[pfalconemca]

I understand the benefit of working with 20+ lenders...you're able to have your deals funded by the right organization, and you have plenty of options to offer your merchant....most of my ISO agreements state that I have to fund a certain amount of deals with them in order to maintain my current agreement. My question is, do most of the smaller ISO's(under 25 employees) work with 4 or 5 lenders...or do you still work as many lenders as you can create a partnership with? Thank you in advance for your help!

[GoodCustomerService]

I haven't seen or heard any funder enforcing a deal funding minimum on anyone in years. Right now, you're pretty satisfied with any ISO that funds deals with you. Regardless of how many or how much you fund for them. As long as that default rate stays low, nobody cares.

[J.Celifarco]

I understand the benefit of working with 20+ lenders...you're able to have your deals funded by the right organization, and you have plenty of options to offer your merchant....most of my ISO agreements state that I have to fund a certain amount of deals with them in order to maintain my current agreement. My question is, do most of the smaller ISO's(under 25 employees) work with 4 or 5 lenders...or do you still work as many lenders as you can create a partnership with? Thank you in advance for your help!

the idea of working with 20+ lenders is insane to me.. If you are working with that many lenders you are not doing enough business with anyone to build a relationship.. Maybe its just me but I always thought working with a smaller group of funders who touch on all the different bases and trying to grow those relationships leads to getting more deals funded then trying to work with 15-20 different banks. If a bank knows they can count on you to try to do your business with them they will be more likely to approve and fund your deals as well as make exceptions when you need them.

[ridextreme]

I understand the benefit of working with 20+ lenders...

I disagree with this. You should have one or two main funding sources, and 3 to 4 sub sources for the deals they don't like. Working with 20+ is not necessary. Don't you want to make more money with once main source????

Being in this industry for almost 10 years I have heard brokers brag many times about the fact that they work with 100 or more lenders. They are only making themselves sound really bad.

[J.Celifarco]

I disagree with this. You should have one or two main funding sources, and 3 to 4 sub sources for the deals they don't like. Working with 20+ is not necessary. Don't you want to make more money with once main source????

Being in this industry for almost 10 years I have heard brokers brag many times about the fact that they work with 100 or more lenders. They are only making themselves sound really bad.

Also if you have a reputation of only working with a small group of banks the other banks will work harder to try and gain your business then if you are out there signing iso agreements with every bank on the street and shotgunning deals all over the place

[Chambo]

I haven't seen or heard any funder enforcing a deal funding minimum on anyone in years. Right now, you're pretty satisfied with any ISO that funds deals with you. Regardless of how many or how much you fund for them. As long as that default rate stays low, nobody cares.

All about conversion rate. Are you wasting the fund's time?

[Chambo]

the idea of working with 20+ lenders is insane to me.. If you are working with that many lenders you are not doing enough business with anyone to build a relationship.. Maybe its just me but I always thought working with a smaller group of funders who touch on all the different bases and trying to grow those relationships leads to getting more deals funded then trying to work with 15-20 different banks. If a bank knows they can count on you to try to do your business with them they will be more likely to approve and fund your deals as well as make exceptions when you need them.

Or...they know they have you, and start to cherry pick

[GoodCustomerService]

I agree that for a healthier work flow it makes more sense to be selective in which funders to work with. Being more careful on deal placement and trying to establish relationships with your funding partners is the best route. But right now, in this market, most ISO's don't care and would prefer to increase the probability of getting the highest offer possible on the deal by sending it out to anyone and everyone and pick the best option that suits their needs (Highest payout). I know guys that would take a little less money and comp on a deal to fund it with a specific funder. But that's really more about path of least resistance to funding (less stips, shorter funding process, etc) than building a relationship. To everyone on here who has been an ISO in this market for more than 5 years and is only working with a handful of funders, and has been able to still convert a high percentage of your deals only using those 5 funders, I applaud you.

[FUNd]

It's really all about having a home for every application. ISO's that "shotgun" deals are typically the ones who don't know the products. There is absolutely no reason to shotgun deals to several lenders at once if you understand the UW guidelines of your lending partners.

[GoodCustomerService]

I get a warm and fuzzy feeling inside when I'm BCC'd on an ISO submission. Makes you feel important. Guys that do that are awesome. Their shops are always clean. And their business has the lowest default rates. Love those guys.

[J.Celifarco]

I agree that for a healthier work flow it makes more sense to be selective in which funders to work with. Being more careful on deal placement and trying to establish relationships with your funding partners is the best route. But right now, in this market, most ISO's don't care and would prefer to increase the probability of getting the highest offer possible on the deal by sending it out to anyone and everyone and pick the best option that suits their needs (Highest payout). I know guys that would take a little less money and comp on a deal to fund it with a specific funder. But that's really more about path of least resistance to funding (less stips, shorter funding process, etc) than building a relationship. To everyone on here who has been an ISO in this market for more than 5 years and is only working with a handful of funders, and has been able to still convert a high percentage of your deals only using those 5 funders, I applaud you.

what these ISO dont understand is that by working with fewer banks you can grow the relationships where you can ask for higher commissions better factor rates that then lead to higher % of funded deals with a higher profit.. The thing is you have to show the bank that you deserve preferred treatment then the other iso's they work with.

[jotucker1983]

I understand the benefit of working with 20+ lenders...you're able to have your deals funded by the right organization, and you have plenty of options to offer your merchant....most of my ISO agreements state that I have to fund a certain amount of deals with them in order to maintain my current agreement. My question is, do most of the smaller ISO's(under 25 employees) work with 4 or 5 lenders...or do you still work as many lenders as you can create a partnership with? Thank you in advance for your help!

There are different deal paper grades and your job as a Broker is to have a credible, quality, and market price-efficient source for each of these paper grades. You have A, B, C and D grades.

Overall, you should have no more than 5 funders that you work with.

* Funders 1 and 2 should be for your A and B grades

* Funder 3 should be mainly for the B and C grades

* Funders 4 and 5 should be solely for C and D grades

[pfalconemca]

Absolutely...I currently have an agreement with 6 lenders...2 of them that I use as my main sources...but there are times where I know that due to my merchant's numbers, my main lenders aren't going to accept the deal and I wouldnt waste their time or risk burning that bridge..but I am also in the business of making money, so I need someplace to send these higher risk merchants...so I'm definitely not in the business of shotgunning the deal and then reviewing all of the offers. I guess the ultimate answer is to work with a handful of funders that all offer different verticals. High risk/low risk/longer terms/shorter terms so that I always have the RIGHT avenue to send my deals down

[GoodCustomerService]

The 5 funder model is just not profitable enough anymore. Why wouldn't you want a pricing war between 5-6 funders? You're guaranteed the highest approval and commission that way. It's much more effective in the sub-prime or high risk space. Definitely a higher likelihood your deal gets jacked from you but the best closers don't get their stuff jacked, Or they get paid anyway when they call out the funder who stole their deal. Best way to do it.....have 2-3 funders for anything needing north of an 8 month term on first position, and anything below that, including second+ positions, have fun.

[J.Celifarco]

The 5 funder model is just not profitable enough anymore. Why wouldn't you want a pricing war between 5-6 funders? You're guaranteed the highest approval and commission that way. It's much more effective in the sub-prime or high risk space. Definitely a higher likelihood your deal gets jacked from you but the best closers don't get their stuff jacked, Or they get paid anyway when they call out the funder who stole their deal. Best way to do it.....have 2-3 funders for anything needing north of an 8 month term on first position, and anything below that, including second+ positions, have fun.

I also think a lot of this has to do with the types of deals you are funding. If the majority of your deals are low quality and stacks I think you will need more funders then if the majority of your deals are 1st position deals. How you market and the deals you get in will have a lot to do with which approach you take and what relationships you need to get deals done. Just different ways of looking at the industry, and deal placement. Don't say the 5 or 6 funder model is profitable because there are plenty of offices who are killing it without shotgunning deals all over the place

[GoodCustomerService]

Yes, John. Couldn't agree more.

[jotucker1983]

I guess I don't see the purpose of using more than 5 funders because, depending on the paper grade and risk based pricing, is there really going to be that much of a difference between the offers?

Take an A Paper deal, let's say it should get a range of a 1.12 - 1.18 factor over 6 months based on pre-qualification. If you have an efficient A Paper funder in your network, then your client should be approved at this pricing range. Sure, some A Paper funders will be different in how they structure this level of pricing, as some might structure it as a Loan rather than an Advance, presenting a lower "cost for capital," however after factoring in the origination fee, you should end up at around the same price range (give or take) anyway.

A lot of brokers get a file, don't do any serious pre-qualification on it, and just hot-shot the file to a ton of funders (well over 5 funders). All this does is create more work for your funders than required, your client's fico score is dinged like crazy which drives down his score, along with the situation of having the 9th funder in your list of shot guns seeing 8 other funders that just pulled this guy's credit over the last 48 hours and wondering to themselves as to what's going on?

In my opinion, the best approach is to have no more than 5 funders, but your file should only be submitted to no more than 3 of those funders at max. You should have the funders that efficiently serve the paper grades in question, then once you get a file you should do efficient pre-qualification so you can pretty much estimate the file's paper grade and send it to the relevant funders in your network.

[J.Celifarco]

I guess I don't see the purpose of using more than 5 funders because, depending on the paper grade and risk based pricing, is there really going to be that much of a difference between the offers?

Take an A Paper deal, let's say it should get a range of a 1.12 - 1.18 factor over 6 months based on pre-qualification. If you have an efficient A Paper funder in your network, then your client should be approved at this pricing range. Sure, some A Paper funders will be different in how they structure this level of pricing, as some might structure it as a Loan rather than an Advance, presenting a lower "cost for capital," however after factoring in the origination fee, you should end up at around the same price range (give or take) anyway.

A lot of brokers get a file, don't do any serious pre-qualification on it, and just hot-shot the file to a ton of funders (well over 5 funders). All this does is create more work for your funders than are required, your client's fico score is dinged like crazy which drives down his score, along with the situation of having the 9th funder in your list of shot guns seeing 8 other funders that just pulled this guy's credit over the last 48 hours and wondering to themselves as to what's going on?

In my opinion, the best approach is to have no more than 5 funders, but your file should only be submitted to no more than 3 of those funders at max. You should have the funders that efficiently serve the paper grades in question, then once you get a file you should do efficient pre-qualification so you can pretty much estimate the file's paper grade and send it to the relevant funders in your network.

Yes but you are making the assumption that most ISO know and understand the banks they work with pricing and underwriting models. I would guess the vast majority dont

[isaacdstern]

you need a few options for each type of deal. The cost of marketing has skyrocketed in the last few years and now more then ever you need to be able to monetize as many deals as you can. The only way to do that in my opinion is to have a home for every deal

[GoodCustomerService]

People also shotgun deals to multiple funders to protect the submission. As Isaac said, the price of marketing is up. So most of the new guys coming into the space are buying UCC's for leads. That stuff is getting hit harder than a $2 hooker. So most ISO's will send it to every funder in their database to hopefully get it in before any of the other ISO's calling it so they can stake claim to it. Most funders hold submissions for at least a week for an ISO before another ISO can resubmit.

[bizloanbroker]

send every deal to Avi Dahan at yellow, he will either fund it directly or find a home for it

[GoodCustomerService]

Send it to me. PM me.

[GoodCustomerService]

Damn. We just ruined this chat, Bizloanbroker.

[patrick.bruscia]

There are definitely a lot of benefits to working with a bunch of different lenders...everyone seems to have their own quirks. sometimes a deal will slip through with a lender you hardly use after being declined everywhere else. key is to create a relationship everywhere you go keep the competition fierce.

if i had 4 lenders i'd fund half the deals that i fund now.

i'm looking at the sales board right now for the month of June and we have deals funded with 9 different lenders up there. of course we have our favorites but its always nice to have someone else in the back pocket if need be.

[Joseph Esparza]

PLAYBOOK is a broker's broker. So we source what it takes and who it takes to get the deal done. We have many A,B,C & D direct funders, and what one might say they do,...the other might say - and really does [it]. Strong relationships don't only exist in volume, but more so in through-put..We don't waste there time, they don't waste ours.