[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. .

[GRP Funding]

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. .

On a refi, the balance gets rolled into the new deal. The original deal might get marked as paid off in your system, but the merchant still has the money. The balance still has a risk of default until it's collected. The "factor on factor" should help cover that added layer of risk. The factor should also cover those funds being extended or started over.

[HannahBernstein]

On a refi, the balance gets rolled into the new deal. The original deal might get marked as paid off in your system, but the merchant still has the money. The balance still has a risk of default until it's collected. The "factor on factor" should help cover that added layer of risk. The factor should also cover those funds being extended or started over.

What is factor on factor? Does that mean that the funder charges the merchant same factor twice on the new deal?

[GRP Funding]

What is factor on factor? Does that mean that the funder charges the merchant same factor twice on the new deal?

If the merchant has a $5k balance and refinances - the funding company would write a new $10k deal and use $5k to pay off the existing balance. The merchant would pocket the other $5k.

On your other question before that - If Company B was giving the merchant $20k and the merchant had a $10k balance with Company A - the merchant would end up getting $10k and Company A would get $10k. So Company B would still write it as a $20k deal and would get paid as so.