[T B Morgan]

Hi
I joined the forum a little over a month ago, I’m new to the alternative lending industry. I've been reading the threads and learning.

I would like to ask your opinion on a referral agreement. Within the agreement it states

“If a funding (excluding a lease funding) defaults within 45 calendar days, then the commission paid to Agent must be returned upon notice of default. If a lease funding defaults within 4 months of funding, then the commission paid to Agent must be returned upon notice of default. The time frames that trigger a commission being returned due to client default are determined by funding sources and may change from time to time. We reserve the right to debit (via ACH) Agent’s checking account if any commissions are not promptly returned notice of a default.”

Is this standard practice with some lenders? I don't agree with it. I work hard to find businesses that are in need of funding. I feel that the underwriting department should be diligent enough to minimize accepting businesses that default. And, if they are willing to fund a high-risk business the funding company who accepted the risk should not punish the agent, who is working hard to bring business to them, by taking back the commission.
Would you sign a contract with that stipulation in it? I'd appreciate your opinion on this matter.

Thank you

[Nunya]

Pretty standard from my experience.

[ridextreme]

I don't agree with it.

You should never sign anything you don't agree with. This industry isn't for everyone.

[KINGCASH]

How soon did they default?

[FCG]

lol what

[fundingsmbs]

seen 30-45 days on most contracts. saw up to 6 months on one that seemed unfair. also, what defines a default is spelled out differently on several agreements. one missed payment could constitute a default. add in a cure period to save yourself headaches.

[WestCoastFunding]

This is standard in the industry.

This may be your first default/clawback, but if you stay in the industry it damn sure won’t be your last.

[Michael I]

seen 30-45 days on most contracts. saw up to 6 months on one that seemed unfair. also, what defines a default is spelled out differently on several agreements. one missed payment could constitute a default. add in a cure period to save yourself headaches.

agreed i had a clawback from a company from someone that missed a payment in the first 30 days . missed a couple of more throughout the term and fully paid off 2 weeks behind schedule on a 9 month term . The company renewed and were still not paying me on the first due to their iso agreement . I did get paid on the renewal and no longer work with that funder.
Bottom line make sure a default means where they dont get paid or sell it to a third party collection service .

Side note , any agreement that has multiple types of default like above usually means you are dealing with an iso

[Big Mack]

Side note , any agreement that has multiple types of default like above usually means you are dealing with an iso

If they include language for both MCA's and equipment leasing in the same agreement, that raises some additional questions.

[WestCoastFunding]

What funder was it?

[Michael I]

What funder was it?

I pm you name

[Nunya]

I pm you name

Just say it.

[Fetachini]

I pm you name

pm me too if you're not going to share it with the community.

[patrickw]

I think this should be fine with everyone specially 30 days default policy if they miss 3-4 payments or so. There are lot of brokers they say a lot of ****s or promise them long term loans with 10% rates if they continue payment for a month or so. Eventually merchant doesn;t get what they were promised so they stop payments.

[NoBigDeal]

agreed i had a clawback from a company from someone that missed a payment in the first 30 days . missed a couple of more throughout the term and fully paid off 2 weeks behind schedule on a 9 month term . The company renewed and were still not paying me on the first due to their iso agreement . I did get paid on the renewal and no longer work with that funder.
Bottom line make sure a default means where they dont get paid or sell it to a third party collection service .

Side note , any agreement that has multiple types of default like above usually means you are dealing with an iso

So the first deal paid off, but they didn't send back the commission they clawed back? That's insane and unfair, especially cuz the funder still made money on the deal. I've had situations where merchant defaulted and I needed to clawback from an ISO, but multiple times, we get the merchant back on track and they pay off. Once the deal reaches "profit" we send the commission back out to the ISO

[RickyR3712]

agreed i had a clawback from a company from someone that missed a payment in the first 30 days . missed a couple of more throughout the term and fully paid off 2 weeks behind schedule on a 9 month term . The company renewed and were still not paying me on the first due to their iso agreement . I did get paid on the renewal and no longer work with that funder.
Bottom line make sure a default means where they dont get paid or sell it to a third party collection service .

Side note , any agreement that has multiple types of default like above usually means you are dealing with an iso

The only funder I know that clawsback after one missed payment is the same one that ask iso to sign personal guarantee,has new iso reps every couple of months and that is greenbox.

[abfunders]

This is clearly a broker who's helping the newbie out, not a funder/lender.

[T B Morgan]

The funder was, National Business Capital and Services.

[Nunya]

The funder was, National Business Capital and Services.

That's an ISO.

[Davincinc]

That's an ISO.

they probably claimed the merchant defaulted and screwed the originator?

did said claw backed broker call the merchant to verify the claim?

[pcfunder]

You know what. I think its time we all demanded our commission back. No more letting the 1% funders control the 99% brokers commission. Give us our commission back!

[Kevin Henry-Seacoast]

Question: Do any cash advance funders send regular statements to referral partners outlining the client's activity?

[Davincinc]

Question: Do any cash advance funders send regular statements to referral partners outlining the client's activity?

credibly has a dashboard that does

[NoBigDeal]

Question: Do any cash advance funders send regular statements to referral partners outlining the client's activity?

Might be more upon request

[Kevin Henry-Seacoast]

credibly has a dashboard that does

We send out monthly statements to our referral partners that details volume and profits.

In the advance space it seems there are a lot of layers involved sometimes when getting a deal done. Broker A send deal to ISO.... ISO send deal to funder. Without having a really good relationship with the client, the ISO, or the funder....it leaves room for somebody to not pay for whatever reason.