[Kevin Henry-Seacoast]

The reasons these companies do not make the profit compared to volume is because of HUGE operational costs. The operational cost went UP not down.

This is the # 1 reason for me believing in the 1099 model vs the w/2

If I make 1 million I am lean and mean on costs

Costs

Computers
Desks
Office
Phones
data leads
prossor
accountant
payroll

add a few more on

= 1 million...taxes...lower rate florida

Add costs in for brokers... ( leads ) same infrastructure...add more commission in. 10 million..pay out commission

When 1099 makes that money its very very low margins

Which is probably why, stock brokerage firms, insurance companies, Loan companies use the model as well...successfully

Correction-cost of funds went down. They appear to be working on operational costs while they are changing the model.

[Karen37a]

Correction-cost of funds went down. They appear to be working on operational costs while they are changing the model.

Changing the model to what?? 1099? lol

[Karen37a]

Lets get down to the nitty gritty

I can point out 5-6 MCA brokers who made 10 million( in total) 1099....but I won't

And people can keep changing the model...investors and wall st watch...how long does it take to make a profit ...geezus

[Kevin Henry-Seacoast]

Changing the model to what?? 1099? lol

No-getting cheaper funds from financial institutions that also send them customers rather than relying on funds from the secondary market like they did in the beginning. Get money from a large bank-Yeah we will give you $50Mil at LIBOR + 2 if you deploy that capital to the clients we send you. Vs. Hedge fund at LIBOR + 8 with an equity kicker and spend boat loads of money marketing for customers.

We do something similar. We provide lines to smaller factors and ABL shops that do smaller deals we will not do. It does not make sense for me to write a $50K factoring facility due to the size and scope of our firm. It just does not move the needle.... It does make sense for me to deploy $10Mil to a company that focuses on smaller deals and does it well. If a referral source calls me with a smaller deal....I refer them to a company that has a line with us. I don't make any money on that deal, but they hopefully will deploy my capital and when the Company grows to as size that makes sense for us....flip the client back to us.

[WestCoastFunding]

I love working with OnDeck. Hard to beat their pricing in this space.

[Kevin Henry-Seacoast]

I love working with OnDeck. Hard to beat their pricing in this space.

It's great to have a low cost of funds!

[Karen37a]

No-getting cheaper funds from financial institutions that also send them customers rather than relying on funds from the secondary market like they did in the beginning. Get money from a large bank-Yeah we will give you $50Mil at LIBOR + 2 if you deploy that capital to the clients we send you. Vs. Hedge fund at LIBOR + 8 with an equity kicker and spend boat loads of money marketing for customers.

We do something similar. We provide lines to smaller factors and ABL shops that do smaller deals we will not do. It does not make sense for me to write a $50K factoring facility due to the size and scope of our firm. It just does not move the needle.... It does make sense for me to deploy $10Mil to a company that focuses on smaller deals and does it well. If a referral source calls me with a smaller deal....I refer them to a company that has a line with us. I don't make any money on that deal, but they hopefully will deploy my capital and when the Company grows to as size that makes sense for us....flip the client back to us.

Great


They will make more money because they expanded into Australia and Canada ...and when those numbers come in I do not want them added into the USA numbers.

Cheaper costs of funds are always better...but we are not the Bank.

The cheaper cost of funds is reserved for A plus paper, a paper ( or secured instraments) to keep the defaults down.( they tightened their requirements as well)

The other grades HAVE to cost more, more risk = more return...simple investing concept or people do things like that french guy from lc club or the big short...( they hide the risk grade of paper= fraud)

If peoples business model is not working...that is on them...other people are very successful, dealing with riskier grades.

its very simple everyone should stay on their side of the street

[Kevin Henry-Seacoast]

Great


They will make more money because they expanded into australia and canada ...and when those numbers come in I do not want them added into the Usa numbers.

Cheaper costs of funds are always better...but we are not the Bank.

The cheaper cost of funds is reserved for A plus paper, a paper to keep the defaults down.( they tightened their requirements as well)

The other grades HAVE to cost more, more risk = more return...simple investing concept or people do things like that french guy from lc club or the big short...( they hide the risk grade of paper= fraud)

If peoples business model is not working...that is on them...other people are very successful, dealing with riskier grades.

its very simple everyone should stay on their side of the street

So what happens when the model of cheaper cost of funds and direct access captive customers leads to them reaching out to the same base for a riskier deal? Again....ONDK is deploying the capital, not the bank that has given them the line. If ONDK wishes to leverage the customer base and it makes sense, I bet they will gladly write a C paper deal with their cheap money.
Kinda like a factoring company that is owned by a bank does a facility for a company that has an ugly balance sheet and a tax lien. If it is a good client and you can manage the risk the deal gets done.....not at the same price as a cleaner company, but the deal gets done. There is nothing preventing any advance company from doing the same....so long as they are good at managing the risk.

[Karen37a]

So what happens when the model of cheaper cost of funds and direct access captive customers leads to them reaching out to the same base for a riskier deal? Again....ONDK is deploying the capital, not the bank that has given them the line. If ONDK wishes to leverage the customer base and it makes sense, I bet they will gladly write a C paper deal with their cheap money.
Kinda like a factoring company that is owned by a bank does a facility for a company that has an ugly balance sheet and a tax lien. If it is a good client and you can manage the risk the deal gets done.....not at the same price as a cleaner company, but the deal gets done. There is nothing preventing any advance company from doing the same....so long as they are good at managing the risk.

They need to fix whatever their issues are of stacking etc

I know the answers and hold the stacks down to almost nil...even on D paper

I will not disclose to competition on a message board

but its like you are saying, this credit card was 9 % and another one gave them one at 29%

or they took out a first mortgage and someone took a second

[Nunya]

Lets get down to the nitty gritty

I can point out 5-6 MCA brokers who made 10 million( in total) 1099....but I won't

And people can keep changing the model...investors and wall st watch...how long does it take to make a profit ...geezus

ONDK is not a broker. At this point they're a 100% balance sheet lender - there's different levels of infrastructure to run a broker shop vs. generating demand, selling, managing portfolio risk and servicing a $1B portfolio.

[Karen37a]

ONDK is not a broker. At this point they're a 100% balance sheet lender - there's different levels of infrastructure to run a broker shop vs. generating demand, selling, managing portfolio risk and servicing a $1B portfolio.

What does any of this have to do with profit

I made my point. I am off

( and I do not like being embarrassed all the time, wall st friends laughing at me because of someones earnings)

[Kevin Henry-Seacoast]

They need to fix whatever their issues are of stacking etc

I know the answers and hold the stacks down to almost nil...even on D paper

I will not disclose to competition on a message board

but its like you are saying, this credit card was 9 % and another one gave them one at 29%

or they took out a first mortgage and someone took a second

Fixing issues from when they started is part of the story that needs to be noticed. How many brokers from this board has an agreement with ONDK and others that can no longer do business with them for any paper and what happens when the clean up some of their past issues/reasons for the losses and expand their risk profile with a very large balance sheet. You don't survive in capital markets and financial services for long without evolving......

[Nunya]

What does any of this have to do with profit

It has to do with comparing origination volume with profit (which you did) for two entirely different business models. Broker and lender are not the same model.

[Karen37a]

It has to do with comparing origination volume with profit (which you did) for two entirely different business models. Broker and lender are not the same model.

There are Lenders who run hybrid models...successfully

The problem is you can't get rid of commissioned salespeople

Anyway, people can keep trying to do whatever ...wish for regulation and w/2 to save them

I am going to be the 1099 gal the whole way...and if it changes ...ill licence up..pass any future exams in a day and pay out w/2 ( less money) to everyone who works for me ( Because of increased operational costs and compliance)