[BuysYourDeclines]

Hello everyone,

I'm new here and hope my question isn't out of line with any of your policies. I had an idea for a business and I wanted to run one aspect past you, since you are much more knowledgeable about your industry than I am.

The crux of the matter: What do you do with your declines? Do they sit and collect dust? Can I buy declined leads from brokers? Is there any reason (regulatory, legal, contractual) that I couldn't do this?

Before the "selling confidential information to an internet stranger" pitchforks come out, let me tell you why I'm asking.

I am not a lender nor a financial broker. I have a background in business turn around, financial restructuring, debt mitigation, and business development. I have a history of working with struggling businesses to help them settle their debts, renegotiate contracts (leases, loans, vendor agreements, etc.) and get cashflow positive.

My theory is that if a company is getting declined for a loan (especially a high interest MCA that seem to be relatively easy to qualify for) that the decline is a symptom of other financial problems that they may be having (poor cashflow, low bank balance, bad credit, over extension of credit/creditors, multiple loans, poor AP/AR management, etc.). AND, I believe that receiving the loan may not necessarily solve their problems--since I have seen a number of companies use MCA funds to do things like pay their payroll...as opposed to growing their business (such as funding a PO).

I have been building a network of people who can provide services to help struggling businesses, but we need to find people to help. I want to connect people who need help with people who can provide help. And, make a buck in the process.

So, any input on this? Is this something that you as a broker would feel comfortable doing?

(I'm still in investigation mode, so I don't have the standard company credentials that you may ask for just yet).

Eager to hear your thoughts!

[Lenders.Marketing]

Nothing like throwing it out there. It would behoove you to to put your company name behind this as that is a requirement around these parts.

This should be an interesting thread...

[BuysYourDeclines]

Nothing like throwing it out there. It would behoove you to to put your company name behind this as that is a requirement around these parts.

This should be an interesting thread...

Ya, I'm hoping to learn from a discussion here.

I will provide credentials when I have them--again, we are in start up phase and I wanted to start by seeing if this idea has any traction.

[len@accfunding.com]

buyyourdeclines@corporateturnaround.com

[NoBigDeal]

buyyourdeclines@corporateturnaround.com

haha nice one

[BuysYourDeclines]

haha nice one

Good news is I'm not Corporate Turnaround!

But, sarcasm aside, this is a fair approximation of my intention--minus the reputation that they have.

[dpFund]

You might consider partnering with some of the esteemed members of this forum, rather than buying declines.

[BuysYourDeclines]

You might consider partnering with some of the esteemed members of this forum, rather than buying declines.

How do you mean? Partnering to offer financial and consulting services to their specific book of clients?

If I'm following you, this may get into revenue sharing and "fixing" businesses to better qualify for funding which could work, but wasn't my initial intention.

But like I said, I'm here to learn.

[Chambo]

Good news is I'm not Corporate Turnaround!

But, sarcasm aside, this is a fair approximation of my intention--minus the reputation that they have.

Debt restructuring is an auto decline in our industry.....you are the hyena and we are the lion...mortal enemies

[BuysYourDeclines]

Debt restructuring is an auto decline in our industry.....you are the hyena and we are the lion...mortal enemies

Perhaps the sardonic parallels to Corporate Turnaround are too strong that my message is getting lost.

The bottom line is this: do companies that have been declined for a loan have other financial issues that they need help addressing? My hypothesis is yes. If that is true, then these companies need help from someone other than a lender...someone who can help them fix the other issues with their business (cashflow, AP/AR management, debt, poor management structure, etc.). I would not say that this idea is an enemy of your industry.

It's out of the box thinking, for sure. But from the conversations I've had with various brokers so far, declines go in the trash. So, if I can turn your trash into treasure, and help a business with their struggles, is that worth it?

[bdshaw]

I understand what you are saying and deal with many of the same problems with present and potential clients. Thinking that cash solved all business problems seems to be a disease that is rampant here.
I know several people here that would be interested in getting help with restructuring and resolving management problems that know that additional cash is just one ingredient of success.
BTW, one of the best logos I've ever seen was on a refuse truck, Your Garbage is our Bread and Butter.
The others are correct about leaving your contact information. You don't need to have the credentials but you do need to make yourself available.
Bob

[jotucker1983]

BuysYourDeclines,

I have a couple of questions if you don't mind?

The crux of the matter: What do you do with your declines? Do they sit and collect dust? Can I buy declined leads from brokers? Is there any reason (regulatory, legal, contractual) that I couldn't do this?

- My declines go off into a "hold pile" where I will touch base in "X" number of months to see if said risk issue was resolved by the business internally, so they could qualify for said MCA product. This could be anything from waiting for MCA balance(s) to come down, to waiting for a credit score to go up.

- I would have to get permission from the client themselves to resell their information. In my opinion, "decline information" is sensitive/confidential and I would not just sell that off without the client's permission to be contacted by you about said services.

I have a background in business turn around, financial restructuring, debt mitigation, and business development. I have a history of working with struggling businesses to help them settle their debts, renegotiate contracts (leases, loans, vendor agreements, etc.) and get cashflow positive.

My theory is that if a company is getting declined for a loan (especially a high interest MCA that seem to be relatively easy to qualify for) that the decline is a symptom of other financial problems that they may be having (poor cashflow, low bank balance, bad credit, over extension of credit/creditors, multiple loans, poor AP/AR management, etc.).

This is true, in fact the reason the merchant is even considering an MCA type of product is because of at least one of these types of issues.

However, I have to make something known here. It would seem like our industry is here to "save" struggling businesses, that's just not the case. Our capital is being used mainly for some sort of growth investment by the merchant or something similar, it's not being used to help a struggling business "make it" to the next month because it's those businesses that usually go to collections.

So with that being said, it is usually the struggling businesses that are placed in our decline pile (the pile you want to purchase), to where all we can really do is wait until the business fixes whatever is going on before we are able to put an advance in there.

Which brings me to the question at hand, if the merchant can barely make it to the next month, what are you really going to do (other than throwing equity in there and changing leadership direction) to help them?

I have been building a network of people who can provide services to help struggling businesses, but we need to find people to help.

They are literally everywhere my friend. Finding businesses (or even individuals for that matter) who are screwed up financially and could use some "turn around capital", are a dime a dozen.

But it's as David Goldin from Capify said in deBanked, "Anybody can fund deals, but the talent is in collecting the money back with profit."

Funding struggling businesses who can barely pay the bills and can barely make it to the next month, is usually not a profitable venture. So seeing as though these are the types of businesses you want to help, again, the question is how are you going to truly help them other than throwing in equity and changing leadership direction (basically, taking over the business)? Helping them save money here or there by reducing expenses is "okay", but that's not going to truly turn around a business that can barely hold on.

[BuysYourDeclines]

JoTucker,

Thanks for the well thought out response!

- My declines go off into a "hold pile" where I will touch base in "X" number of months to see if said risk issue was resolved by the business internally, so they could qualify for said MCA product. This could be anything from waiting for MCA balance(s) to come down, to waiting for a credit score to go up.

Success is certainly in the follow up and in the situation you suggest, this business may not need anything at all other than to bide their time. However, this isn't the type of business that I'm looking to find. The businesses that I'm looking for are the ones who are being declined for reasons of financial instability. Maybe that are strong tradespeople (contractors, doctors, dentists, plumbers, etc.) who know their craft very well, but don't know how to run a business very well. I've seen this quite often where they are either in the field too much to manage the day to day business operations or they fall into the "I don't know what I don't know" category and make poor business decisions. I suspect the types of issues they are having are not simply going to fix themselves in time.

- I would have to get permission from the client themselves to resell their information. In my opinion, "decline information" is sensitive/confidential and I would not just sell that off without the client's permission to be contacted by you about said services.

I certainly understand the concern here. My original conceptual model was to buy declines and then have my team call them with a 'cold call' script and pitch business consulting services. Knowing that we, like you, would have a regression analysis, it could very well take 100 calls to sign 1 client.

However, if a better, more comfortable model is a direct hand-off, that could work as well. Something along the lines of a broker telling a business "Mr./Mrs. Business owner, I wasn't able to get you qualified for this loan, and to be honest, it looks like you have some larger problems than just your credit score. Would you be open to having a conversation with a business consultant who may be able to help you with x,y,z?"

That model could work, but I see some concerns with that. First, I'm pulling the broker away from their normal mode of operation. Second, I don't know how much due diligence brokers tend to do. I'm sure some do a LOT of diligence, while I have also heard stories of MCA lenders looking at 2 months bank statements and funding, not realizing those two months were the best two months in the businesses history. Again, this could be a better model, but would need more exploration.

Our capital is being used mainly for some sort of growth investment by the merchant or something similar, it's not being used to help a struggling business "make it" to the next month because it's those businesses that usually go to collections.

I believe herein lies my point. If your customers are using this short term, high interest funding for growth (funding PO, buying materials to finish a job, etc.) then they are doing the right thing. They are leveraging some of their cash to make it to the next payday. And once again, these are not the people I am looking for.

However, I have seen many examples of people who are using MCA loans to "make it" to the next month. Using short term, high interest cash to pay payroll, pay their bills, pay themselves, etc.

I had one client who had to have an emergency fix of his fire alarm/sprinkler system in his restaurant. It cost him $70k overnight, which was pretty much his entire surplus cash. So, he went out and got TWO MCA loans to help him with his carrying costs. Needless to say he fell behind.

Another example is a client who owned a car detailing franchise. She was grossing $60k in revenue a month, but she didn't know how to calculate profit margins, COGS, how to motivate her sales people, her prices were significantly lower than her competitors, etc. She had EIGHT MCA's that were taking a total of $25k each month from her income.

These are just two examples of what I have seen and these types of stories are serving as the basis for my hypothesis. These are people that need more help than just a cash infusion.

So, in the perfect world, funding gets used exactly as that--funding--but I think there are plenty of people out there who are not following that model.

So with that being said, it is usually the struggling businesses that are placed in our decline pile (the pile you want to purchase), to where all we can really do is wait until the business fixes whatever is going on before we are able to put an advance in there.

I said this above, but again, if it is not an issue that time can fix (credit score, existing loan balances, etc.) how are these businesses going to fix those problems without any additional help? The fact that these businesses are struggling is exactly the reason I want to contact them.

Which brings me to the question at hand, if the merchant can barely make it to the next month, what are you really going to do (other than throwing equity in there and changing leadership direction) to help them?

This is a great question. The simple, and non-explicit answer, is 'it depends.' Every business has a story and every business has a different circumstance and path to success. To speak from things that I have done:

- If a business has existing lawsuits, liens, or judgments, they could need help with settlement negotiation
- Look through their expenses and help them streamline their costs. Do they really need to be spending every dime they are spending
- Analyze their receivables. Are they getting paid on time? Is their profit margin what it should be? Are their prices where they need to be?
- Better training for their sales team. Are their sales pitches well written and effective? Is the compensation fair? Are the sales people motivated monetarily?
- Marketing. How are they reaching customers? Are they isolating the proper demographic? Are they getting good response results?
- Renegotiate existing leases. This could be property or equipment. If there is a decent history between the lessor and lessee, the lessor should be willing to help out. (I've been able to negotiate all kinds of arrangements including deferments, forbearance, reduced payment per month at a longer term, etc. )

These are just a couple examples, but hopefully this demonstrates that there really is a full service feel to the type of help these businesses could use.

Again, I'm not saying 100% of declines need this help. I'm saying I want to look through declines to find the 10% - 20% who DO need this help.

They are literally everywhere my friend. Finding businesses (or even individuals for that matter) who are screwed up financially and could use some "turn around capital", are a dime a dozen.

This is true. However, I wanted to look in a place that (it seems) not many people are looking. And again, I came here to learn. It's discussion like these that are going to help me refine my thoughts.

Helping them save money here or there by reducing expenses is "okay", but that's not going to truly turn around a business that can barely hold on.

That's the challenge. But any business owner who wants to fight to save their business would see it as a challenge worth undertaking. And they need an ally.

I look forward to more of your thoughts.

Best,

Doug

[BuysYourDeclines]

BTW, one of the best logos I've ever seen was on a refuse truck, Your Garbage is our Bread and Butter.

That is a great slogan!

And I will put my contact info in my profile...once I figure out how. Thanks!

[Arturo Quintero]

Hi, Jotucker you are realy good with this explanation. Got a couple of solutions of mine with this. Really an innovative discussion.

[FoxIso]

Good news is I'm not Corporate Turnaround!

But, sarcasm aside, this is a fair approximation of my intention--minus the reputation that they have.

So..then who are you?