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07-08-2014, 08:23 AM #1
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I really don't know any funders that do add-ons. I only see add-ons done for good clients that are not yet eligible for renewal. Pretty much every funder steers merchants to do renewals and my merchants don't really seem to care. They just care about how much money they will net and whether they can afford the monthly payments.
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07-08-2014, 08:44 AM #2
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there are actually a few good funders out there still offering the option of either or. Of course a funder will qualify a merchant faster if they take the renewal but I do know some sensible funders still offering it. Some funders like an ODC for instance can't offer a re-up as they do not have the margins to do so.
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07-08-2014, 10:46 AM #3
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07-08-2014, 11:03 AM #4
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Not unless you increase the daily payment or holdback percentage. If you do an "add-on" for the merchant without increasing something, you're basically putting money on the street and paying commission on a deal you won't collect a penny on until the first balance is paid.
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07-08-2014, 11:32 AM #5
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Not sure I agree. Same time vs money. When doing an add on you are only re-lending money that has already been repaid. Capital exposure is the same as or decreases from the original deal unless you are re-upping for a larger amount. Doing add ons keeps turning the same money at the same return over the same period of time.
I can see the concern for funders when commission is involved though. That does add an additional layer of risk on the margins.
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07-08-2014, 11:43 AM #6
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07-08-2014, 11:53 AM #7
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I guess we'll just have to agree to disagree. Add ons and refi's have the same duration. Refi's just double the cost of the second round.
Maybe I'm missing something but doing a 6 month add on 3 months into the original deal pays at the same speed and doing a 6 month refi 3 months into the original deal. The only difference is the margins.
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