[Duvdevan]

I've read a lot posts here about the market being saturated and there are Funders on every corner. But where are these corners?

How many companies are there that are capable of funding at least $2 million a month consistently? And I do mean $2 million of their own funds - even if they broker out the rest. I bet that list is not as long as many people think. Sure, there are a ton of ISO's and I actually think that's great for the industry, the more ISO's there are the more opportunity there will be for new funding companies to step in and take in those ISO's. Especially when the ODC's of the world start neglecting them.

[Chambo]

the issue is, these smaller ISO's (0-15 reps) that don't have the budget to mass market, are using the same lead sources. Thus, those poor merchants are getting called 5, 10, 15 times a week with the same schtick. Then people start stacking on each other feeding off each other like rats

And $2 mill "of the own funds"? What do you mean by that? Who uses their own funds in this industry?

[Chambo]

On the funder side...every funds wants the same thing. "Send us your good deals", or (as we saw these some folks recently "send us your declines"....just another "me too" campaign shadowing others with nothing new to bring to the table.

Thus...saturation

[Duvdevan]

the issue is, these smaller ISO's (0-15 reps) that don't have the budget to mass market, are using the same lead sources. Thus, those poor merchants are getting called 5, 10, 15 times a week with the same schtick. Then people start stacking on each other feeding off each other like rats

And $2 mill "of the own funds"? What do you mean by that? Who uses their own funds in this industry?

Very few of these ISO's have the ability or the network to go out and raise $10 million to run their own funding company. In-house funding does exist but not on a large scale. If you had access to an investor who gives you $10 million in capital would you sit around and still broker out all your deals to the big boys? Doesn't it make sense to to do your own risk analysis on some deals and fund the business yourself (or syndicate it to spread risk), instead of sending it directly to the big boys to fund.

[Duvdevan]

On the funder side...every funds wants the same thing. "Send us your good deals", or (as we saw these some folks recently "send us your declines"....just another "me too" campaign shadowing others with nothing new to bring to the table.

Thus...saturation

Other than higher commission pay outs, what would you like to see from the new Funding companies entering the game?

I do notice folks using the "send us your declines" phrase a lot, I'm just wondering what the statistics look like. Heck, if you're an ISO and you sent an app to the big funding companies and they all pass, and than you say, well let me try one of these guy's that accept declines, how often can they actually get that deal funded? And are they just going to first try to re-submit that deal to the big boys again, just to see if an ISO missed a few big funding companies?

[Scott Williams]

New funders need to have a niche just like new iso's need to have a niche marketing. Instead of "send us your declines", they need to be more detailed on something they do different compared to the other funders. Examples......"we can fund merchants with an open bankruptcy" "we can fund merchants with open tax liens under 50k" "we allow up to 8 NSF per month on the bank statements"

[Duvdevan]

New funders need to have a niche just like new iso's need to have a niche marketing. Instead of "send us your declines", they need to be more detailed on something they do different compared to the other funders. Examples......"we can fund merchants with an open bankruptcy" "we can fund merchants with open tax liens under 50k" "we allow up to 8 NSF per month on the bank statements"

But is that really offering anything different? "Send us your declines" is a very vague statement, you can pick up the phone and say hey Mr. Funder I saw your ad about accepting declines and I have a merchant with (open bankruptcy, up to 8 NSF's a month, open tax liens under 50K etc. ). I agree , it is more detailed if you spell it out, but is it really something new? Which is why I'm interested in the numbers, just because the company is marketing itself as "send us your declines we will fund them" doesn't mean they will. So is it just all smokes and mirrors?

[Scott Williams]

Lots of them are just taking your deals and brokering them out. Smoker and mirrors in my opinion.

Important part of this industry is knowing your funders. Find out which lenders are directly lending their own money. Do your homework and find out what certain lenders like. Read through their guidelines and make a cheat sheet. Then when you get a deal that has an open tax lien not on a payment plan you know where to submit it.

[Duvdevan]

Lots of them are just taking your deals and brokering them out. Smoker and mirrors in my opinion.

Honestly, I would love to see a pole for this.

Are the brokers hoping that you missed a few big funders when you received your declines? Or, do they simply re-submit the application to the same funding company the ISO had already submitted to, leveraging their strong relationship to convince the original decline to be reversed.

[Sean Cash]

the thing is, funders that offer the flexibility of funding deals with tax liens, gas stations, homebased, online, bad credit, and the like dont want you to send in only deals that meet that criteria. Ask any funder that says they'll do gas station deals if you can send all your gas stations. I guarantee they'll say "If that's all you're going to send us, then don't bother. Do a few million regular decent cedit retail/food service deals with us and we'll do some gas stations with you." no one wants to be a dump for your tax lien deals, or other impaired files. Saying they'll do them means so long as you send them all of your other business too.

[MCNetwork]

"Send us your declines" just translates to "send us your declines so I can see if I'd like to decline it or not." It's a meaningless statement meant to recruit more ISOs.

[funding pro]

the thing is, funders that offer the flexibility of funding deals with tax liens, gas stations, homebased, online, bad credit, and the like dont want you to send in only deals that meet that criteria. Ask any funder that says they'll do gas station deals if you can send all your gas stations. I guarantee they'll say "If that's all you're going to send us, then don't bother. Do a few million regular decent cedit retail/food service deals with us and we'll do some gas stations with you." no one wants to be a dump for your tax lien deals, or other impaired files. Saying they'll do them means so long as you send them all of your other business too.

+1

I would also go out and say, companies funding $2MM a month is probably more prevalent than you would think. Many of the companies that were funding in house $100-200k/month a few years ago should have grown to those numbers by now. The ultimate question I would ask a "new" funding company as was already stated is "What do you offer, that I dont have today?" And if your answer is a point or two, stop wasting my time. I'd rather fund with an established company that I have been doing business with for some time than risk my renewal portfolio with some new, no name firm.

[Duvdevan]

+1

I would also go out and say, companies funding $2MM a month is probably more prevalent than you would think. Many of the companies that were funding in house $100-200k/month a few years ago should have grown to those numbers by now. The ultimate question I would ask a "new" funding company as was already stated is "What do you offer, that I dont have today?" And if your answer is a point or two, stop wasting my time. I'd rather fund with an established company that I have been doing business with for some time than risk my renewal portfolio with some new, no name firm.

I get what you're trying to say, but I would not phrase it that way.

No business, in any industry (unless they're a desperate before they even started) will want to hear, "What do you offer me, that I don't have today"..."stop wasting my time". As soon as they hear that, they will tune you out before you even start. The conversation is being presented as "me" "me", "me". It makes a lot more sense to approach a new funding company with, "What can we do for each other to make this a win-win for both of us". Business is about relationship building on both ends, you may already have a book of business, but you already know, there are hundreds of ISO's out there that started out with no deals and built up their book, and those are the guy's that helped build the ODC's and Strategic's of this world. There are of course plenty more entering the game, some will succeed most wont.

So while it may not make sense for you, it might be a better option for other ISO's who want to get in with a new funding company. A new business is always more loyal to it's early entry partners more than anyone else, but that loyalty is not born overnight. You can wait a year, or two to jump on board, but you wont be able to negotiate the same type of deal those other folks are getting.

[MCNetwork]

Depends on the funder and the experience of the ISO. You wouldn't approach an Advance Me, Rapid Advance or On Deck Capital asking "what can you do for me" but you can certainly ask that question of the new players who are eager to sign up ISOs. I do it all the time!

[Duvdevan]

Depends on the funder and the experience of the ISO. You wouldn't approach an Advance Me, Rapid Advance or On Deck Capital asking "what can you do for me" but you can certainly ask that question of the new players who are eager to sign up ISOs. I do it all the time!

What's the best and worst answer you've gotten so far from asking that question? And, what were you looking for?

[HeatherF]

As a decline company that does state " Send me your declines" I see the decline space in two ways. It benefits the ISO so that they can capitalize on their marketing expenses and get a better rate of return as well as keeping their agents funding deals (nothing is more discouraging as a new agent to have your first couple of deals denied off the bat). It also helps small business owners who have no where else to go. Contrary to some belief on this board not all business owners who qualify for a decline advance have " scum bag kids" or " go to Vegas after a divorce". There are some business owners who get in unforeseen circumstances or just make bad decisions on when and how to pay bills.

We are a direct funder with our own capital which does allow us to make decisions as we see fit. I know most agents believe that if they received the paper it must be fundable but even decline houses have deals they will just not touch. It is not like we are offering a decline program just so we can get all your deal flow. There are companies who have added the decline or starter program so that they can better serve the ISO with all their needs but they still have guidelines that can be restrictive. The best thing you can do is just to know who you are working with and what they will and will not do. It is one reason we allow agents to speak to our underwriters directly. We want you to have full disclosure of why we can't offer on a merchant and understand our way of thinking and in return will hear your case as to why we should.

[Scott Williams]

Its great that new funders are always coming into the industry but an ISO only needs 6-7 funders for their volume/submissions. So that means a new funder would have to offer something that would knock off a current funder out of your rotation. It doesn't always need to be a program but maybe just better service, turnaround time, communication, etc.

[Duvdevan]

Its great that new funders are always coming into the industry but an ISO only needs 6-7 funders for their volume/submissions. So that means a new funder would have to offer something that would knock off a current funder out of your rotation. It doesn't always need to be a program but maybe just better service, turnaround time, communication, etc.

+1
Good stuff!!

[CO1]

My company lowered the commission 6% and is now offering 50% on the processing. An they dont really follow guidelines meaning the restricted lists, they like every to do anything that makes sense to them, and thats how some direct funders operate. An as far with credit score, they dont care because thats what this product was based on, but now you have funders with a minium.

[MCNetwork]

What's the best and worst answer you've gotten so far from asking that question? And, what were you looking for?

Everyone pretty much pitches themselves the same way so there were no best or worst answers. The proof comes once you've started working with the funders. The main things I look for when dealing with a funder are:

1. Speed of underwriting (within 24 hours)
2. Ease of funding (within 7 business days MAX)
3. Flexibility of underwriting staff to tweak programs according to merchant's needs
4. Competitive commissions
5. Good approval ratios, meaning their UW guidelines are not overly strict
6. Timely notification of merchants who are eligible for renewal
7. Competitive factors/buy rates
8. Honesty and professionalism

If any of my funders fail on the above criteria, I start looking elsewhere. I keep about 6 funders in my current rotation who meet all of the above criteria. In order to add another funder to my list, they need to be able to service industry categories that my current funders don't service.

[JayBallentine]

"Send us your declines" just translates to "send us your declines so I can see if I'd like to decline it or not." It's a meaningless statement meant to recruit more ISOs.

Is this a general statement?

[MCNetwork]

This is just based on my experience

[funding pro]

In the case of a reseller saying this, I would agree. There are a handful of funding companies out there that will fund declines that the "tighter" funding companies turn down.