[Finance1]

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.

Isn't an add on the same margin as the original deal though? I suppose OD needs to jack up returns on the existing book to keep defaults in line. They are thin compared to most.

[GRP Funding]

Isn't an add on the same margin as the original deal though? I suppose OD needs to jack up returns on the existing book to keep defaults in line. They are thin compared to most.

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.

[Finance1]

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.

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.

[GRP Funding]

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.

New deal, add-on, refinance - you're ALWAYS lending money that has already been repaid by someone. Add-ons just delay repayment of the additional funds. Unless the payment increases.

[Finance1]

New deal, add-on, refinance - you're ALWAYS lending money that has already been repaid by someone. Add-ons just delay repayment of the additional funds. Unless the payment increases.

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.

[GRP Funding]

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.

I agree that the duration is the same - but the add-on doesn't start to be repaid until the original balance is paid in full. So it's like giving someone a 6 month deal and only collecting in months 4-6. You're missing the opportunity to "turn" those funds into another deal. And another deal. And another deal. You lose more than just the economics on that one re-up. With that said, we're not against top ups. We do renewals here both ways. All depends on the customer's performance, balance, payment, amount requested, etc.

[MCNetwork]

I agree with GRP. A refi consummates the original deal and starts a fresh new deal. An add on still has a remaining balance that is at risk of default. .