[JMKFunding]

Rate this deal:

Loan amount = $22,000.00
Payback = $30,340.00

Merchant nets $ 20,000.00

Factor is 1.380
Daily Payment is $198.00

To my knowledge the merchant does about 500K in sales - mostly credit cards and does online business primarily

I want to know if it is expensive, fair or cheap

[isaacdstern]

What's his fico? Does he have open tax liens? Any criminal history?

[MCNetwork]

Looks like an 8 month 1.38 which is an average factor in our industry. As to whether or not it's expensive, fair or cheap, that depends on the customer's credit and business profile and what other options are available to him. If he's got 760 credit and a bank line of credit of 12%, then this is expensive. If he's got 500 credit, tax liens and just got out of bankruptcy then this is cheap.

[JMKFunding]

610 credit and no liens or bankruptcies

You think the fee is fair??

[MCNetwork]

610 credit and no liens or bankruptcies

You think the fee is fair??

The term "fair" is highly subjective. You are selling the use of proceeds, not just the factor. I can sell a 1.45 factor and make it a great deal for the merchant. It all depends on your skill as a salesman.

[JMKFunding]

It has to do with my business model does it not - more than my ability to sell?

[isaacdstern]

What are the margins? We got an app last week where the merchant had gross sales of 10MM a month but was working on 1.75% margins....top line is important but it's all about the bottom line

[Scott Williams]

Why is the merchant netting 20k? Are you paying off a competitor balance of 2k or trying to charge a 2k origination fee? If you are charging a fee, then that 1.38% just turned into a 1.52%

[bostriba]

Exactly! It becomes a 1.52. Does that seem a fair deal for a business with score over 600 and no obvious issues.? The only issue is that business is seasonal and in
slow time now.

[risp999]

8 months? That's a fair deal. People are always buying a payment anyways.

[JSL23]

The terms are fine. 1.38 7.5 months for $20,000 is great for a Merchant grossing $30k-$75k. For someone doing $500,000 in sales.... I don't know.

On the other hand if his margins are low and/or he is seeking a similar amount, it is fine, depends on your skills as a Salesperson, as others have said.

Is he depositing $500,000? Does his P&L/balance sheet reflect that. It's like 1 day worth of sales..... I don't know all the facts, but I don't think it's your business model or the factor, just the amount offered is a potential problem.

[JMKFunding]

Appreciate the feedback! thx!

[funding pro]

The terms are fine. 1.38 7.5 months for $20,000 is great for a Merchant grossing $30k-$75k. For someone doing $500,000 in sales.... I don't know.

On the other hand if his margins are low and/or he is seeking a similar amount, it is fine, depends on your skills as a Salesperson, as others have said.

Is he depositing $500,000? Does his P&L/balance sheet reflect that. It's like 1 day worth of sales..... I don't know all the facts, but I don't think it's your business model or the factor, just the amount offered is a potential problem.

I read it that he meant $500k annually, but I could be wrong. Still merchant could qualify for more assuming good banks, TIB and quality of the credit report.

[GRP Funding]

Looks like a 7 month 1.38 to me. How much commission is built into that rate? Hopefully a lot. The rate is pretty high.

[rld]

Like others have said.. it looks like an average offer.

I would hope with a 600+ FICO and no problems with his business that you are making enough commission off this deal to where you could cut some of it out and get him under 1.35. That is what I would personally do anyway. I did a deal recently where the guy had around the same FICO and did around $800k a month.. sold him at 1.28 and still made 8% off the deal (100k deal @ 7 months) so you can definitely make good money off a lower factor if you are willing to shop around.

One thing I have noticed in this industry.. the best salesman in the world isn't going to get a sale if the deal doesn't make business sense to the person buying it. The only time that salesmanship really comes in handy is when someone really needs the money but is on the fence about whether or not to go with you or the other guy and you are close to his factor and term. Otherwise it is all about whether or not a deal makes sense for the business.

[Jared_Weitz]

Rate this deal:

Loan amount = $22,000.00
Payback = $30,340.00

Merchant nets $ 20,000.00

Factor is 1.380
Daily Payment is $198.00

To my knowledge the merchant does about 500K in sales - mostly credit cards and does online business primarily

I want to know if it is expensive, fair or cheap

8 month 1.38 with no fees is still high for this merchant from what you're describing.

[JSL23]

I read it that he meant $500k annually, but I could be wrong. Still merchant could qualify for more assuming good banks, TIB and quality of the credit report.

If it is $500,000 annually, then it is a decent offer, could be a couple of points less and I hope for the Merchant's sake that isn't a buyrate. Certainly doable if the $500,000 is his annual revenue. Anyone who gets about 50% of their monthly gross for a manageable amount has a legitimate offer on the table.

[OldFundingHound]

It's a 1.52 factor no matter how you slice it, even if he's paying off an existing balance. but 1.38 is about average.
It's a good deal if the merchant needs the cash and you can put that cash in their hand.
So what's the problem?
He's not bank quality with a 610 score.
Selling isn't telling. Price is what you pay...VALUE is what you GET. So $20K in his hand and assuming he needs it for a damn good reason...that's the value. I'd quit wrestling over it, fund it, rinse and repeat. That's the business.

[Zach]

One thing I think people aren't noticing is:

"To my knowledge the merchant does about 500K in sales - mostly credit cards and does online business primarily"

Do you REALLY think that an online retailer is going to qualify for a 1.3 over 12 months?

This guy is lucky to get his 1.38 over 7. It's probably from yellowstone or rapid.

[JMKFunding]

I talked him into it after 10 weeks. So he ain't begging. What's it worth to him?- a lot less than to most other guys. If it has less value to this guy then the product needs to be priced accordingly.

It's a 1.52 factor no matter how you slice it, even if he's paying off an existing balance. but 1.38 is about average.
It's a good deal if the merchant needs the cash and you can put that cash in their hand.
So what's the problem?
He's not bank quality with a 610 score.
Selling isn't telling. Price is what you pay...VALUE is what you GET. So $20K in his hand and assuming he needs it for a damn good reason...that's the value. I'd quit wrestling over it, fund it, rinse and repeat. That's the business.

[AMERICApital1]

I have a 22k deal at 1.38 (8pts markup) with 395 ach fee and 295 origination fee. I feel that it is a fair deal but wish the lender would waive origination fee...

[Chambo]

I have a 22k deal at 1.38 (8pts markup) with 395 ach fee and 295 origination fee. I feel that it is a fair deal but wish the lender would waive origination fee...

That sounds like an SFS deal. They'll remove it, no problem...but it is coming out of your commissions

[AMERICApital1]

yes but selling it at 8 pts im sure there are other lenders out there that do not have such fees. im contemplating sending it to bfs due to what's going on w them...not sure if snap or rapid would be a better fit...thoughts?

[Quickfunder]

The term "fair" is highly subjective. You are selling the use of proceeds, not just the factor. I can sell a 1.45 factor and make it a great deal for the merchant. It all depends on your skill as a salesman.

Can you elaborate? Merchants hardly ever disclose to me their intentions for the money. For all I know, they want to buy their daughter a car or get a new boat. Every time I ask, I get a vague "Um, some equipment. I guess..."

If I HAD the opportunity to actually discuss margins on the money, I'm confident I could sell higher factors also. But as to how all you veterans out there even get into that, I don't know. My clients seem to just want an approval and the money and not discuss with me the need. They get 1,000 phone calls a day.

If they do want to talk ... I take it as a bad sign they have bad criteria. "Well.. You see, I got into this misunderstanding with one of my vendors. And I didn't know I was late on my taxes." Etc, etc.

[JSL23]

Can you elaborate? Merchants hardly ever disclose to me their intentions for the money. For all I know, they want to buy their daughter a car or get a new boat. Every time I ask, I get a vague "Um, some equipment. I guess..."

If I HAD the opportunity to actually discuss margins on the money, I'm confident I could sell higher factors also. But as to how all you veterans out there even get into that, I don't know. My clients seem to just want an approval and the money and not discuss with me the need. They get 1,000 phone calls a day.

If they do want to talk ... I take it as a bad sign they have bad criteria. "Well.. You see, I got into this misunderstanding with one of my vendors. And I didn't know I was late on my taxes." Etc, etc.

Ask them again. I don't know if I'd call myself a veteran after 9 months, but I have plenty of experience in B2B Sales and know that prequalification is key. I have seen too many people just talk at Merchants and not listen to them enough OR just act grateful to get a submission.

If they are hesitant to speak at first is because they get called all the time and are guarded, not wanting to talk to Salespeople. Once you get their application requalify them. If they are vague, tell them "Some equipment.....I guess won't fly with your bank, can you please be more specific?" I've found if you just shut up for a minute people are happy to open up to you and give you all the info you need to get the job done.