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  1. #1
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    Best time to hit em with the psf?

    People have different opinions, what is yours?

  2. #2
    a Year after the deal funds
    Last edited by Jconnycp; 11-17-2020 at 05:24 PM.

  3. #3
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    Quote Originally Posted by Iscibibi153 View Post
    People have different opinions, what is yours?
    Best way is to send it with contracts, anyone who slips a fee at the end is just killing their renewal or renewals for a few points that might get disputed.

  4. #4
    Senior Member Reputation points: 99227 ridextreme's Avatar
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    Quote Originally Posted by moneygreen View Post
    Best way is to send it with contracts, anyone who slips a fee at the end is just killing their renewal or renewals for a few points that might get disputed.
    Not the best way at all. Just "sending it with the contracts" is opening yourself up to problems later. You will get the guy who says "What's this page that says you're gonna ACH my bank account X dollars?" Then you're gonna explain the PSF, and he's gonna say "Why didn't you tell me this when we spoke?" Don't you agree? Then you're gonna get the guy who just signs everything without reading it, and calls you a couple days later asking why you went into his bank account, are you one of those guys who says "Well you signed it! Don't you read what you sign?"

    The best and most ethical way is to tell him up front when he's being closed. You can also work the number into the funded amount by telling him "The fees for the transaction total 5%, but if you would like, I can work it into the deal to make it easier for you". But you have to have room to add the fee, instead of maxing him out with no room.

    Reps sometimes wonder why they send out contracts and the guy goes dark. Maybe it's because you put a bad taste in his mouth by sneaking in the fee (especially on the better paper deals. If you're selling a 4th position they will probably sign anything).

  5. #5
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    Build a close relationship with a funder and they may allow you to add the PSF form in the contract

  6. #6
    PSF's are a scourge in this industry. Most lenders already take 5% of the funded amount off the top. Now the broker has to go and add another 5%+ on top of that? Now if you have a $10k deal with $500 in lender fees, and then you take a 5% PSF for another $500... that merchants going to feel even more pissed and robbed now that he's netting only $9k when they were sold on the $10k.. stop being ****ing greedy and taking PSF's, it only serves to **** up the renewal and that's if the guy doesn't place a stop payment on day 1.. you get paid commission as it is so suck it up.. a happier merchant is more likely to renew and bank you RESIDUAL dollars, which is something that half the ISO's in this industry forget to think about.. they just want their quick 1time funding and be out..

    fools play the short game, kings play the long one.. which are you?

  7. #7
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    Disclose up front - be transparent
    Collect immediately - the same day the deal funds
    Collect E-Check - Deposit Immediately - will hit merchant account that evening
    Should clear before merchant spends the funds or moves to another bank account.

    2nd Option - Be Upfront & Transparent - Collect Fee Upfront - Best Effort Contract
    Dave Lambert, Business Development
    dave@fcbankcard.com
    Merchant Services Consultant
    High Risk Merchant Payment Solutions
    SBA 7(a) Loans & Short-Term Funding
    T/VM: 727-291-7890
    Office: 727-233-1111
    Skype: fc-financial

  8. #8
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    Quote Originally Posted by ridextreme View Post
    Not the best way at all. Just "sending it with the contracts" is opening yourself up to problems later. You will get the guy who says "What's this page that says you're gonna ACH my bank account X dollars?" Then you're gonna explain the PSF, and he's gonna say "Why didn't you tell me this when we spoke?" Don't you agree? Then you're gonna get the guy who just signs everything without reading it, and calls you a couple days later asking why you went into his bank account, are you one of those guys who says "Well you signed it! Don't you read what you sign?"

    The best and most ethical way is to tell him up front when he's being closed. You can also work the number into the funded amount by telling him "The fees for the transaction total 5%, but if you would like, I can work it into the deal to make it easier for you". But you have to have room to add the fee, instead of maxing him out with no room.

    Reps sometimes wonder why they send out contracts and the guy goes dark. Maybe it's because you put a bad taste in his mouth by sneaking in the fee (especially on the better paper deals. If you're selling a 4th position they will probably sign anything).
    greeat points you make thanks

  9. #9
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    Agreed. Instead of acting shady you should be not only building reputable relationships with your funding houses but with your merchants as well. When you do right by folks and you keep it honest they have a tendency to stick with you. & remember that an ISO's bread and butter is that renewal game; the amount you'll make in the long term versus choking them out on a ridiculous junk fee in the first round is always substantially higher. You're talking to business owners and they understand better than anyone that nothing in this life is free.. so if you level with them about the cost and your fee they will almost always be understanding and ultimately appreciate your honestly which only helps you in the long run.

    I also know guys who will sacrifice their comms, even significantly, if it will close the deal; because hypothetically if there are 4 diff shops with the same approval, who do you think merch is going to close with? The guy who pitches him a rate that's 7 points less than the others.

    And most funders won't allow past a certain percentage for PSF's or additions to their set up fee, but regardless if they do or not it's going to cost you that merchant or potentially even endanger the repayment if they don't net enough (this is really high risk stuff I'm talking about, but I have seen guys wack a 3k origination fee on a guy we funded for 10k).

    Someone pointed out that certain places will allow you to add to their contract set up prior to drafting, and it's true.. I've done that before, which is also segways into another lesson of being aware of every funder's specifics from product space to buy rates, terms, commission allowances etc. It's key to know where you have maneuverability and how to place deals so that they not only get funded but it maximizes profit for you too. After all.. we all play this game to get paid right?
    Last edited by DTFdowntofund; 11-18-2020 at 08:29 AM.

  10. #10
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    When I do a real estate deal, there are two ways I do it:
    (1) Build in the broker points to the deal (lender protects) and present it on the term sheet so that it comes out of the funding
    (2) Fee agreement up-front for funded amounts, the agreement allows me to take it out of the closing from the lender

    There's no real difference with an MCA. Either up-front or put it on the contracts (hidden or not). As long as the client is presented a non-moving target, then it's more likely to close and you're not "evil."

    But once you're already dealing with expensive money (MCAs), adding on fees when there are already 10-12 points built in can be.... risky.

    (1) The underwriters at the funders are underwriting based on the payments and the fees and the payback, and the risk of the client stacking, and then to throw in a curveball with a PSF, just adds to more risk for the funder. Keep in mind, the funder is paying you the main portion of whatever you get, and I assume you want to keep a good relationship with them, so you want to make sure that the funder / lender is safe in their investment in the way you as a broker presented the relationship.
    (2) Renewals
    (3) Referrals
    (4) Other opportunities (you got them a factor, now they now need a real estate loan)

  11. #11
    Quote Originally Posted by Iscibibi153 View Post
    People have different opinions, what is yours?
    I've been in this space for 10 years. I have never charged a psf to any client. Its wrong and its greedy. And they will remember that when you try to renew them. a quick buck will hurt your renewal book beyond words. Many people charge the fees, pray the guy doesn't default within 30 days and move on. This is not how you grow your ISO shop. Growth comes from building relationships and actually giving a **** about your merchants and not always charging max points and max offers. Figure out what they need, and make them value your relationship. Then one day when you're still funding them 10 years down the road, you'll realize quick and fast and max everything isn't what keeps your clients with you. When other people call them they tell them to **** off, I only work with so and so. When lenders call them they say **** off, I only work with so and so. Play the long game, it works. Better to have a happy and loyal book of clients than people who think you're a shady greasy salesman/saleswoman.

  12. #12
    Quote Originally Posted by IndustryVet View Post
    I've been in this space for 10 years. I have never charged a psf to any client. Its wrong and its greedy. And they will remember that when you try to renew them. a quick buck will hurt your renewal book beyond words. Many people charge the fees, pray the guy doesn't default within 30 days and move on. This is not how you grow your ISO shop. Growth comes from building relationships and actually giving a **** about your merchants and not always charging max points and max offers. Figure out what they need, and make them value your relationship. Then one day when you're still funding them 10 years down the road, you'll realize quick and fast and max everything isn't what keeps your clients with you. When other people call them they tell them to **** off, I only work with so and so. When lenders call them they say **** off, I only work with so and so. Play the long game, it works. Better to have a happy and loyal book of clients than people who think you're a shady greasy salesman/saleswoman.
    Couldn't have said it better myself. PSF's are pure greed and screw up relationships and renewal game.

  13. #13
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    isos who pull psf renewal rate = crap - but they dont care because they are usually stacking the same files anyway

    isos who dont pull psfs retention rate is usually alot better

  14. #14
    Veteran Reputation points: 157541 J.Celifarco's Avatar
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    PSF's = greed. There is no need to add a fee when you are already upselling 10 or more points. I love competing against iso's that charge psf's, guaranteed win for me
    John Celifarco
    Managing Partner
    Horizon Funding Group

    3423 Ave S
    Brooklyn, NY 11234
    T: (347) 773-3990 | F: (718) 795-1990
    Linkedin: Profile
    Email: john@horizonfundinggroup.com

  15. #15
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    Quote Originally Posted by J.Celifarco View Post
    PSF's = greed. There is no need to add a fee when you are already upselling 10 or more points. I love competing against iso's that charge psf's, guaranteed win for me
    The second mouse always gets the cheese.....
    Hedley Lamarr......That's Hedley

  16. #16
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    A little side note,

    I have/had a few merchants that will never take another MCA or renewal since the brokers promised them SBA money, Consolidation, LOC etc after a few weeks of MCA payment history.

    While i am happy the merchants takes the money and pay back, there is no long-term game or relationship at all.

  17. #17
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    If your getting 10+ Points as commission a PSF is just greedy... If you have to downsell a file and your commission is 2-3% disclosing a PSF with the merchant shouldn't be any issue because of the "Savings" you got them.

    Be open and honest with the merchant and with the funder.
    Thank you,

    Lior Monus
    Business Development Manager
    CFG Merchant Solutions


    Direct: (646) 880-6764
    Cell: (516) 319-5826
    Fax: (646) 278-7322
    Lmonus@cfgms.com
    180 Maiden Lane New York, NY 10038

    www.cfgmerchantsolutions.com

  18. #18
    Senior Member Reputation points: 11927 FUND3R1's Avatar
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    It depends on the time and effort put into the file. If you are getting the merchant a collateral loan (WBL) you should pull a fee because a deal like that takes some time to fund, and also the stipulations that are required. As stated above, if you are making a decent amount on the file, there should be no need to pull a PSF Fee.

    Lender's these days are making the funding effortless by doing more homework on the merchant on the backend.
    FUND3R1

    "Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we've got 24 hours each. --Christopher Rice"

  19. #19
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    Quote Originally Posted by FUND3R1 View Post
    It depends on the time and effort put into the file. If you are getting the merchant a collateral loan (WBL) you should pull a fee because a deal like that takes some time to fund, and also the stipulations that are required. As stated above, if you are making a decent amount on the file, there should be no need to pull a PSF Fee.

    Lender's these days are making the funding effortless by doing more homework on the merchant on the backend.
    "SHOULD" pull a PSF?
    49-52% on a year term with 3 months of prepaid interest already held back on their newer products, and you "SHOULD" pull a PSF on top of the 5 points that was paid?
    Just to let you know, if you pull a real PSF from the merchant, it's against WBL's ISO agreement. You can send them a bill afterwards if you want, but never is it "SHOULD"

  20. #20
    Quote Originally Posted by IndustryVet View Post
    I've been in this space for 10 years. I have never charged a psf to any client. Its wrong and its greedy. And they will remember that when you try to renew them. a quick buck will hurt your renewal book beyond words. Many people charge the fees, pray the guy doesn't default within 30 days and move on. This is not how you grow your ISO shop. Growth comes from building relationships and actually giving a **** about your merchants and not always charging max points and max offers. Figure out what they need, and make them value your relationship. Then one day when you're still funding them 10 years down the road, you'll realize quick and fast and max everything isn't what keeps your clients with you. When other people call them they tell them to **** off, I only work with so and so. When lenders call them they say **** off, I only work with so and so. Play the long game, it works. Better to have a happy and loyal book of clients than people who think you're a shady greasy salesman/saleswoman.
    I disagree- Its not greed- If you work hard to get the merchant a great deal and you sell a normal fee (1-4%) of the funded there is totally nothing wrong with that. as long as your honest and upfront you wont loose the client or the renewal and you will end up with more PR-

  21. #21
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    Quote Originally Posted by FUND3R1 View Post
    It depends on the time and effort put into the file. If you are getting the merchant a collateral loan (WBL) you should pull a fee because a deal like that takes some time to fund, and also the stipulations that are required. As stated above, if you are making a decent amount on the file, there should be no need to pull a PSF Fee.

    Lender's these days are making the funding effortless by doing more homework on the merchant on the backend.
    You just don't understand the wholesale end of the spectrum obviously. Allow me to assist you here:

    A secured loan, sometimes referred to as a collateralized loan, is one which utilizes a tangible asset of some type.. typically real estate though I do recall a shop that was leveraging vehicles, jewels etc (dammit, what was their name? it's going to drive me nuts now.. started with a P). Moving on..

    WBL has more or less been the only lender in our space to encompass this product model, which in comparison to the rest of the industry, is undoubtedly a much, much longer turn around. The requirements for underwriting an unsecured deal are fairly basic, and can be quickly expedited by seasoned funding houses for fast turnaround.

    What you need to understand is that WBL is in essence writing mortgages, and just like a regular person going through the process.. this is not only equally as tedious but you're also incorporating the logistics of the business volume, projections of receivables, seasonality, etc. into the equation; the only difference is that having a lien on something that is concrete and valuable affords the product model to extend significantly higher approvals amounts with longer term durations as it deflates the risk. But the requirements to ascertain validity, the necessity of site inspections to the physical location, the title work, etc. all are completely standard to this avenue of funding and there's just no other way to go about it. ... & once you are aware of this you'll start to understand that it has absolutely nothing to do with back-end competency or efficiency; it's simply a totally different creature... apples and oranges.

    And I really don't mean this in a snide or condescending way, but like I tell my guys, we aren't all born.. take our first breath, and then are magically proficient in all things cash advance. You've gotta learn.

    I can tell you that when I started branching off from the unsecured model and became more heavily involved with different types of financing it was the same thing. I once worked on monster cannibis deal with collateral, and just getting past the conference calls between numerous attorneys, COOs, folks from the licensing department etc. it was almost two weeks before we even received the financials. Another one I worked on had 8 locations, all averaging over 5MM a month, and they were mid-construct for 8 other locations.. lot of moving parts. Point being, once you understand the logistics of the process it's easier for you to not only navigate the game in general but it will help you to better sell. Trust me, this ain't my first rodeo.

    Moral of the story is your merchant isn't responsible for the underwriting or verification procedure and seeking punitive damages for your impatience by pushing your PSF on the guy might feel good in the moment, but do yourself a favor and dabble in some delayed gratification. When you see how good you feel after you get in bed with the guy long term and you can experience that money shot on a frequent basis you'll get over those one night stands...err, single serving use merchants.

  22. #22
    Senior Member Reputation points: 51397 DTFdowntofund's Avatar
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    Quote Originally Posted by abfunders View Post
    "SHOULD" pull a PSF?
    49-52% on a year term with 3 months of prepaid interest already held back on their newer products, and you "SHOULD" pull a PSF on top of the 5 points that was paid?
    Just to let you know, if you pull a real PSF from the merchant, it's against WBL's ISO agreement. You can send them a bill afterwards if you want, but never is it "SHOULD"
    This is like trying to slip a PSF form somewhere in the mix during a Funding Circle or LoanMe deal...lol. You have to understand your lender list and where you can afford some maneuverability and where you can't.

    ie -I know I am sacrificing a higher payout in comms with Fundation but I am going to get a lower rate which happens to be what that deal specifically needs to close. This kind of falls back on whoever is allocating the deals, they should know where to place deals to maximize the approval + allow for the biggest commission as a result. Successful retail shops are organized and notate these things to be able to ferry subs over quickly with the right guidelines. Also helps tremendously if you have someone with at least a mediocre underwriting ability to scrub the docs once you get a full package to better appropriate the deals. The better they're placed the more likely you are to get an offer that makes sense,.. fund, and be skipping all the way to the bank hoping they don't clawback your ish. lol, I'm just kidding.

  23. #23
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    Quote Originally Posted by DTFdowntofund View Post
    This is like trying to slip a PSF form somewhere in the mix during a Funding Circle or LoanMe deal...lol. You have to understand your lender list and where you can afford some maneuverability and where you can't.
    I didn't say it was the right thing, I just said that you could in order to skittle around breaking the ISO agreement. I've personally never done it. Any time I've added fees paid by the client, I did it up-front before sending to the lender and connecting the two and the lender paid me out. And never at all with an MCA.

  24. #24
    Quote Originally Posted by moneypenny1 View Post
    I disagree- Its not greed- If you work hard to get the merchant a great deal and you sell a normal fee (1-4%) of the funded there is totally nothing wrong with that. as long as your honest and upfront you wont loose the client or the renewal and you will end up with more PR-
    My point is, it puts a bad taste in merchants' mouths. Every file takes work, and the points you're making on the file should be enough for you not to hit the merchant (who's already taking expensive money) with another fee. Wouldn't it make sense to try to drop fees wherever possible rather than add-on wherever possible? They always remember the deal you got them. They keep coming back. Another example- dropping points on an A paper client to get the deal done may suck for this month, but that's residual income every renewal just added to your pipeline. I understand you not agreeing, but in my opinion, and many others like me- there is just no upside to charging additional fees. I'd rather have a book of clients that know I don't charge them anything other than what's on the contracts. Its gotten me more referrals than you can imagine. To each his own, I just don't do it and I don't advise anyone just getting started in the space to do it either.

  25. #25
    Senior Member Reputation points: 11927 FUND3R1's Avatar
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    Quote Originally Posted by DTFdowntofund View Post
    You just don't understand the wholesale end of the spectrum obviously. Allow me to assist you here:

    A secured loan, sometimes referred to as a collateralized loan, is one which utilizes a tangible asset of some type.. typically real estate though I do recall a shop that was leveraging vehicles, jewels etc (dammit, what was their name? it's going to drive me nuts now.. started with a P). Moving on..

    WBL has more or less been the only lender in our space to encompass this product model, which in comparison to the rest of the industry, is undoubtedly a much, much longer turn around. The requirements for underwriting an unsecured deal are fairly basic, and can be quickly expedited by seasoned funding houses for fast turnaround.

    What you need to understand is that WBL is in essence writing mortgages, and just like a regular person going through the process.. this is not only equally as tedious but you're also incorporating the logistics of the business volume, projections of receivables, seasonality, etc. into the equation; the only difference is that having a lien on something that is concrete and valuable affords the product model to extend significantly higher approvals amounts with longer term durations as it deflates the risk. But the requirements to ascertain validity, the necessity of site inspections to the physical location, the title work, etc. all are completely standard to this avenue of funding and there's just no other way to go about it. ... & once you are aware of this you'll start to understand that it has absolutely nothing to do with back-end competency or efficiency; it's simply a totally different creature... apples and oranges.

    And I really don't mean this in a snide or condescending way, but like I tell my guys, we aren't all born.. take our first breath, and then are magically proficient in all things cash advance. You've gotta learn.

    I can tell you that when I started branching off from the unsecured model and became more heavily involved with different types of financing it was the same thing. I once worked on monster cannibis deal with collateral, and just getting past the conference calls between numerous attorneys, COOs, folks from the licensing department etc. it was almost two weeks before we even received the financials. Another one I worked on had 8 locations, all averaging over 5MM a month, and they were mid-construct for 8 other locations.. lot of moving parts. Point being, once you understand the logistics of the process it's easier for you to not only navigate the game in general but it will help you to better sell. Trust me, this ain't my first rodeo.

    Moral of the story is your merchant isn't responsible for the underwriting or verification procedure and seeking punitive damages for your impatience by pushing your PSF on the guy might feel good in the moment, but do yourself a favor and dabble in some delayed gratification. When you see how good you feel after you get in bed with the guy long term and you can experience that money shot on a frequent basis you'll get over those one night stands...err, single serving use merchants.
    I never said the merchant was responsible for underwriting or verification procedure. When you have to call the merchants accountants for information they should have on hand and get financials for them. Never said a PSF was the right thing either, I rarely pull one because I have repeat clients -so there for I don't need to pull a PSF. Generally. I appreciate your feedback and totally understand the wholesale end of the spectrum.
    FUND3R1

    "Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we've got 24 hours each. --Christopher Rice"

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