[mbradford101]

Also, one lender told me to focus on restaurants for MCAs, and OnDeck Capital explained that they do small business loans instead of HCAs, which he said were cheaper for the merchants and sounded like an easier sell. He also explained how low the bar was for their loans - like a 500 credit score, 3K in the bank, a couple thousand in processing, and at least a year in business, and said they dedcut by ACH, avoiding all the processing complications. (I think I remembered all this right, but details may be slightly different).

It might have been you (C01), but someone in one of the other threads said they were doing over 800K per month, mainly through ODC. So it sounds like using them may be one of the secrets. So far though, ODC is the only lender that said I'd need to pay a fee to get signed up ($95), which I guess isn't bad for being a newbie, since this probably weeds out the folks who aren't serious at all.

I'd still love to hear some more success secrets though

[CO1]

I have no secret, I have worked with a American Allied Funding, and than Capital Stack, now a company named First US Funding. And our lead source is press 1's and I am the director of ISO Relations and I do my sales as well. My secret is ISO's thats the secret to most of the big funding companies and the time when i started in this industry it was known but the ACH product was becoming more aware. And also depending on what points and the amounts you are selling and if you are putting your own fee on the deals. You need to know where to place what deal. Not all Funders might like the same deal. Some like specific ones than others. You need to place them right.

[CO1]

American Allied Funding was all UCC calling by hand.
Capital Stack was all Funding Universe AKA Lendio, Press 1 and recycled leads.
First US Funding is Press 1, UCC, Lendio, we might try Fax Blast, and mailers.

[Finance1]

Some really good posts here. This industry is far from a get rich quick scheme unless you are at the top of the food chain and even then...

I'm an ex-mortgage guy. I ran a great shop. We funded what we wanted on our warehouse lines and brokered the rest. Mostly a-paper so don't throw rocks! lol. Very profitable business and I probably don't need to explain why it all went down the tubes. I entered this space with the intention of being a funder but had to take my lumps first so we were a standard reseller. Oh boy did I learn a lot the first couple years...

You can't hide from the rates. They're high. Very high. Even premium price is a tough pill to swallow for a first time mca client with good credit. You have to learn to talk rates and get around those objections UPFRONT. If you are hoping to throw an offer out without setting any expectations first then you will hear a lot of crickets after you send the #'s.

I have a lot of different ways of explaining it depending on the client and I train my agents to do the same. I'm not in the front lines nearly as much as I used to be but I still jump in for fun. We have an advantage by being able to fund our own stuff but we don't fund every deal. If it doesn't fit our box we either syndicate or broker it. Earning trust and setting proper expectations before an app is even filled out is incredibly important to getting stuff funded. A simple "15 to 30 cents on the dollar over the next 6-12 months is the world we operate in. If you can't deal with those #'s then it's best that we part as friends before chasing a bunch of paper" works well for many (even these #'s are low for risky stuff). Dangle a premium price cookie or two but if you can't talk real rates and pre-sell then don't bother.

Niche's are best way to go if you are going to cold call. Call on a specific SIC code and talk about a special program just for them. Doctors and restaurants already have them but so does everybody else if you can sell from that angle. Stick with just a couple SIC codes and get used to the types of folks you are talking to. Remember every conversation. Share stories of the last call to the next call.

Get people to talk about their business. They LOVE talking about their business. Ask them what their first year was like and why they started in the first place. Once they open up a big big barrier is down. Drop the "you remind me a lot of a a client I'm helping get a new lift for his auto repair shop so he can add a mechanic AND MAKE MORE MONEY".

Put the cost in perspective. "If you put a new lift in your shop how much extra revenue can you make over the next 3-5 years? Wow, that makes the $6k cost of capital on the 25 ground seem really small". See?

I closed a pizza shop once with a brilliant line. I asked "If I walked into your pizza shop and said I'm going to buy $13k worth of pizza over the next 6 months but I wanted to pay $10k cash today, would you take it?". Merchant said in a heart beat. I told him the cash advance was almost the same thing. We're giving you $10k today in exchange for $13k of sales over the next six months. It clicked and he signed the deal.

This business is tough as hell. No two ways around it. But you can make a great living if you are good. There's a ton of agents out there who aren't. Way too many. That's the saturation part. Lotsa of not so good agents tossing each deal against 6 walls praying that they can close it and have a hard time even explaining it. Don't be that agent.

[CO1]

And also don't forget there's a lot of companies with restrictions on what they will fund. Some don't. Benefits of working with a direct funder.

[mbradford101]

Sounds like good advice from all you guys.

Don't know if anyone can answer this, but I'm wondering what a phone system / software costs that does the calls with the press 1 to connect. Is there a recommended vendor for these systems (and the bulk phone numbers)?

[Scott Williams]

Be careful about focusing too much on press 1. Think about the type of merchant that would respond to a press 1 campaign. 99% of the time its going to be merchants that have been declined ten times in the past for a MCA. These merchants are getting 5-10 calls a week from live agents so press 1 is going to deliver the "low hanging fruit".

[MCAVeteran]

that is why funders are racing to offer loans to non cc sale business. the mca space is saturated and new sic's were needed to keep this going strong...by now, most iso's are getting email solicitations about loans/bank only and rebranding/messaging from funders to become a more full suite alternative lending company.....its come along way from the days of, mr merchant, you have to switch your cc processing company to x,y,z to get an advance....

[Duvdevan]

Years ago, I sold printing to businesses, cold-calling, following-up, and repeat-visiting about a thousand businesses until my print and copy sales were over $50,000 per month.

So I'm wondering if I could do the same thing in the MCA industry? Are there any ISOs or salespeople on the forum who built a decent income cold-calling and canvasing businesses? If so, could you share how it worked for you?

-

Mark,

Another person from the print industry once asked me if he can enter the MCA field by simply canvassing and using yellow pages to generate leads and sales. While canvassing and cold calling works great with print, alternative lending is a different type of service. With print, you know you can walk in to any business and it is pretty much a given that they need the service, and more or less likely they already have a vendor or contact that they're working with. So your job is to build a relationship and convince that business to switch vendors.


In this business if you started canvassing and cold calling all day, you would drive yourself crazy. Not every business needs financing and not every business is looking for alternative financing. You wouldn't have enough time in a day to canvass every day and come back to the office make cold calls, and take in to consideration all the operational duties you'll have to deal with.

[mbradford101]

Mark,

Another person from the print industry once asked me if he can enter the MCA field by simply canvassing and using yellow pages to generate leads and sales. While canvassing and cold calling works great with print, alternative lending is a different type of service. With print, you know you can walk in to any business and it is pretty much a given that they need the service, and more or less likely they already have a vendor or contact that they're working with. So your job is to build a relationship and convince that business to switch vendors.


In this business if you started canvassing and cold calling all day, you would drive yourself crazy. Not every business needs financing and not every business is looking for alternative financing. You wouldn't have enough time in a day to canvass every day and come back to the office make cold calls, and take in to consideration all the operational duties you'll have to deal with.

I hear ya'. One lender told me to focus on restaurants, and I assume there's probably a top 10 list of businesses most likely to do these types of loans. So I may try canvassing just those types of businesses. Selling printing, I'd leave a flyer and business card (and sometimes a couple pieces of candy), then follow up with a phone call a couple days later, and just keep repeating the process until they'd try us with a print job or tell me to go away and never come back :)

I was 22 then, so it was alot easier to get away with being annoying. Now I'm 39 :) But I'd imagine that even in this business, there'd be a better response rate if you actually stopped in and left something in person (which you could mention when you called), rather than the hundred+ hang-ups you'd get cold-calling by phone -- never even getting beyond the gate-keeper.

For me, it's worth a shot, even focusing on just 1-3 types of businesses, since I KNOW I'll give up if I get a hundred hang-ups in a row calling by phone, and I don't have the budget to buy leads or do direct mail or anything else expensive.

But now I'm also wondering about what quickfunder said above -- that he's "sick of having to haggle with merchants who are being outright lied to by all the other guys." I had that same experience when I worked for a mortgage company before the crash. Calling leads, I was honest about the actual rate we could get them (even having dozens of lenders), but the deals always went to brokers who quoted rates well below what was possible, which I assume probably "changed" not long before they got to the closing table (or at the closing table, as I've seen happen more than once).

It's hard to win at that game :)

[skideeppow]

He is pulling your leg. Every merchant I talk to has heard of the MCA industry.

[Sean Cash]

personally, the majority of business owners I speak to have never heard of it. most, if not all government officials have never heard of it. banks, hedge funds, and private equity groups are just starting to learn about it. journalists are just starting to hear of it, but even then not really because the industry is being overshadowed in the news by silicon valley darlings like lending club, on deck capital, and kabbage. They distort the message because although ODC and Kabbage are part of the greater MCA industry, they're not the heart and soul of it.

all the mailers, cold calls, and email blasts in the world don't mean the people receiving them have any idea what it is being offered. Sell my future receivables? never heard of that. I hear that more than 90% of the time.

[atag40]

Hello ya'll...

I'm new to the MCA field. I'm not really in it yet, but am seriously considering it. I get that I can be considered competition and such...

I've read this whole thread, and I'm finding myself baffled by one thing in particular: The head of an ISO (who's been in the business since '07 and has done VERY very well in it on his own), while wanting to recruit me to work for/with him, told me that 90% of the merchants that I will talk to will have never heard of MCAs.

He also told me a story about going to a chamber of commerce meeting RECENTLY (in a pretty big city) and presenting his business to the whole crowd and then having 90% of the people there meet him outside and ask for his services.

Do you think he was outright lying about the climate of the business right now? From your above posts I would think that he's pulling my leg. But until I get into it, I wouldn't know for myself.

Would you say that it's totally impossible that he's still having those kind of experiences?

Thanks so much!

The greater majority of businesses have not heard of this product. That said, it is possible that market saturation occurs despite many business owners being unaware of this product.

The MCA market is a niche product which is only right for specific business types. These fall into two bins (as I understand it), those who have a way to monetize short term capital but not the credit to go to a bank, and/or time/credit to go for an SBA loan, and those who are in trouble (And either sink or swim with short term funding. If its the unfortunate former case, hopefully axe drops after 6-8 months when the funding is paid back).

Unfortunately this is not a product that is right for every business, just the specific market that we work in. Therefore your future boss is not necessarily lying, but perhaps giving your first lesson about framing the conversation to work for your purposes .

[HollyH]

Atag40, Thanks!!

Appreciate that info, and I like, "perhaps giving your first lesson about framing the conversation to work for your purposes." Good.

[MCNetwork]

I don't think your typical merchant knows what an MCA is unless he is on the internet searching for short term working capital. Then he can't help but come across a zillion MCA firms that explain what it is.

[Scott Williams]

Depends on the industry type too. Every restaurant owner in America know of MCA since he/she gets tons of calls and mailers. Other industry owners could be in the dark.

[MCNetwork]

I used to own a restaurant and I got mailers from AdvanceMe all the time. But I didn't know what it was at the time and didn't care as long as my cash flow was good.

[HollyH]

Skideeppow, Sean Bash, MCNetwork, Scott W, thanks so much for your quick responses. Helpful.

I'm open to any other posts as well. Thank you!

[Finance1]

I'm having some success with strong companies, good credit, and bigger deals. Definitely moreso than in 2010-12. The evolution of the longer terms/lower rates and expanded industries is really helping.

Back in 10-11 we ran into plenty of quality merchants who wouldn't even consider OD's standard 1.20/6 or if you were lucky, 1.27/9. But the 12-18 month window gets the job done.

I know there is a lot of talk about longer terms being bad because renewals come late and who knows if they perform but the companies I've seen funded lately really benefited from the better deals out their (they deserved it too). Still tough to sell but if your mind is sharp you can get it done.

Setting expectations properly is very important. I have no problem giving a real best case scenario upfront. If you have a strong client, saying the best case scenario would be 30-35 cents on the dollar over 18 months is totally honest and doesn't even look that bad to them. We've gotten 2 100k+ deals funded in the last 2 weeks and have several more in the works. That might be common for some small iso's but not for us.

[HollyH]

Finance1, thanks so much!!!

[vmccapital.com]

My brother is back to stocks, im still here! is this ali ?

[J.Celifarco]

Sean I have to say I agree with you on this.. No matter how many cold calls or mailers a business receives, until they take the time to talk to someone who knows what they are talking about and explains a MCA honestly most business owners don't know what we offer.. Also even after they talk to someone I feel a lot of merchants still don't really understand this type of lending.. With so many sales offices trying different sales tactics in the end the merchants usually don't get the real story on how a MCA works until they agree to a deal and see a contract

[Sean Cash]

Sean I have to say I agree with you on this.. No matter how many cold calls or mailers a business receives, until they take the time to talk to someone who knows what they are talking about and explains a MCA honestly most business owners don't know what we offer.. Also even after they talk to someone I feel a lot of merchants still don't really understand this type of lending.. With so many sales offices trying different sales tactics in the end the merchants usually don't get the real story on how a MCA works until they agree to a deal and see a contract

Back when I was an underwriter, I remember a part of my job was fielding calls from merchants asking why their merchant account deposits were so small. I would tell them that their contracted percentage was being withheld and applied to their balance. It was amazing to see that some merchants didn't fully grasp the concept until they were actually a few weeks into it. You could explain the program frontwards, backwards and upside down but it wasn't until their deposits weren't matching up with their batches that they started paying attention.

[Wabbitt]

Great thread. I am a noob myself in the industry, and I did go the route of training with an ISO. Unfortunately, the guy I worked for was a crook who was selling every deal at a 1.59 to as high as a 1.99 and tacking on crazy upfront fees. He was hurting merchants and hurting the industry. Not only that, but he was also not paying his agents the way he was supposed to. It was quite a learning experience-and a costly one. I learned quite a bit, but urge you to use caution when starting out and do your homework on the company you go to work for. As far as saturation, well, I've seen a lot of new competition, even in the short time I have been in the industry, but I still talk to plenty of merchants who are very unfamiliar with the product. I had a lot of early success, which could be a good thing, or a bad thing depending on how you look at it.

[HollyH]

Wabbit, thanks for that.

The ISO guy I mentioned, I believe, is on the up and up, although I'm a little turned off by the commission split (5% to me of FUNDED amt from a direct lender that will, if I go with them DIRECTLY, pay 8-9% of PAYBACK amt to me). Does that sound standard to you all?

I was trying to reach him for two weeks and during that time found the same lender (he uses) on my own. When he finally got back to me I had already researched the lender.

I'm torn between going with an ISO for the training and starting on my own. I'm sharp, have succeeded in sales and am great with people, but am acutely aware that I know only a little. I considered going with the ISO and then being on my own with other lenders, but I don't know if that intention is coming from complete integrity on my part.