[brandon_]

What is the logic behind advertising that you fund defaults? Why would you intentionally solicit brokers to send you PG's that blatantly show intentions to not pay you back/have tons of payment issues and then work with those said brokers who are going to blast you to get paid commissions on them when its likely to go bad because these are the only deals they have?

This is something to this day I do not understand... It's one thing if you have a starter program for deals like that(if you have an appetite for it), but your main box is in a different area so you are spreading out the funds in different brackets. In that case, you aren't advertising it you just implement it to your process and anyone who knows about it can take advantage.

"WE FUND DEFAULTS AND SUPER SUPER HIGH RISK" - I've been doing this for a while and this is basically the next generation of MCA marketing in my email daily lol

Anyone want to shed some light? Maybe there is something I don't know.

[pcfunder]

It was a strategy used awhile ago by ISO reps to get new ISO's on board. It was basically saying "yo we are CRAZY over here. So crazy that were willing to fund defaults! Send us your deals and we'll make some insaneee offers that are WAY better than anyone else!" Basically saying "we don't care about standard underwriting guidelines, we will fund the deals you are having trouble funding but in return send us everything you get".

The fricken problem with this is that we live in such a copy cat market that no one even knows what they are doing anymore when screaming out "WE FUND DEFAULTSSSSSSSS" It went from kinda tasteless but aggressive and unique to extremely tasteless and another cold call anyone/everyone and beg them to sign up without offering anything unique or creative technique.

If you want to be good at anything in life. literally anything. spend some amount of time in thought. even if its like 10 seconds a day, that's a good start. First and foremost because people who actually know what they are doing in this industry will sniff you out so fast you will barely make a penny. Secondly because if you ACTUALLY want to grow your company and bring on new ISO's, you need to show some form of value and there is absolutely zero value in being the 100th person who says "I fund defaults".

[ectorro]

Deleted

[JAY SWISS]

So while your right with the concept. We do fund past defaults (not across the board obviously and its not our main focus) the reason why we do it is we actually use it as a payment history for a better second deal. Defaulting does not always mean the merchant is dead, we wouldn't give them a regular offer it would most likely be smaller and shorter deal but we have seen much success in it and merchants start building themselves back up. Most funders wouldn't look at these files or be busy with it just decline it and rightfully so, but we give them a second chance and help them grow.

[pcfunder]

Funding defaults only makes sense if the merchant fully satisfied the judgement and has clean bank statements. Even then your still playing with fire because the merchant has a strong chance of being a heavy stacker. Funding anything else doesn't really make sense to me at all unless you have some of the best collection methods ever created or something like that.

But as far as constantly marketing that you fund defaults... it gets old. Also I'm surprised the owners of the companies don't get mad at the ISO's who heavily market that they fund defaults. I would imagine their submission inbox is filled with horrible deals. Seems like a lot of time and salary would go into sending out a bunch of declines.

[mcabroker1]

Lets take the "WE FUND DEFAULTS AND SUPER SUPER HIGH RISK" marketing strategy out of this convo for a second.

As someone who rarely works on deals with default history, is everyone else seeing more defaults deals coming around (including the funders & brokers that don't market to funding defaults) ?

My thought process is:
1.there are only a limited amount of new deals coming into circulation.
2. there are more and more funders popping up who are desperate to fund. so you see deals that default once. then a second time and even a third.
3. I have also noticed that some of the corporate companies, who fund anything, are funding previous default deals without knowing, causing other funders to blindly stack them since they see some payment history and assumed the corporate company did the underwriting.

[NoBiggie]

3. I have also noticed that some of the corporate companies, who fund anything, are funding previous default deals without knowing, causing other funders to blindly stack them since they see some payment history and assumed the corporate company did the underwriting.

ahhhhh the Circle of (mca) Life

[brandon_]

Its just all "I hope they pay me" which doesn't make any logical sense no matter how you guys want to spin it. Lending money is an investment, and a disciplined one at that. Funding default deals is roulette. "Let me give him 10k on a short term and go heavy on the renewal" is when the merchant burns you, and they know exactly when and how to do it. Why? They did it once before lol Most deals burn you in general as every deal has its timeline.. just a matter of WHEN they will burn you.

[killerspin]

There are some funders out there that will actually fund defaults.. they have their reasons for doing so and they know the risk. The term is usually terrible and some people won’t agree with the method but the school of thought is that if the deal does default again they know they have a strong chance of collecting on the receivables- certain banks they can freeze, the business has a strong A/R to go after, credit card processing they can lock up, etc. it seems to be a way to get money out with a crazy return and hope the number of payers outpace the no payers. These funders also work off a P/L where as long as they are in the green they don’t care what the default rate is. MCA has all sorts of characters i guess it works in their eyes.

On the flip side I think if a merchant defaulted in the past or stopped payment on a funder, there’s a very strong chance they’ll do it again. It’s like thinking your girlfriend who cheated on you with the entire football team won’t cheat on you again.. be real with yourself. If you are up for the headache I guess there’s some benefits.

[ESE5020]

On our end, we underwrite based on Accounts Receivables, We do not care if you have bad credit or good credit. If you have an open default you need to be in a payment plan, we will verify the Payment Plan or a ZBL that we will also verify. If you have decent receivables and have paid off or are paying off the default, we will price the risk and make an offer. Just giving you our point of view, it may not make sense for others.

[fundingsmbs]

https://dramerlaw.com/newco-capital-group/

is this common for law firms to be promoting this?

[killerspin]

https://dramerlaw.com/newco-capital-group/

is this common for law firms to be promoting this?

Why don't the funders get together and go after these debt settlement companies? YS did it a few years ago I believe and they won. I never understood how debt settlement coaches a merchant to default and gets away with it.

[SNO]

What is the logic behind advertising that you fund defaults? Why would you intentionally solicit brokers to send you PG's that blatantly show intentions to not pay you back/have tons of payment issues and then work with those said brokers who are going to blast you to get paid commissions on them when its likely to go bad because these are the only deals they have?

This is something to this day I do not understand... It's one thing if you have a starter program for deals like that(if you have an appetite for it), but your main box is in a different area so you are spreading out the funds in different brackets. In that case, you aren't advertising it you just implement it to your process and anyone who knows about it can take advantage.

"WE FUND DEFAULTS AND SUPER SUPER HIGH RISK" - I've been doing this for a while and this is basically the next generation of MCA marketing in my email daily lol

Anyone want to shed some light? Maybe there is something I don't know.

In my opinion, the logic is that those said companies that promote funding defaults, are saying this because they have nothing else to bring to the table. They can't market low buy rates, long terms, or even transparency and trust with the amount of white labeling going on. So the only thing left is to market that you do defaults. But you just get dog **** files all day, and when an occasional good file comes in, the itch for backdooring starts.

[brandon_]

That is my point - you're clogging up your pipeline with **** that will never stick. And spending actual money to advertise for it. I still don't understand this logic based on all the responses

[fundingsmbs]

who says they are selling mcas at all. they could be soliciting the leads for equipment finance, ar financing, cc processing , credit repair svc, etc etc etc.