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06-21-2021, 02:17 PM #1
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How do you become a "Funder"? Step by Step Guide request
I came across a post here on the forum by Yankeeman07 that stated
That got me to thinking...... Then I google searched "how to become a mca funder", and it returned 0 results! How is it possible that that phrase brought up 0 results! How about we fix that here, so in the event someone googles that, at least this thread will come up with good info..
So if a person has $15/20k to lend, how would they go about lending it? In essence becoming a funder.....
I imagine you would need to setup a business entity 1st, open a business account, fund it, get contract drawn up, have your lawyers review the contracts, then lend the money out????
I don't know exactly, what the steps are... But I am sure some of you all here know exactly what to do and have actually did it.
So would any of you mind to contribute in making a step by step guide of what it takes to correctly lay the foundation to become a funder?
What do you think the initial investment one would need to make before they are even able to lend the money out?
Once a person understands what it takes to correctly fund the 1st deal, the 2nd, 3rd, - 1000th deal is rinse and repeat, minus the initial setup investment. So the more fundings that are done, the cheaper each funding becomes to do, so to speak... ????Last edited by Winning; 06-21-2021 at 02:28 PM.
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06-21-2021, 02:26 PM #2
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#1 Spend $20k on leads to broker deals and understanding how MCA underwriting works and what's a good deal, what's a bad deal
#2 Start syndicating in the good deals [you are essentially funding...]
#3 Use a funder's platform and/or start white-labeling
#4a Get LendSAAS (or similar) and investors and hire underwriters
#4b Figure out how to get the deals in the door
I think that's pretty concise, but can be expanded on. There's also more ways in if you had more money.
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06-21-2021, 02:47 PM #3
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Good Advice is NOT Free - not quite sure why you are lurking in a MCA forum when your a merchant.
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
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06-21-2021, 02:52 PM #4
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06-21-2021, 02:58 PM #5
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06-21-2021, 03:09 PM #6
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Spend $20k on leads from who? You have links to companies that offer this service you speak of?
Does a funder have to broker deals? I thought brokers were the middle men between the Funder and the Merchant...??
Understanding what's a good deal and a bad deal. Is there certain mathematical formulas used to assist in ranking a deal? If so, like what? Or is it all subjective and gut feeling? Or is it a combination of both?
Syndicating... 1st lets make sure we understand what that even means..
Loan Syndication
https://www.investopedia.com/terms/l...yndication.asp
Loan syndication is the process of involving a group of lenders in funding various portions of a loan for a single borrower. Loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender's risk exposure levels. Thus, multiple lenders form a syndicate to provide the borrower with the requested capital.
So what you are saying for #2, is to start putting money with other peoples money and going in on deals together with other people.
So where would "I" find these other people who have been presented with deals to see if there is room for "me" to become a part of the deal?
Please share link to funders platforms.
More lingo that we need to understand. White Labeling..
White Labeling = the ability to use someone else funds but show the borrower my name as the funding entity.
This brings up a new question. Could a person start syndicating using white labeled funds? Based on my understanding of both those terms, I don't see why you couldn't. The question would be, is if it would be profitable to do? But I guess that depends on how cheap you have access to white label funds, and how good the syndicated deals that you are a part of.
https://www.lendsaas.com/
Hire Underwriters...
https://www.upwork.com/hire/underwriters/
Look like underwriters are about $75 to $115 per hour?
How many hours would you say an underwriter would need to spend on a $15/20K file?Last edited by Winning; 06-21-2021 at 03:12 PM.
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06-21-2021, 03:16 PM #7
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Send money to a business bank account. Over time take back more than you sent.
Obviously there is no easy answer to this. What type of financing, what type of businesses are you targeting. Then factor in sales, development, tech, accounting, servicing, underwriting, collections, marketing, investors, legal, etc etc. It takes a lot of capital to start a real MCA funder and become successful. If you want to avoid the mess of starting up an entire company, then I'd suggest looking into peer to peer lending.
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06-21-2021, 03:28 PM #8
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You talking about 15-20k or 15-20 million? You can not became a funder for 15-20k as the backend and legal will cost you more than that . if you have real money they are companies like steven hunters that can get you started with some sort of underwriting guidelines and than you can take from there to set up the backend with someone like ocrolus
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06-21-2021, 03:39 PM #9
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I have received tons of free good advice here on this forum!
What are you talking about!?!?!???
Take a look at your own post history here @ https://dailyfunder.com/search.php?searchid=318800
You give tons of unsolicited free advice here on the forum! Your contributions here are much appreciated!
By definition I don't think I would be considered a lurker.
Lurker
https://en.wikipedia.org/wiki/Lurker
In Internet culture, a lurker is typically a member of an online community who observes, but does not participate.
This post makes my 449th post. So I think that would qualify me as a participant, not a lurker.Last edited by Winning; 06-21-2021 at 03:49 PM.
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06-21-2021, 03:46 PM #10
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Winning, we love you dearly, you make it interesting.
I guess my step #1 was assuming you worked for someone before and know a bit about the MCA industry.
Step #0 is knowing how to broker and close loans, which likely means working for someone else first. If the goal is to be a funder, then also read ABFunders posts about the difference between a funder and broker
But in general:
Good lead sources are one of the biggest topics discussed here. Here's the list: Google ads, cold calls from D&B and UCC lists, live transfers, buying old rejects, illegally purchasing submissions, creating a CRM that allows you to legally backdoor, work as an ISO rep or "A-F paper funder" and really just brokering it out... many ways to get leads. And if you're really smart, you'll buy from dumbleads.com (Note to Don: I'm expecting a cash payment, either from you or from Winning.... as Dave said, good advise isn't free.)
By syndicating, you're brokering the deal to another funder, and telling them, "You're willing to put in $100,000, but I want this deal, so let me put in $20,000 on top of my commission and and pay me weekly from the deal as it pays out." You're syndicating with the funder that you know through your networks on Daily Funder and Debanked (Note to Sean: See above the note to Don )
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06-21-2021, 06:43 PM #11
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Did not insult - Good Advice is NOT Free and part of your second post "illegally purchasing submissions, creating a CRM that allows you to legally backdoor - With advice like that, run in a different direction.
If someone is serious about becoming a Merchant Cash Advance Broker - start with good Legal Representation - was the point I was making.
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
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06-21-2021, 07:00 PM #12
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06-21-2021, 09:51 PM #13
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06-22-2021, 08:27 AM #14
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06-22-2021, 09:37 AM #15
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The Mathematical Formula is as basic as an Excel Template w/ all the rules set up. MCC's Calc for example.
You input monthly volume, neg days. adb, it spits an offer out.
Also, becoming a funder doesn't rely on leads at all. You can simply come up with a Niche, market to ISO's and get deal flow.
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06-22-2021, 09:53 AM #16
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Some great info to unpack! Thanks.
To get a better understanding regarding "Types of Financing".. I found what I think is a good detailed explanation on the diffrent types of financing at https://www.typesof.net/a/types-of-f...th-explanation
You also mentioned Peer to Peer Lending. So one should have an understanding of exactly what that is.. I found a good explanation on what Peer to Peer lending is, and how it works at https://www.creditkarma.com/personal...o-peer-lending
A list of Peer to Peer platforms and what their borrowing and investment requirements can be found at https://www.moneyunder30.com/peer-to...-and-investors
I get offers to borrow from those peer to peer companies all the time, I had no idea that I could lend them my own money to lend out to people! I see some of their minimum investments is very low... I am going to take a serious look in placing some capital with some of those peer to peer companies! Great Info!Last edited by Winning; 06-22-2021 at 10:03 AM.
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06-22-2021, 10:10 AM #17
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- Apr 2013
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Can I respectfully say "uhhh no" to this?
Basic Funder start-up minus all the legal stuff:
#1) gain EXPERIENCE in the industry (as an underwriter most preferably) you need to know the game if you want to play it. There are risks involved.
#2) Figure out the type of funder you want to become whether you want to be a big funder, small funder, A paper, B-C paper (this is usually based on the amount of capital you have to work with) You need to have guidelines for the type of deals you fund so you don't fall of course.
#3) UNDERWRITING, this is probably the most important. Your underwriting determines the success of the business. The amount of companies I've seen fail simply due to not having good underwriting is remarkable. There are a lot of underwriters out there but do they actually know what they are doing? ( I've actually written a full underwriting manual/guide which has been praised by a small few)
#4) Find banking that allows business to business ACH and wiring, lot of banks won't allow due to industry but there are few out there.
#5) Get your tools (backround check, credit check, accounting softwares, crm etc.)
#6) Get ISO Reps or Sales team (Deal flow)
A) ISO Reps- To call on brokers and iso shops to get them to submit deals for you to fund
B)Sales team- to call on merchants to get deals sourced inhouse (less worry about competition) but then you need to get phones, leads, etc.
#7) Fund deals and hope they don't default
#8) Collections
This is pretty much a basic imo. Obviously there is more to it but I am not going to be too detailed with it. Hope this helps, I don't mind giving free advice but I do charge for consulting.
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06-22-2021, 10:49 AM #18
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We're saying the same thing, you just expanded on it more thoroughly, or came from a slightly difference perspective. My #1 - #3 are versions of your #1 "gaining experience." I skipped some detailed steps, like I assumed an MCA funder, but my #4 is your #3 - #8. If you have enough experience, those steps are obvious.
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06-22-2021, 11:08 AM #19
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06-22-2021, 12:30 PM #20
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You could take Fetachini's word... look at the join date and rep points. Enough said.
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07-01-2021, 11:23 PM #21
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Hey, look man, not trying to be a dick here, but to even have the discussion of starting a funding company, without at least first working in the trenches for 3-5 years first, you're just not gonna have a good time. I worked in the industry as a junior underwriter, worked my ass off for several years up the ladder, being promoted as I did so, while moving across all of the top funding companies before I even considered starting my own shop. There's some experience that can only be gained through sweat equity. Being a successful funder is one of those. If you're truly interested, I would suggest starting with an entry-level position at any reputable funding shop. As someone who's owned their own funding company for 3 years now, I can tell you that nobody is your friend. Nobody will help you. Nobody will tell you what it takes to BE THEIR COMPETITION!
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