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  1. #1
    Member Reputation points: 1157
    Join Date
    Apr 2018
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    New York City
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    34

    Exclamation note to broker would you fund it ?

    I am particularly annoyed the Fed is actively bailing out the Repo Markets. Basically its a very large cash advance with much shorter terms to their friends in much higher places. 350 Billion in small business funding with ZERO skill knowledge of how our industry works. They have no idea the Merchants they are up against. Now is the time to protect your Funders and merchants bring in solid deals that you believe in. Strong payback months 12-24 months do not fund a deal just because it can be funded. Kill the Funders we all die, yes new funders will rise up.*They may want to take the risk even though you know it will fail* But I know the Funding Companies I have had the pride to work with for the past 4 years did not kill my 15 pt deals to let other funding companies take them. No now is a chance to show who gives a **** and who does not. Funding companies need us the brokers to be just as vigilant as if this were our reputation on the line not our commissions. Their are 100's of companies asking what do I do. If you can not walk your merchants through this without taking un-needed funding then your in the wrong space. Merchants lack most basic business skills however they have built companies that for the most apart need advice not money right now. Advise them you will try to work with the funding companies that first dealt with them. If they are stacked well this maybe more difficult, however funders are not stupid. This dies down business opens up cash can go back out. Payments start to come in yes their will be losses but working with your merchant is your job working with the funder is your job. Giving away money is not what this job is. Building lasting relationships and AR through keeping your word to your clients.

    No one is bailing us out except for ourselves. This has been long over due the circumstances surrounding Covid-19 are terrible but this economy has been on fuems. As we brace for recession remember what built this industry up. Subprime what happens when primes start default on the banks*merchant not business" Primes become subprimes and the dominos fall into the MCA space. If we all play it safe and wait patiently stick with deals that have solid 12-24 months of payback. Funding deals in an envoirment like this does not make sense unless it is something that for instance gold price drops Jeweler wants to take advantage of whole say opportunity no problem. To me this job is teaching the merchant he does not need the store anymore. This will show a lot of people they do not need offices. Good Luck.

  2. #2
    Senior Member Reputation points: 86751
    Join Date
    Feb 2018
    Posts
    1,346

    the irony is that this industry started as a repay with your ebb and flow of future sales and performance guarantees. all repaid with future cc sales. the lockbox was a clunky way to fund more deals for those who didn't have compatible processing. fast forward, everyone shifted to fixed terms with fixed repayments, which, investors love because of the predictability of repayment when so many merchants began to game the system, switch cc processing companies, use more than one terminal etc etc. i get why that shift happened. However, once contracts changed from performance guarantees to personal guarantees and than fixed repayments vs variable, any recession was going to burst that bubble. I don't know today what % of deals have cc splits in place but I assume it's around 15% or less? So the majority of outstanding debt in our industry is on a fixed repayment model and many contracts call for personal guarantees vs performance guarantees- a very big difference in legal terms when defaults occur. A personal guarantee can go after the guarantors personal assets. For everyone who made those 12-15 pt commissions and large bonus rips to push a certain funder, now is the time to step up and help those merchants in a bind. Don't leave that mess to collections/legal as a first round of attack. Get in front of it and show you actually care. you may not be able to save everyone, but, you can look in the mirror and know you tried your best.
    Last edited by fundingsmbs; 03-31-2020 at 03:30 AM.

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