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  1. #1
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    "Underwriting Fee" Without Funding

    Is this common? First time I've seen it. Or maybe I just never looked for something like this?

    underwriting fee.PNG

  2. #2
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    There is such a thing as a "due diligence fee" that is often done on bigger equity deals that need serious underwriting. I did hotel in December and it was a $10,000 commitment fee that was refundable for whatever wasn't used. They physically flew to the location, it covered wires and credit pulls, if they needed a few appraisal, etc.... WBL does it also, but at least we all know that they close deals.

    The lender/funder can do whatever they want, it's just not smart business since I as a broker wouldn't send a client there knowing that my relationship with the client is at stake if I cost them $500 just for producing them contracts and the funder/lender changes their mind. Pulling credit costs money, still gotta pay UW, even if the deal doesn't go through.

  3. #3
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    if thats an mca company, it is not a normal clause.

  4. #4
    Senior Member Reputation points: 32550 Funder Mark's Avatar
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    Quote Originally Posted by fundingsmbs View Post
    if thats an mca company, it is not a normal clause.
    It is an MCA company

  5. #5
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    scam. if the company is forcing a merchant to pay $499 per contract to pay for their employee staff to UW, I would say it's a very poor choice policy

  6. #6
    Quote Originally Posted by abfunders View Post
    There is such a thing as a "due diligence fee" that is often done on bigger equity deals that need serious underwriting. I did hotel in December and it was a $10,000 commitment fee that was refundable for whatever wasn't used. They physically flew to the location, it covered wires and credit pulls, if they needed a few appraisal, etc.... WBL does it also, but at least we all know that they close deals.

    The lender/funder can do whatever they want, it's just not smart business since I as a broker wouldn't send a client there knowing that my relationship with the client is at stake if I cost them $500 just for producing them contracts and the funder/lender changes their mind. Pulling credit costs money, still gotta pay UW, even if the deal doesn't go through.
    This is correct^

    Also correct re what the others in this thread said. MCA companies do not typically engage in this practice as UW costs are minimal. Scam.

  7. #7
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    Never seen an MCA funder with a non-refundable UW fee. Only seen it in things like collateralized deals where there is an inspection/ appraisal

  8. #8
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    If any MCA Funder asks you or your merchant for that run in the other direction as fast as you can . Nothing more than a grab and run cash scam.
    Things like this give the industry a bad name.

    Jake Strelzik
    Vice President / ISO Relations

    4000 Hollywood Blvd
    Hollywood , FL 33021
    954-641-8756 (office) /305-785-2548 (cell)
    888 472 2933 fax
    jstrelzik@flashadvance.com
    www.flashadvance.com

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