[Triumph Capital]

I hope its not a big deal to ask these questions on this forum. My questions are:

How much money was pushed/sold in MCA and cash advance in 2016 as a whole?

Roughly how many ISO's and direct lenders are out there?

What is the main form of advertising for the industry to bring merchants in? Telemarketing, Tv, Internet?

What would an average ROI be for direct lenders in the industry if you averaged A paper to F paper

Who is the largest company as far as ROI? A paper lenders or D grade type lenders?

What is the total amount of yearly funding, roughly for business financing in america including conventional loans,sbla loans, credit lines,MCA, real estate backed loans and all commercial business financing?

How many employees/sales people to the largest direct lenders have roughly?

what is the attrition with cold calling and losing telemarketers?

[MCNetwork]

I'll tackle some of them. The general industry questions can be found on www.debanked.com

1. What is the main form of advertising for the industry to bring merchants in? Telemarketing, Tv, Internet?

Telemarketing and internet (SEO, PPC, Adwords)

2. What would an average ROI be for direct lenders in the industry if you averaged A paper to F paper

If the average factor rate (averaging A through F paper) is 1.30, commissions paid are 10%, default rates are around 10%, then gross ROI per transaction would be around 10%. If the funder does a lot of marketing, then ROI will drop to single digits. The key is to keep rolling over the payments coming in so the annual ROI as a whole will be much higher, so the theory goes. The main issue is that even single digit default rates can sink a funding company if the total dollars defaulted is still too high. Default rate as a percentage of customers is a meaningless metric. Defaulted dollars as a percentage of the overall portfolio paints an accurate picture.

3. Who is the largest company as far as ROI? A paper lenders or D grade type lenders?

I would think that the D grade funders would have a higher ROI. It's tough to tell because their default rates are pretty high.

4. How many employees/sales people to the largest direct lenders have roughly?

Not all direct funders have internal sales teams, but for the ones that do, the headcount at the large firms is probably 60-150

5. what is the attrition with cold calling and losing telemarketers?

Depends on the lead sources. If leads are good, the attrition rate is low. If telemarketers are calling UCCs all day, you'll probably have an 80% attrition rate.

[Yankeeman07]

I hope its not a big deal to ask these questions on this forum. My questions are:

How much money was pushed/sold in MCA and cash advance in 2016 as a whole?

Roughly how many ISO's and direct lenders are out there?

What is the main form of advertising for the industry to bring merchants in? Telemarketing, Tv, Internet?

What would an average ROI be for direct lenders in the industry if you averaged A paper to F paper

Who is the largest company as far as ROI? A paper lenders or D grade type lenders?

What is the total amount of yearly funding, roughly for business financing in america including conventional loans,sbla loans, credit lines,MCA, real estate backed loans and all commercial business financing?

How many employees/sales people to the largest direct lenders have roughly?

what is the attrition with cold calling and losing telemarketers?

Merchant Cash Advance(19 Viewing)
Purchases of future revenues (discussion only)

This Forum has a section titled " Everything else -
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[Cfairbank]

I=]
2. What would an average ROI be for direct lenders in the industry if you averaged A paper to F paper

If the average factor rate (averaging A through F paper) is 1.30, commissions paid are 10%, default rates are around 10%, then gross ROI per transaction would be around 10%. If the funder does a lot of marketing, then ROI will drop to single digits. The key is to keep rolling over the payments coming in so the annual ROI as a whole will be much higher, so the theory goes. The main issue is that even single digit default rates can sink a funding company if the total dollars defaulted is still too high. Default rate as a percentage of customers is a meaningless metric. Defaulted dollars as a percentage of the overall portfolio paints an accurate picture.

[/I]

Sorry writing quickly, but this area, which ties closely to the problems folks have calculating APR creates a gross understatement on both IRR and APR with just annualizing these terms (or setting to the same term) because you have to account for the TIMING and the Compounding of the interest in a fix-based product versus a fully amortizing product. So in most cases, people say a 6 month 1.3 is really a 60%APR, it's actually 109% on a daily pay (before the double dip and assuming no origination fee). But so few in the market get the difference, but it's HUGE to the business owner that renews (and for IRR, your investors!). If you are collecting cash flows on a daily basis, and presumably re-investinge them, your interest is compounding and your return (aka your IRR) is much higher. Just like with APR, MCAs or fixed repayment term loans will have grossly understated APRs if you simply annualize them; since the interest calculation was determined on the initial loan amount, NOT, as is usual in financial services, on the outstanding balance at time of interest payment. Therefore, with a fixed repayment loan you are paying ballpark double the interest (and have a much higher APR) on simply annualizing the product. Then the double dip, and see ya.

Anyways, my point to offer my view wasn't to call-out anyone. But this is what scares me. We spend so much time on education, because I KNOW folks will not look kindly on this industry if we can't calculate IRR on these product or APR. Every few months we have this same discussion. And it does scare me if we don't all get together and make sure at a minimum we know what we are selling (yes, i know the immediate response will be that MCAs can't calculate APR, which is true, but (a) fixed repayment lenders easily can; and (b) MCA can absolutely caclutate an effective APR for the product. And yes, I know they choose not to and view that is dangerous (that part is not my business).

Anyways, just wanted to chime in, not criticizing anybody or getting into apr/mca debate. Here is helpful info below:

https://www.breakoutfinance.com/apr-calculator/

Note how different it is when you change the payment frequency

And as always, here's the overview and calc for double dipping
https://www.breakoutfinance.com/doub...ing-explained/

[Karen37a]

The attrition rate in any sales organization, in any decade, 80s - now is Very very high.

There is a difference between a commission broker/agent who gets paid a lot of money and an hourly wage employee /draw vs commission or salary and commission.

It's Hourly and commission
hourly or commission
Salary only
Salary and commission
Salary or commission

Draw vs Commission
Commission only Rock stars

Unfortunately, brokers who make a lower salary and do not participate in the high gains think their way is the only way,and it really is slightly lower attrition,( they stick around for a paycheck) they also have lower closing ratios.
( so you eventually fire them, they do not quit)

Salaried employees and "inside" sales reps have a lower attrition rate. They also make less commission, bonus, residual income etc.

( there are some rock stars on the inside, some are on these boards but they took a more calculated risk)

So . If you are going to swing for the fences and be independent, expect higher commission, etc but expect most sales people to fall off all around you.And expect more expenses.

Most sales people do not know the difference between an inbound leads center and being fed leads or being a Hunter and have a hunters mentality and making the boo koo bucks.

There are only so many "real" Direct Funders and many many white labels. The avg for the industry is 1.30-1.35 and 7% commission if i had to guess.

Any sales organization, group or even a boy scout troop (if successful), is being led by a Leader. The success of the organization varies widely based on the Leadership ability of the ones in charge.

When I had branches nationwide in other organizations that I owned and sold. Some leaders/managers had the ability to have 50 brokers/agents in their organization. Some only had 3.

If you are paying someone, anyone will follow. Take the paycheck away and see who stays.

Running 1099 Commission only organizations for over 20 years has taught me about leading from the front and loyalty, integrity and the power of a great leader at work.I was very lucky to have some very powerful successful, wealthy mentors over the years. I can still call most of them friend.

I also learned that most people never get around to doing anything, they are in the think tank or planning phase forever. Also, they like to give advice or theories from the bottom.Time in business does not = competency.

It is not as easy as it looks and most are never going to make it. Be Careful who you take advice from. Good luck to you

[Karen37a]

PS. You should have just let me be "Karen under the radar who made a few friends "

Not directed at anyone in particular ***