need to explain why it all went down the tubes. I entered this space with the intention of being a funder but had to take my lumps first so we were a standard reseller. Oh boy did I learn a lot the first couple years...

You can't hide from the rates. They're high. Very high. Even premium price is a tough pill to swallow for a first time mca client with good credit. You have to learn to talk rates and get around those objections UPFRONT. If you are hoping to throw an offer out without setting any expectations first then you will hear a lot of crickets after you send the #'s.

I have a lot of different ways of explaining it depending on the client and I train my agents to do the same. I'm not in the front lines nearly as much as I used to be but I still jump in for fun. We have an advantage by being able to fund our own stuff but we don't fund every deal. If it doesn't fit our box we either syndicate or broker it. Earning trust and setting proper expectations before an app is even filled out is incredibly important to getting stuff funded. A simple "15 to 30 cents on the dollar over the next 6-12 months is the world we operate in. If you can't deal with those #'s then it's best that we part as friends before chasing a bunch of paper" works well for many (even these #'s are low for risky stuff). Dangle a premium price cookie or two but if you can't talk real rates and pre-sell then don't bother.

Niche's are best way to go if you are going to cold call. Call on a specific SIC code and talk about a special program just for them. Doctors and restaurants already have them but so does everybody else if you can sell from that angle. Stick with just a couple SIC codes and get used to the types of folks you are talking to. Remember every conversation. Share stories of the last call to the next call.

Get people to talk about their business. They LOVE talking about their business. Ask them what their first year was like and why they started in the first place. Once they open up a big big barrier is down. Drop the "you remind me a lot of a a client I'm helping get a new lift for his auto repair shop so he can add a mechanic AND MAKE MORE MONEY".

Put the cost in perspective. "If you put a new lift in your shop how much extra revenue can you make over the next 3-5 years? Wow, that makes the $6k cost of capital on the 25 ground seem really small". See?

I closed a pizza shop once with a brilliant line. I asked "If I walked into your pizza shop and said I'm going to buy $13k worth of pizza over the next 6 months but I wanted to pay $10k cash today, would you take it?". Merchant said in a heart beat. I told him the cash advance was almost the same thing. We're giving you $10k today in exchange for $13k of sales over the next six months. It clicked and he signed the deal.

This business is tough as hell. No two ways around it. But you can make a great living if you are good. There's a ton of agents out there who aren't. Way too many. That's the saturation part. Lotsa of not so good agents tossing each deal against 6 walls praying that they can close it and have a hard time even explaining it. Don't be that agent.