[MCNetwork]

Only the broker knows if there's 10-12 points built into an offer. The merchant doesn't have access to buy rates so he doesn't know what the wholesale/retail numbers are. The broker's job is to present the funding amount, the payback amount and the daily payment and just sell the deal. If there is a competing offer on the table, then you start lowering rates by playing good cop (you) and bad cop (your underwriter) until you're in position to win the deal. But you don't start your sales presentation by lopping off a bunch of points just because you feel uncomfortable or feel like you'll be undercut by someone else out there. There's no room for fear and self-limiting beliefs in this profession. These psychological hang ups will prevent you from being an effective salesperson and maximizing your commissions.

[abfunders]

Only the broker knows if there's 10-12 points built into an offer. The merchant doesn't have access to buy rates so he doesn't know what the wholesale/retail numbers are. The broker's job is to present the funding amount, the payback amount and the daily payment and just sell the deal. If there is a competing offer on the table, then you start lowering rates by playing good cop (you) and bad cop (your underwriter) until you're in position to win the deal. But you don't start your sales presentation by lopping off a bunch of points just because you feel uncomfortable or feel like you'll be undercut by someone else out there. There's no room for fear and self-limiting beliefs in this profession. These psychological hang ups will prevent you from being an effective salesperson and maximizing your commissions.

That's EXACTLY my point Archie. The job is not to "sell" the loan as is. The job is to make the client feel comfortable with the terms and the relationship. If you're "selling" the client telling them that you're on "their side," it's plain not true.

The "sales" job comes when you know that this actually is a decent option for the client that you have, they don't want to take it, and it's good. I think it's okay to rely on underwriters' experience that your client won't default.

[jotucker1983]

Guys I think this is an excellent discussion , mind if I chime in?

Only the broker knows if there's 10-12 points built into an offer. The merchant doesn't have access to buy rates so he doesn't know what the wholesale/retail numbers are.

The only issue with this Archie is that we are now dealing with an open marketplace on the internet where many companies are properly quoting merchants based on their Paper Grade. Now if the merchant does absolutely no shopping whatsoever and only talks to you, well, you could get away with (for example) pricing A Paper as if it's C Paper, so you can make 10 - 15 points on it. But if that merchant shops this around, if he's A Paper he's going to see A Paper offers out there and ask you to either become more competitive or just mark you off the list altogether.

I think it's a good recommendation (especially with today's competitive market) to "assume" a merchant might shop and to price within his Paper Grade. So if you pre-qual him and he's clearly A Paper, he has no business getting an offer for a 6 month 1.25 - 1.30. He should be priced anywhere from 1.12 to 1.18.

I agree with some of this. We have lost deals when the sub broker insisted on highest commission possible and not what's best for the customer. It is usually always, max max max on funding size and commissions. The direct sales side of the business doesn't have this pressure. They can undercut brokers all day long with lower rates and retention is better.

Great point! This is also why a lot of the A and B Funders/Lenders are doing away or minimizing their external Broker Model in some capacity. They realize that properly pricing a merchant based on their Paper Grade leads not to just winning the initial deal, but offers a higher probability of a renewal stream of additional deals for the next 12 to 60 months.

Funders/Lenders with in-house agents are able to operate like this in a profitable manner, however, the external Broker shops (in which most of them are poorly ran) need to get 10 points on nearly every deal to even attempt to survive.

[MCNetwork]

The only issue with this Archie is that we are now dealing with an open marketplace on the internet where many companies are properly quoting merchants based on their Paper Grade. Now if the merchant does absolutely no shopping whatsoever and only talks to you, well, you could get away with (for example) pricing A Paper as if it's C Paper, so you can make 10 - 15 points on it. But if that merchant shops this around, if he's A Paper he's going to see A Paper offers out there and ask you to either become more competitive or just mark you off the list altogether.

John, most merchants don't have the faintest clue where to begin shopping around. Most don't know who On Deck Capital is. The first quote they receive may well be from Yellowstone and they'll think that's the factor rate they're entitled to. They won't know where else to turn to because there are 750 other companies that pop up when you do a Google search for "business loan" and 90% of them are brokers. It's a minefield out there and merchants don't want their private information circulating in cyberspace. It's our job to help them navigate through the process, come up with a variety of funding options, tie them up with a nice red ribbon and present them.

[Karen37a]

John, most merchants don't have the faintest clue where to begin shopping around. Most don't know who On Deck Capital is. The first quote they receive may well be from Yellowstone and they'll think that's the factor rate they're entitled to. They won't know where else to turn to because there are 750 other companies that pop up when you do a Google search for "business loan" and 90% of them are brokers. It's our job to help them navigate through the process.

yep...we are the quote machine( broker)...not some internet thing...control the merchant

[abfunders]

John, most merchants don't have the faintest clue where to begin shopping around. Most don't know who On Deck Capital is. The first quote they receive may well be from Yellowstone and they'll think that's the factor rate they're entitled to. They won't know where else to turn to because there are 750 other companies that pop up when you do a Google search for "business loan" and 90% of them are brokers. It's our job to help them navigate through the process.

Archie's right about the many different options.
The problem is when you run into someone with an Amex or Paypal or Square (or up and coming Shopify) offer.... those things will be impossible to beat. Unless you "sell" them or "navigate" them to a different lender/offer that's worse off for them (they don't need more than 12 months, but you offer them 1.38 on less money (and "ignore" the fact that the PayPal deal is a 1.35 for more money - and then just focus on the payback "amount" is less), that's not called working for the client - that's called salesmanship.

[Karen37a]

Archie's right about the many different options.
The problem is when you run into someone with an Amex or Paypal or Square (or up and coming Shopify) offer.... those things will be impossible to beat. Unless you "sell" them or "navigate" them to a different lender/offer that's worse off for them (they don't need more than 12 months, but you offer them 1.38 on less money (and "ignore" the fact that the PayPal deal is a 1.35 for more money - and then just focus on the payback "amount" is less), that's not called working for the client - that's called salesmanship.

I would just tell the person...take that deal its the best thing for you ( if the numbers are correct at the final close) If not come back...if the dollar amount is negligible they will choose to work with a broker over automation all day, every day... if not you can possibly get the merchant back...if not....something called next

[Michael I]

John, most merchants don't have the faintest clue where to begin shopping around. Most don't know who On Deck Capital is. The first quote they receive may well be from Yellowstone and they'll think that's the factor rate they're entitled to. They won't know where else to turn to because there are 750 other companies that pop up when you do a Google search for "business loan" and 90% of them are brokers. It's a minefield out there and merchants don't want their private information circulating in cyberspace. It's our job to help them navigate through the process, come up with a variety of funding options, tie them up with a nice red ribbon and present them.

archie according to him on deck is a bad lender as i did a deal this week where they gave him 40% of gross.

[Karen37a]

archie according to him on deck is a bad lender as i did a deal this week where they gave him 40% of gross.

lol

[jotucker1983]

John, most merchants don't have the faintest clue where to begin shopping around. Most don't know who On Deck Capital is. The first quote they receive may well be from Yellowstone and they'll think that's the factor rate they're entitled to. They won't know where else to turn to because there are 750 other companies that pop up when you do a Google search for "business loan" and 90% of them are brokers. It's a minefield out there and merchants don't want their private information circulating in cyberspace. It's our job to help them navigate through the process, come up with a variety of funding options, tie them up with a nice red ribbon and present them.

I don't know if I completely agree with that lol. You can look up various reports about where most of the funding volume is going these days and where it's being generated, it's not coming from the traditional "cold calling" external broker model. The A/B Paper Funders are where the majority of the volume of the space is being generated with a large chunk of that coming from in-house origination, then many of those Funders have direct relationships with C/D Papers to send declines to.

I just disagree with the notion that a client with a 650 - 700 credit score, solid banks, no liens, and solid sales revenues, is just going to "take" whatever offer is first spit out at him without trying to get some sort of idea of what the marketplace is likely to price.

archie according to him on deck is a bad lender as i did a deal this week where they gave him 40% of gross.

So just to clarify, you sent a deal to On Deck this week with let's say the annual gross sales being $500,000 and they approved him for $200,000? If so, can you PM me the name of your On Deck Account Rep because I might need a new one lol.

The highest 1st position approvals I've seen were at 10% to 15%.

[Michael I]

So just to clarify, you sent a deal to On Deck this week with let's say the annual gross sales being $500,000 and they approved him for $200,000? If so, can you PM me the name of your On Deck Account Rep because I might need a new one lol.

The highest 1st position approvals I've seen were at 10% to 15%.

No merchant does 100k a month (1.2 million a year) they approved him for 185k where payments were 40k a month on the 6 month approval. I actually funded him 200k on a 12 month to be honest but the approval was there on the 6 month

[Karen37a]

No merchant does 100k a month (1.2 million a year) they approved him for 185k where payments were 40k a month on the 6 month approval. I actually funded him 200k on a 12 month to be honest but the approval was there on the 6 month

Good job...you were always great at placement...algorithms

[jotucker1983]

No merchant does 100k a month (1.2 million a year) they approved him for 185k where payments were 40k a month on the 6 month approval. I actually funded him 200k on a 12 month to be honest but the approval was there on the 6 month

Okay I see now, so they approved the client for 15% to 16% of their annual sales and they included a payment option in there were the payments would equate to about 40% of the monthly sales gross? I see now.

Well, this is a discussion forum and we are all just providing our "opinions" lol. I personally think payments on an MCA related deal being more than 20% of monthly gross starts to get into a little bit of shaky territory, but that's just my "opinion".

Since about 2016 I would say, On Deck has honestly been throwing out some crazy offers every now and then. I think they are used to being stacked on like hell and are throwing out crazy offers in an attempt to at least avert being stacked.

[fundingsmbs]

No merchant does 100k a month (1.2 million a year) they approved him for 185k where payments were 40k a month on the 6 month approval. I actually funded him 200k on a 12 month to be honest but the approval was there on the 6 month

Without knowing what type of business this is, most retailers and mom pops could not afford to have 40% of their monthly sales used to repay a debt after taxes and overhead. Most are lucky if they operate on a 20% profit margin and some operate <10%. Hopefully they used that money for the right ROI and it gets paid back, but, ODC can sell off large chunks of loans through securitization as evidenced through their historical off loading of loans. This works out well for the broker if they are funding everything and making it easy. That places a lot of pressure on the rest of the competition that may not be able to do this model. What usually happens is the merchant that didn't add addtl revenues with the loan, they borrow from other companies to repay the debt and the cycle begins of endless borrowing. The ADBs must have been very strong

[Karen37a]

Without knowing what type of business this is, most retailers and mom pops could not afford to have 40% of their monthly sales used to repay a debt after taxes and overhead. Most are lucky if they operate on a 20% profit margin and some operate <10%. Hopefully they used that money for the right ROI and it gets paid back, but, ODC can sell off large chunks of loans through securitization as evidenced through their historical off loading of loans. This works out well for the broker if they are funding everything and making it easy. That places a lot of pressure on the rest of the competition that may not be able to do this model. What usually happens is the merchant that didn't add addtl revenues with the loan, they borrow from other companies to repay the debt and the cycle begins of endless borrowing. The ADBs must have been very strong

I had people at 40%...it was a choice, 40% or the business goes under. I have to make the determination if the money will get paid back...and i am using my street smarts and book smarts...and then I am not the finanal decison maker..The Funder is

No matter what anyone says ( not directed at you fundingsmbs) Business get in financial trouble for numerous reason other than them being inept like some of the cash adbance brokers on this site who went out of business yet keep coming back to stir up trouble.
And this isnt a perfect world...some of them have cash or a second business ( structured thinkers saying box and vertical on the phone never really get to know their merchant)


So it comes right down to the nitty-gritty ...no one would take a cash advance EVER not even from A paper if they were in a great position. They wouldn't need a loan or advance.There are numerous legitimate reasons someone would want to stack... a vendor doesn't pay them ...rolling 90-120 days late on collections

Working capital
a hurricane
construction on the road in front of your restaurant, diverting traffic away.

I even had a lady whos town got flooded because the Dam broke.,... I actually sent in the weather papers and the reports to show it actually happened.

* MOst cant find out the real reason they want money( because they are not real salespeople and they are not smart enough to care because it isnt their money) and just say "inventory" "renovation"...meanwhile inventory really meant Mistress, renovation = casino

So now...you think it's unethical for me to get that woman more money? If her business wasnt flooded but just lost foot traffic for 2 weeks?
( I am pre underwriting the files..making MY decision if I want it funded...then telling the funders the crazy stories...they do not even want to know them anymore)

What is unethical is the brokers who can't think out of the box and only think about numbers and have no street smarts. Not smart enough to get down to the real root cause of the issue and determine if this person really deserves more money.
Some can't do it because you are BAD SALESPEOPLE... you think sales is a bad profession ...meanwhile sales = consulting and you will never ever never ever never ever get that idea no matter how many people tell it to you.

This is why I do not hire structured people ( technical is fine)... I can promise you I give this personality test and tell them ( this business will not be for you) for over 30 years ...I will not make an attempt at training them anymore.

Some of us actually work with the funders and lenders and say " this person actually had a dam break and I am not joking what do you want me to do"But I am in contact with the merchants, they like me. It wasn't a wham bam thank you mam ( I do not care that I print this only 5-10 % are going to make it and you cant dent my wallet...big lenders( banks) can dent us all)

Another thing...If the world was perfect I would be of NO VALUE to merchants...stop complaining and find the merchants who need help that will want to talk to you.


This is all flawed logic...if you use someone's logic no one would have a credit card or take out a personal loan or a mortgage from the bank without 20-30% down. And that is not my opinion its a fact


Where is the sell it like ser guy...get him here so he can teach me how to put on a Banna outfit and jump up and down to gain attention in the street

[Emoney]

Guys I think this is an excellent discussion , mind if I chime in?



The only issue with this Archie is that we are now dealing with an open marketplace on the internet where many companies are properly quoting merchants based on their Paper Grade. Now if the merchant does absolutely no shopping whatsoever and only talks to you, well, you could get away with (for example) pricing A Paper as if it's C Paper, so you can make 10 - 15 points on it. But if that merchant shops this around, if he's A Paper he's going to see A Paper offers out there and ask you to either become more competitive or just mark you off the list altogether.

I think it's a good recommendation (especially with today's competitive market) to "assume" a merchant might shop and to price within his Paper Grade. So if you pre-qual him and he's clearly A Paper, he has no business getting an offer for a 6 month 1.25 - 1.30. He should be priced anywhere from 1.12 to 1.18.



Great point! This is also why a lot of the A and B Funders/Lenders are doing away or minimizing their external Broker Model in some capacity. They realize that properly pricing a merchant based on their Paper Grade leads not to just winning the initial deal, but offers a higher probability of a renewal stream of additional deals for the next 12 to 60 months.

Funders/Lenders with in-house agents are able to operate like this in a profitable manner, however, the external Broker shops (in which most of them are poorly ran) need to get 10 points on nearly every deal to even attempt to survive.

Didn't you leave the business? Just wondering....