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02-15-2021, 12:39 PM #1
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- Sep 2020
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- 52
lol!
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02-15-2021, 12:40 PM #2
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- Sep 2020
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- 52
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02-11-2021, 07:06 PM #3
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- Apr 2020
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- 54
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02-16-2021, 11:50 AM #4
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- Jun 2017
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02-11-2021, 01:50 PM #5
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- Jan 2018
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- 519
I think the funder adds a fee and a hefty commission through a calculated percentage of cost of overhead, cost of defaults, investors portions, etc...
it does seem a little odd that a broker feels they have the right to randomly come in and say "hey i dont really care about any of that i just want to make more money". I also do agree that getting paid 12 points should make anyone and everyone very rich if you just play this game the right way which 100% involves renewals.
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02-11-2021, 01:52 PM #6
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- Dec 2016
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- 379
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02-11-2021, 02:53 PM #7
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- Jun 2015
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- 3,322
the number one thing by far to have a renewal game is to make sure you placed the merchant correctly . i dont care if you made 1% if you put the merchant in the wrong home they will wind up going somewhere else .
Also funders need to know the market and renew based on that. I remember how easy it was to move a merchant when on deck and bfs started going out 12 plus months instead of the 6 month 1.38 and 8 month 1.48 that it was at for ever. Same thing happened when the second position guys went from the 3- 4 moths to the 6-10 months the ones that were not adapting were losing all their clients
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02-12-2021, 11:47 AM #8
Hey all,
I see both sides of the coin here, I think we should all keep in mind the fact that anything acquired without effort and without cost is generally unappreciated, often discredited. Due to the unregulated, "if you know you know", clandestine nature of the MCA Industry that we're all in, it's not hard for a lender to put their name out there and start generating business. The second your entity's name is in a few merchants bank statements and you fund a few deals, a viral effect occurs where notoriety quickly becomes established and before you know it you're getting a heavy influx of ISO's trying to sign up with you. Look at ironwood for example, they were arguably the fastest lender in the game for a few months before EVERYONE found out about them.. because every one is looking for the next best new lender while simultaneously broker shops have an existential journey ahead of them if they want to develop even a quarter of the notoriety in general let alone doing it in the timeframe that a new lender can incoherently do it in. So my point in saying all of this is yes, renewal game is key.. However, in the minds of most brokers, they're ALWAYS in competition with other lenders approvals in the clients ears, other brokers hammering the clients phone number trying to bad mouth the guy that they're currently working with and work with them instead. As we can all understand, this promotes a caged lion mentality where if they don't behave the way they do in some circumstances, they'll get burned. Hence where PSF's / greed, clawback periods come into play. Because no matter who it is lending, if they know what they're doing, their bottom lines are always in the green and that's with an industry wide 10%+ default rate, that's why we're in this business in the first place because yes we're helping people but at the same time we're making money, this statement is axiomatic. If there's any vitriol to that statement, keep in mind that if the motives weren't 90% self fulfilling for some of these platforms, we wouldn't see 1.50 factor rates for the high risk clients, we'd see declines.. plain and simple. We need to keep in mind that the entirety of this thread is congenial, so of course these ideas of infinite time framed clawbacks if the client goes bad, waiting till it's fully paid off to pay the ISO commission, renewal game, etc., will be gratified by everyone here because it serves the party at hand. We have to visualize that the industry is the way it is after 10+ years for a reason. If we had a really nice car but filled the gas tank with acid it would corrode the internals and now we can't drive at all, hence why it's filled with the fluid that makes it move.. gas. If everyone starts changing the very criteria that has a direct correlation with their main source of business (ISO'S), this causes a direct negative impact to their main source of business (ISO'S), which eventually will cause an incoherent negative result for them as well. Yes, you'll make a little more money in the short term by saving a few defaults, saving some commission that would've been paid, but a pernicious effect will be underlying and lurking in your platform. Before you know it, 50% of your ISO's are gone, the other 50% aren't performing nearly as well due to the lack of incentive, and now because of the criteria changes that you put in place because you thought it was the right move, your platform has quickly become dilapidated along with the ISO partners that utilized you for their business. In conclusion, although some of these points are valid to the utmost degree, they're not realistically viable to put in place in the space that we're in.Last edited by Finance; 02-12-2021 at 12:04 PM.
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02-12-2021, 01:25 PM #9
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- Dec 2016
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- 379
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02-12-2021, 01:27 PM #10
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02-12-2021, 05:43 PM #11
Did you say Ironwood was the fastest lender? lol
I remember years ago we had a 5k offer from them, and they needed the physical COJ to be mailed in prior to funding. The entire process took almost 2 solid weeks, and in the end, they said the banks were fraudulent without conducting a decision logic or bank login and just killed the deal.
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02-12-2021, 11:12 PM #12
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02-11-2021, 04:51 PM #13
- Join Date
- Jan 2018
- Posts
- 519
yeah I think most funders let good ISO's get away with a lot. Theres a lot of money to go around as long as it goes around in an honest way. When I first became an ISO rep I had an ISO that would flood us with submissions like 60-70 a day. We catered to this ISO like CRAZY until we noticed every. single. deal. defaulted. literally not one paid in full. found out that the owners BUSINESS PLAN was to stack until they couldnt get approved by anyone else and then give them a reverse. They sold the merchant on how "amazing and awesome" a reverse consolidation is so the merchant looked at every position like free money. most of the time the merchant never even qualified for a reverse and even if they did they would default anyway.
other ISO's I dont have a single default with. Not sure what they do or if its just luck. Just seems to be how things work right now.
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02-11-2021, 05:32 PM #14
- Join Date
- Apr 2013
- Posts
- 245
The reason for clawback is because of shady brokers. Do you know how many funding calls I've been on with a merchant and they tell me well XYZ broker told me if I take this he's going to get me X amount more in a few days. The broker takes the commission then disappears on the merchant then another shady broker promises the same thing and boom another funding in a few days.
I love the idea of paying half commission upfront and then another half on the back when merchant is paid off or ready for renewal.
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03-03-2021, 06:23 PM #15
- Join Date
- May 2019
- Posts
- 74
Consistency , Honesty and not pushing nonsense! We have many isos that just send deals to all funders and always ask for exceptions and dont close. Funders want to fund without having to run in circles for no reason. As a funder, we like helping our isos succeed but we find many isos don't care and like to spin wheels for no reason without even talking to the merchant. The # 1 asset we have in life is time! We also like isos who dont double, triple and quadruple fund clients and then put the client on a reverse.
Also we love isos who dont pitch the client a Term loan in 30 days if they show good payment history on the advance. If yall only knew how many time we here of clients getting caught on that lie. SMH
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