[Zach]

There are a lot of changes looming on the horizon...


Technology is connecting merchants directly with lenders in a fast, simple fashion. Companies like fundera, buynance, and surely others are tapping into this technology to aim for volume-based market grabs (no disrespect to them, it's genius).

Originator's portfolios are being damaged by high commission payouts (CAN Capital paying 17 points up-front PLUS the funded amount on 18-month terms with a 1.24 buy rate). How long will high commissions last?

Lenders are gaining market share and word-of-mouth advertising to end users. Their marketing efforts and branding are increasing almost exponentially.

Direct mail returns are diminishing rapidly. Pieces that used to yield 1.25-2% response rates are now dwindling to 0.5-1%.

Competition is picking up. Maxing out deals and expecting to fund them is no longer the norm, unless you have a referral or a unique lead source.

Big money is buying in. Lending club goes public, CIT is buying in, Pawnee leasing starts windset capital...


The question is: is this the BEST time to be a broker... or the worst?

[cashguy]

Very good thoughts

[Jared_Weitz]

There are a lot of changes looming on the horizon...


Technology is connecting merchants directly with lenders in a fast, simple fashion. Companies like fundera, buynance, and surely others are tapping into this technology to aim for volume-based market grabs (no disrespect to them, it's genius).

Originator's portfolios are being damaged by high commission payouts (CAN Capital paying 17 points up-front PLUS the funded amount on 18-month terms with a 1.24 buy rate). How long will high commissions last?

Lenders are gaining market share and word-of-mouth advertising to end users. Their marketing efforts and branding are increasing almost exponentially.

Direct mail returns are diminishing rapidly. Pieces that used to yield 1.25-2% response rates are now dwindling to 0.5-1%.

Competition is picking up. Maxing out deals and expecting to fund them is no longer the norm, unless you have a referral or a unique lead source.

Big money is buying in. Lending club goes public, CIT is buying in, Pawnee leasing starts windset capital...


The question is: is this the BEST time to be a broker... or the worst?

I think for brokers just starting now it would be tough to build a brand. If you have a broker who has been around a while and has money on the street also then chances are that broker's relationships and AR may allow him to ride along side with the big boys. I think the key is to have some skin in the game because you're right, big comms won't be here forever and if the average CPA keeps rising due to higher competition the only way to sustain is to have that AR and/or like you mentioned have some referral sources and proprietary lead sources.

[Scott Williams]

Broker shops with high cost will get hurt the most. If a broker shop needs to make 10-12% on each deal to make money after paying out commission, marketing, etc....then that's going to be a problem. Broker shops that run lean and can still be profitable making 6% on each deal will be fine.

[Andy]

I think there will always be a need for a good broker. Just as I would take my car to a mechanic to get it fixed because I am no auto repair expert, a smart business owner should use a good broker to get business financing. A business owner does not know all the direct lenders, and what types of deals each lender prefers. And therefore does not know who will give him the strongest approval at the lowest cost. By going to a direct funder they are limited to only the programs offered by that funder, whereas a broker has access to many more options. I have to say it is very rare that we get a merchant with an existing balance with a competitor, and we are not able to beat the merchants previous deal.
The catch of course being that the business owner must use a GOOD broker, one that is not short term commission focused and charging a bunch of junk fees.

[Chambo]

There are a lot of changes looming on the horizon...


Technology is connecting merchants directly with lenders in a fast, simple fashion. Companies like fundera, buynance, and surely others are tapping into this technology to aim for volume-based market grabs (no disrespect to them, it's genius).

Originator's portfolios are being damaged by high commission payouts (CAN Capital paying 17 points up-front PLUS the funded amount on 18-month terms with a 1.24 buy rate). How long will high commissions last?

Lenders are gaining market share and word-of-mouth advertising to end users. Their marketing efforts and branding are increasing almost exponentially.

Direct mail returns are diminishing rapidly. Pieces that used to yield 1.25-2% response rates are now dwindling to 0.5-1%.

Competition is picking up. Maxing out deals and expecting to fund them is no longer the norm, unless you have a referral or a unique lead source.

Big money is buying in. Lending club goes public, CIT is buying in, Pawnee leasing starts windset capital...


The question is: is this the BEST time to be a broker... or the worst?

I posted about this in a different thread a little while ago. All these fly by night brokers are in for a rude awakening if they don't clean up their acts.

[Chambo]

I think there will always be a need for a good broker. Just as I would take my car to a mechanic to get it fixed because I am no auto repair expert, a smart business owner should use a good broker to get business financing. A business owner does not know all the direct lenders, and what types of deals each lender prefers. And therefore does not know who will give him the strongest approval at the lowest cost. By going to a direct funder they are limited to only the programs offered by that funder, whereas a broker has access to many more options. I have to say it is very rare that we get a merchant with an existing balance with a competitor, and we are not able to beat the merchants previous deal.
The catch of course being that the business owner must use a GOOD broker, one that is not short term commission focused and charging a bunch of junk fees.

The invention of the internet didn't do away with Stockbrokers and Financial Planners. We still go to brick and mortal stores, instead of buying everything online.

the market is changing however, and "the old ways of doing business" really won't fly. I agree with some of the above posts. The reps out there who have done right by their merchants and looked at this industry long term will continue to exist and most likely thrive (I have been hearing there are only 2-3 years left in the business for 9 years now)

[freddy]

The way I look at it - Brokers are an integral part of our success - their ability to bring deals to the table which we would not have seen only opens the doors to more opportunity.
As for the internet - it has solved many issues and made our world much smaller - for better and for worse.
But service industries are better served by human beings than by icons, cursors or automated information. For example.
Last year in January I was in Las Vegas for a marketing conference. I was scheduled to leave on a Tuesday morning. The flights were all cancelled due to an impending storm.
I needed to re-book myself - I went online, the flights were all booked or were going Las vegas to Chicago (In january? Are you kidding?) Las Vegas to Dallas...five hour layover - it was a mess.
Finally I decided to call my old travel agent, Whiz Travel. Within five minutes I received my e-ticket in my email inbox with an aisle seat! The flight was sold out but one seat had opened up which I never would have seen on the internet. I got to the airport and the flight was overbooked and several people were given vouchers to take a later flight.
I stayed in my seat and in 5 hours I was in JFK airport.
My point?
Our business is about service - brokers - the good brokers will always been an asset to a private funder like mine. We pay extra commissions for the top ISO/Brokers as a thank you.

In the end only the strong will survive - all the stackers and pretenders will be in another industry trying to mess that up - we are here to stay. ISOs are welcomed.

[Chambo]

The way I look at it - Brokers are an integral part of our success - their ability to bring deals to the table which we would not have seen only opens the doors to more opportunity.
As for the internet - it has solved many issues and made our world much smaller - for better and for worse.
But service industries are better served by human beings than by icons, cursors or automated information. For example.
Last year in January I was in Las Vegas for a marketing conference. I was scheduled to leave on a Tuesday morning. The flights were all cancelled due to an impending storm.
I needed to re-book myself - I went online, the flights were all booked or were going Las vegas to Chicago (In january? Are you kidding?) Las Vegas to Dallas...five hour layover - it was a mess.
Finally I decided to call my old travel agent, Whiz Travel. Within five minutes I received my e-ticket in my email inbox with an aisle seat! The flight was sold out but one seat had opened up which I never would have seen on the internet. I got to the airport and the flight was overbooked and several people were given vouchers to take a later flight.
I stayed in my seat and in 5 hours I was in JFK airport.
My point?
Our business is about service - brokers - the good brokers will always been an asset to a private funder like mine. We pay extra commissions for the top ISO/Brokers as a thank you.

In the end only the strong will survive - all the stackers and pretenders will be in another industry trying to mess that up - we are here to stay. ISOs are welcomed.

and what funder would that be?

[freddy]

Business Credit & Capital
freddy@bccfund.com
347-560-2346

[WhoisKingsley]

Wouldn't now be the best time to be a "broker"? This is my first post but not my first time on the forums. I've been following and reading up on the changes and opinions of others for months without speaking a word. The term "Broker" scared me away at first. You think- no one wants to work with a broker when they can find the source directly. But then you think, what if that one source doesn't approve what you want... on to the next? So being a broker is a good thing! UNFORTUNATELY though- there are many greedy horrible brokers out there that give the good guys a bad name. It's all about representation of yourself and how your represent the lenders/products that you are brokering for them.

[1StopFunding]

Amanda you're on point!

[ERS]

Its all about "Adapt or Die". The definition of Broker is ever-changing. Either we adapt to change or we get left by the wayside. I personally think its a great time to be a Broker! The current market just means we need to up our game in order to stand out. There will always be clientele that prefers to pick up the phone and talk to their "Advisor" versus simply being a number. This business is all about nurturing relationships....and website has yet to develop that ability.

[J.Celifarco]

All the points made here are good, and YES the industry is definitely changing. That said I think one thing has been true since I started in this business and that is if you are fair and honest with your clients then you will have a place in this industry and have a chance to last. If you aren't then you won't. Brokers will always be needed in one form or another, it will be the ones who adapt to the changes in the Industry and treat their clients right that will be the ones left standing

[nwarshaw]

I see a lot of talk about change, adapting to change, etc. How much change would you be willing to accept?

As an example:

Would you sign a 1st right of refusal with a large funder?
Would you go through a funders certification course to become registered as an approved vendor/broker?
Would you sign a funders promise guidelines? To not xyz, or to always xyz - centered around stacking and disclosure
Would you let commission rates fluctuate based on you broker default %, loaded and shared in an industry database?
Would you pay an annual fee for the right to carry a product or brand?
What if the association had a license, and funders only allowed licensed brokers - would you pay to get a license from the association, would you take classes and a test?
(think real estate agent, think insurance broker)

[ghop]

I see a lot of talk about change, adapting to change, etc. How much change would you be willing to accept?


(think real estate agent, think insurance broker)

Nathan Warshaw
President
Warshaw Consulting
770-704-7876
770-500-2437
nawarshaw@gmail.com

think not using a gmail account if you wanna be taken seriously
funders promise guidline? funders who don't "opt in" will be stacking them regardless...welcome to capitalism bud

[WhoisKingsley]

Change is good but you don't need to reinvent the wheel. I understand brokers are shopping contracts but your 1st rights of refusal have to be real good and you need to build a relationship before you make that decision. I think it should be up to the discretion of the lender/broker before making that decision. Any training a lender can offer at a fee or exaggerated UW guidelines are a plus and I think any broker should sign to promise to keep the integrity of the business. A disclosure should be made if you are working with a direct lender vs. a rep for a company (i.e. All of the overused titles)- a set % should be worked on depending on what the broker has to offer. You pay junk, you get junk. I don't believe it will ever get to the point where you would need a license to be a "Broker" but I do believe if you have a company with UW on hand and can make decisions to assist and syndicate, there should be. Just my opinions

[FundersCloud]

The way I look at it - Brokers are an integral part of our success - their ability to bring deals to the table which we would not have seen only opens the doors to more opportunity.
As for the internet - it has solved many issues and made our world much smaller - for better and for worse.
But service industries are better served by human beings than by icons, cursors or automated information. For example.
Last year in January I was in Las Vegas for a marketing conference. I was scheduled to leave on a Tuesday morning. The flights were all cancelled due to an impending storm.
I needed to re-book myself - I went online, the flights were all booked or were going Las vegas to Chicago (In january? Are you kidding?) Las Vegas to Dallas...five hour layover - it was a mess.
Finally I decided to call my old travel agent, Whiz Travel. Within five minutes I received my e-ticket in my email inbox with an aisle seat! The flight was sold out but one seat had opened up which I never would have seen on the internet. I got to the airport and the flight was overbooked and several people were given vouchers to take a later flight.
I stayed in my seat and in 5 hours I was in JFK airport.
My point?
Our business is about service - brokers - the good brokers will always been an asset to a private funder like mine. We pay extra commissions for the top ISO/Brokers as a thank you.

In the end only the strong will survive - all the stackers and pretenders will be in another industry trying to mess that up - we are here to stay. ISOs are welcomed.

You raise an important point that I see as pivotal for the future of the MCA industry. Humans can provide a personalized and direct service that computers cannot always provide — but why opt for one over the other when we can capitalize on both computers and humans to enhance the industry and broker career entirely?

In today’s digital world anyone and everyone risks being voided by technological advancements; the key is to utilize those developments in the most advantageous way for your job- a way that lets you be more effective and productive in how you work.

Over the past two years we developed an online platform to do just that- to provide brokers with the technology to systematize and expedite the deal-closing process from start to finish. The interface is a one stop shop where brokers can easily find lenders, communicate among clients, and streamline paperwork, all in a few clicks.

Brokers don’t need to be left out of the digital process; they can join it and take the reigns to be active agents, customizing and personalizing their platforms. At the end of the day its about bringing together all available resources to get the best job done as fast as possible.

- Sam Shapiro Founder/Senior VP

[MTY MSI]

Sam, could you post details & a link for the online platform you're describing?

[FundersCloud]

Sure. The FundersCloud system allows you to:

- manage your reps and office, and create sub-users with our free CRM
- generate instant deals with the electronic merchant application
- run credit on your merchant once for multiple offers with our API
- access a database of 20+ funders to elicit multiple offers
- expedite deal-closing with automated contracts, ready to be signed

I’d be happy to link you into one of our daily 2pm demos where I can walk you through all of the features on the interface. Call 1-888-255-2199 Ext 102 for general inquiries or to sign into the demo.

You can find our website (that is constantly being renovated) HERE.


- Sam Shapiro Founder/Senior VP
FundersCloud

[JayBallentine]

Sure. The FundersCloud system allows you to:

- manage your reps and office, and create sub-users with our free CRM
- generate instant deals with the electronic merchant application
- run credit on your merchant once for multiple offers with our API
- access a database of 20+ funders to elicit multiple offers
- expedite deal-closing with automated contracts, ready to be signed

I’d be happy to link you into one of our daily 2pm demos where I can walk you through all of the features on the interface. Call 1-888-255-2199 Ext 102 for general inquiries or to sign into the demo.

You can find our website (that is constantly being renovated) HERE.


- Sam Shapiro Founder/Senior VP
FundersCloud

Nice going Sam!

Anyone considering FC - know that Sam and Co. have busted their hump the last two years to get it right! FC is an incredible resource for brokers. I was blown away by the sneak peak I got months ago.

You will save time and money, because time is money. Pass those savings to your clients!!!

[FundersCloud]

Thanks Jay! We appreciate it. Jay is also working on some incredible tools. We love collaborating to make the industry stronger. Thanks for the kind words.

[GRP Funding]

Sam - good to see that you are still at it. Looks good.

[FundersCloud]

Glad you think so Brian. What are you waiting for- get on the system! Or if you're not yet convinced let one of our daily demos convince you.

[OC Funder]

Nathan Warshaw
President
Warshaw Consulting
770-704-7876
770-500-2437
nawarshaw@gmail.com

think not using a gmail account if you wanna be taken seriously
funders promise guidline? funders who don't "opt in" will be stacking them regardless...welcome to capitalism bud

I think most of us know who Nathan Warshaw is, regardless of which email he chooses to use. Anyone who has funded real volume in this space knows that name.

For years I have heard lenders lament the activity their brokers engage in... stacking, gauging merchants with additional fees, unscrupulous marketing techniques, etc. There has never been any real consequences for this behavior, which I think is why so many fear future regulation. However, it seems like there is a shift by some of the larger funders to clean up the space. I know On Deck has recently terminated their relationship with dozens of partners, and CAN has become extremely selective about signing up new brokers. I hear other players are reevaluating who they partner with as well. It wouldn't surprise me if minimum monthly requirements become regular to keep relationships.

Even with all the money and technology currently available, brokers still make up a majority of the volume funded and I don't think this will change anytime soon. However, the barrier to entry is definitely higher than it used to be.