[GIGATT50]

We have clients that would like to direct lend in the MCA space. How would they go about this? Is syndication the best place to start? Thx in advance for your responses.

[treymarkel]

We have clients that would like to direct lend in the MCA space. How would they go about this? Is syndication the best place to start? Thx in advance for your responses.

It very much depends on what you mean by "direct lend". Are they looking to open a direct lending company with their own staff and underwriting model etc or are they just looking to get a rate of return that MCA offers? These two are very different.

Opening a Direct Funding Shop: You will need a good underwriting model, a staff that can process files, and a good software platform. You will also need to decide if you are going to originate your own files or if you are going to rely on ISO's (Brokers) sending you files. Some do both but doing both requires you to understand you might be competing with your ISO network originating your own files. I work for Centrex Software which is one of the more popular options for brokers and funders in the corporate finance sector. www.centrexsoftware.com

Syndicating Only: There are plenty of direct funding shops that are looking for more quality syndicates. I would do your research on each funding shop you want to work with and ask what their current portfolio looks like. What are their default rates, what SIC codes do they focus on, how big are they etc. Expect to pay servicing fees of anywhere between 1% up to about 4% or 5%. As a syndicate you will also be responsible for a portion of the broker commission. Most funders you syndicate with will have a portal you access to look at reports etc.

Plenty of other great funders and ISO's on this forum that can offer good advice. Like I said, I work for a software company in the sector and have quite a bit of perspective but I have never been a funder or broker or have ever worked for one.

Anyway, my basic starter thoughts.

Cheers,

Trey Markel
tmarkel@centrexsoftware.com
(888) 622-5810
www.centrexsoftware.com