[Sachip24]

merchant lowered payments for two weeks during Covid then paid off lender in one shot has ZBL. After paid off lender put him on Datamerch for lowering payments and even put lowered payments during Covid in datamerch. Anyone can fund? does 500-800k a month no positions construction.

[Hedley Lamarr]

merchant lowered payments for two weeks during Covid then paid off lender in one shot has ZBL. After paid off lender put him on Datamerch for lowering payments and even put lowered payments during Covid in datamerch. Anyone can fund? does 500-800k a month no positions construction.

Find a construction factor. You will get a bigger, better deal, and make more money.

[killaakev]

ill fund that deal any day give me a call 213-340-4979

[Sachip24]

Find a construction factor. You will get a bigger, better deal, and make more money.

tried merchant had very bad experience with Capstone with another business he has and doesn't want the notification part of it

[Hedley Lamarr]

So....he restructured his last facility and now he wants a new facility with no rules.... Run as fast as you can.

[abfunders]

BTW, Kevin, how do you figure that he'd make "more money" than a cash advance? I understand that over a few years (2-5) he will probably do better, but when you think about a bird in the hand versus two in the bush, and "working capital" to grow a broker up-front at the beginning and to then pay them, a cash advance is going to make more sense from a purely "MY MONEY" standpoint. 8-10 points same week vs about 1-2 points per year with a factor.

Obviously a factor is better for the merchant, I'm just coming from the math side of things.

[abfunders]

Sachip24, I have a funder who expressed interest in doing this, but he wants to know who the funder was. Send me an email/PM

[NationalCorporateData]

Sounds like it would be mid/low-tier due to the DataMerch issue, or you could pursue factoring as Kevin suggested. Some may be able to factor without assignment, but his concern with that sounds like a red flag.

[Hedley Lamarr]

BTW, Kevin, how do you figure that he'd make "more money" than a cash advance? I understand that over a few years (2-5) he will probably do better, but when you think about a bird in the hand versus two in the bush, and "working capital" to grow a broker up-front at the beginning and to then pay them, a cash advance is going to make more sense from a purely "MY MONEY" standpoint. 8-10 points same week vs about 1-2 points per year with a factor.

Obviously a factor is better for the merchant, I'm just coming from the math side of things.

Micah,

You keep bring that up and I tell you the same thing over and over again. You are obviously working with the wrong factors or you would rather make a smaller amount of fast money. All of my referral sources have no issues what so ever on the amount of commissions they are making on deals with us and certainly not the longevity of the client relationships. Case in point: A broker from this forum just renewed again on a deal that we did 4 years ago. He made more money the first year with us than he would have if he had gone for the quick buck. He has enjoyed the commissions on the deal now going on 4 years. The client is happy and so is he.

[abfunders]

Sounds like it would be mid/low-tier due to the DataMerch issue, or you could pursue factoring as Kevin suggested. Some may be able to factor without assignment, but his concern with that sounds like a red flag.

His concern is common. I have a client who HIGHLY qualifies for factoring, but even after a full hour with him a week ago, and an hour with him about 1.5 years ago, in his head he thinks that if a factor calls to verify that he'll lose street cred for being self-funded and self-sustaining. I told him that if you have someone big backing you, it should actually add cred, because you have someone who will trust you, and you have a LOC that you can draw from and always maintain services.

And this is a B2B client whose clients are are ordering from other suppliers as well, and they're getting calls from other factors all the time.

And then if the factor is annoying or obnoxious and can't figure out how to trust the client ever... it's just a bad feeling.

[abfunders]

Micah,

You keep bring that up and I tell you the same thing over and over again. You are obviously working with the wrong factors or you would rather make a smaller amount of fast money. All of my referral sources have no issues what so ever on the amount of commissions they are making on deals with us and certainly not the longevity of the client relationships. Case in point: A broker from this forum just renewed again on a deal that we did 4 years ago. He made more money the first year with us than he would have if he had gone for the quick buck. He has enjoyed the commissions on the deal now going on 4 years. The client is happy and so is he.

A $350,000 advance that pays $35,000

If the same client gets funded $500,000 monthly from the factor, advance rate of 1.5% per 30 days, and the factor pays 15% profit share (let's hope their cost of capital is 2%), then they make 13% of the 1.5% / month of $500,000.

500,000 * 0.015 = $7500 * 0.13 = $975 monthly
Even if they went out 60 days on all contracts, that's double the amount per month at $1950 monthly
It would take 18 months to make up that 10 points
Of course not all 1st positions pay 10 points, they pay 8, so that's $28,000, which means it takes 14 months.

And keep in mind, lots of brokers have to figure out funny ways to pay their agents and keep them happy with residuals. Cash advances are much easier to deal with. Yes, there ARE creative ways to pay agents on residuals, but not all agents are happy about it.

Where did I go wrong?

Again Kevin, I'm ALL for factoring, just want to know where my math went wrong and I'll delete these posts.

[Hedley Lamarr]

A $350,000 advance that pays $35,000

If the same client gets funded $500,000 monthly from the factor, advance rate of 1.5% per 30 days, and the factor pays 15% profit share (let's hope their cost of capital is 2%), then they make 13% of the 1.5% / month of $500,000.

500,000 * 0.015 = $7500 * 0.13 = $975 monthly
Even if they went out 60 days on all contracts, that's double the amount per month at $1950 monthly
It would take 18 months to make up that 10 points
Of course not all 1st positions pay 10 points, they pay 8, so that's $28,000, which means it takes 14 months.

And keep in mind, lots of brokers have to figure out funny ways to pay their agents and keep them happy with residuals. Cash advances are much easier to deal with. Yes, there ARE creative ways to pay agents on residuals, but not all agents are happy about it.

Where did I go wrong?

Again Kevin, I'm ALL for factoring, just want to know where my math went wrong and I'll delete these posts.

Micah,

Just keep doing the cash advances. You have it all figured out.

[Torro Funding]

Hey, good morning!

Torro will fund behind altered payments as long as it's zbal or payments are still being made.

We'd love to take a run at this- give us a call if you'd like to run it down.

Evan Ensign
Director of Business Development
c: 419.577.5119
o: 267.592.4291
evan.ensign@torro.com