[MCNetwork]

Wow...talk about a lot of hair on a deal! This one looked like Chewbacca! It's always good to hear the other side of the story.

[skideeppow]

This is a good discussion. Possibly we did not communicate properly the real reason for the decline. It was not because of the tax liens, which we did know about at application and were over $300k. This was a deal that had hair going in, and collapsed under the weight of too many issues. There were 7 legal entities, money being moved around, a borderline industry (travel agency/timeshare or vacation sales), excessive credit card chargebacks (customer dissatisfaction with the product), large competitor payoff, incomplete financial statements, 6 separate lawsuits against the business, large jump in volume from 2014 to 2015 (red flag), a website with multiple complaints against the business for deceptive sales practices including as recently as August 2015.

As many of you have noted, the initial offer is not a full underwrite. Deals that are declined solely on the basis of information identified in the application or made known at the time of the application is a poor business practice, and if that were the case an ISO would have a very legitimate complaint against the funder.

So you are saying this is the deal the original poster brought to Rapid. Well, of course there was little or no chance of this getting done. All those issues, i would have been holding my breath to get this done, and would have let the merchant know the chances of this funding were slim to none.

[TheShitzuofMCA]

Many variables as to why, I worked for a funding company who would lie if they were short on money. Instead of being honest with the brokers, they would continue to let them submit then cherry pick what deals to fund at the final stage. Others request so many stipulations as a deterrent it feels like, making you want to give up. lol The relationship between ISO and funding companies has been tested. Its hard to find trustworthy brokers and funding companies will always try to get some type of loyalty when it comes to submissions be it by working relationship or compensation. Companies like Rapid that have so many submission can get away with treating ISO like you stated. Its only going to get worse I feel.

[Chambo]

This is a good discussion. Possibly we did not communicate properly the real reason for the decline. It was not because of the tax liens, which we did know about at application and were over $300k. This was a deal that had hair going in, and collapsed under the weight of too many issues. There were 7 legal entities, money being moved around, a borderline industry (travel agency/timeshare or vacation sales), excessive credit card chargebacks (customer dissatisfaction with the product), large competitor payoff, incomplete financial statements, 6 separate lawsuits against the business, large jump in volume from 2014 to 2015 (red flag), a website with multiple complaints against the business for deceptive sales practices including as recently as August 2015.

As many of you have noted, the initial offer is not a full underwrite. Deals that are declined solely on the basis of information identified in the application or made known at the time of the application is a poor business practice, and if that were the case an ISO would have a very legitimate complaint against the funder.

WOW, even I wouldn't argue with Jeremy over that!

[CLucas]

The question: Lazy underwriting? OR-Inexperienced underwriting? OR-Maybe MCA’s companies want the deal and string you along with stipe’s while waiting for a syndicate partner to fund the other half of the deal and if they can’t find a syndicate partner consequently the deal dies or is reduced in size. The reasons given for denial or reduced amount may have nothing to do with the underwriting criteria of the applicant. The result Merchant’s view of this industry is now rooted in disgust, skepticism, and disdain. Simply put “I applied, signed contracts, was told everything was moving forward, gave all the documentation needed, and they screwed me at the very last minute” This could be a common view from Merchants that have gone thru this process.

[J.Celifarco]

The question: Lazy underwriting? OR-Inexperienced underwriting? OR-Maybe MCA’s companies want the deal and string you along with stipe’s while waiting for a syndicate partner to fund the other half of the deal and if they can’t find a syndicate partner consequently the deal dies or is reduced in size. The reasons given for denial or reduced amount may have nothing to do with the underwriting criteria of the applicant. The result Merchant’s view of this industry is now rooted in disgust, skepticism, and disdain. Simply put “I applied, signed contracts, was told everything was moving forward, gave all the documentation needed, and they screwed me at the very last minute” This could be a common view from Merchants that have gone thru this process.

Did you read the list of reasons above as to why the file was killed??? Sometimes a deal is just bad and cant be funded, sometimes things come up during underwriting and things change.. I am a sales guy my life would be a lot easier if all the deals were approved all the time but thats not reality. This outlook by some sales people in this industry that everything is always the banks fault gives the rest of us a bad name. Take some time learn and understand underwriting at the different banks you work with and you will run into these problems a lot less. It will also make selling this product and managing your clients expectations easier if you understand the different banks process in coming to an approval.

Believe me I know banks sometimes drop the ball and make mistakes, but to throw a blanket judgement across everyone that underwriting is lazy, or that the bank is stringing you a long waiting for syndication is just wrong. Just like in every industry there are good companies and there are bad companies. If you do your due diligence and choose the right banks to work with, and take the time to learn their process you will not have these problems. If you sign up with every new bank that shows up on the block and shot gun your deals all over the place these are the issues you will run into

[MTY MSI]

IIRC correctly the OP thought the deal was declined because of the tax lien which the funder knew about upfront. I can't imagine anybody knowing all the reasons for the decline would expect anything but a decline. Jeremy Brown said it was a possibility Rapid didn't communicate these reasons to the ISO/broker and if that's the case it's the reason this post was started. ISO/brokers don't underwrite a deal and thus if all the issues weren't communicated by the funder how would the ISO/broker know about them?

[J.Celifarco]

IIRC correctly the OP thought the deal was declined because of the tax lien which the funder knew about upfront. I can't imagine anybody knowing all the reasons for the decline would expect anything but a decline. Jeremy Brown said it was a possibility Rapid didn't communicate these reasons to the ISO/broker and if that's the case it's the reason this post was started. ISO/brokers don't underwrite a deal and thus if all the issues weren't communicated by the funder how would the ISO/broker know about them?

because the ISO said the deal was killed by all other banks and this was the last chance to get done.. If all the other banks killed they had to know the reasons

[MTY MSI]

To use Rapid as a last chance funder doesn't make any sense.

[CLucas]

John I am not disputing that during the underwriting process things come up. However when a file get's denied based on information that is on the application itself, but underwriters still ask for a mound of additional docs, the message that is being sent, is WE NEVER LOOKED AT THE APPLICATION TO BEGIN WITH, however we artificially led the merchant and the ISO to believe, this file had a winning chance. That said maybe underwriting isn't always communicating the real reason why somebody was denied, so they substitute the real reason with something more generic but true at the same time. I guess what is frustrating from the merchant's point of view is the abstract information asked for, and the non-specific elusive reasons for denial. Please understand I am not asking for advice on how to communicate with my merchants, but rather trying to give a perspective from the merchants points of view. As this space continues to grow and more mainstream players enter this space. We need to be cognizant of not our perspective but rather the perspective of the Customer/merchant because there perception will become our reality.

[MCNetwork]

let-it-go-meme.png

[Christian]

This is a good discussion. Possibly we did not communicate properly the real reason for the decline. It was not because of the tax liens, which we did know about at application and were over $300k. This was a deal that had hair going in, and collapsed under the weight of too many issues. There were 7 legal entities, money being moved around, a borderline industry (travel agency/timeshare or vacation sales), excessive credit card chargebacks (customer dissatisfaction with the product), large competitor payoff, incomplete financial statements, 6 separate lawsuits against the business, large jump in volume from 2014 to 2015 (red flag), a website with multiple complaints against the business for deceptive sales practices including as recently as August 2015.

As many of you have noted, the initial offer is not a full underwrite. Deals that are declined solely on the basis of information identified in the application or made known at the time of the application is a poor business practice, and if that were the case an ISO would have a very legitimate complaint against the funder.

/\ This is simply not correct and I have screenshots out of the Rapid submission portal to prove this. I can accept a deal going south, but I just hate there being lies spread regarding the decline. This industry doesn’t have to live up to its bad reputation. Note:
1) I informed the rep that the apparent 3-4% was not all charge-backs. Since the merchant offers a 3 day refund period on his product (this is a courtesy and not required by law), most of those are voluntary refunds and not charge-backs.
2) The tax lien was disclosed day one and is even referenced in your portal notes on 8/17.
3) When dealing with as many of clients as this merchant deals with, there will be BBB complaints (see Bank of America with 5,000+ or Expedia with 3,000+ complaints). 13 complaints in 12 months when doing $1,000,000 per month in sales is absolutely nothing. They don't even have bad rating at "B".
4) The financial statements were complete, including 2 years tax returns.
5) There were not 7 legal entities. Rapid underwriting actually confused the Registered Agent with the business owner, even when they had K-1s to make it crystal clear. There were 2 entities, with one being owned by the other. Bank statements provided on both. The Registered Agent for these companies was also the agent for unrelated companies; because that’s her job!
6) The lawsuits were against the other businesses.
7) Large pay-off? The client was netting about 80% after the payoff. And you knew about it from day one.
8) All of this information was provided up front. And to make matters worse, in my Rapid Portal notes they give three reasons for decline on 8/17 and then email me that they are all “okay” and then on 9/15 kill the deal after signing citing the same reasons that were okayed on day 1. The reason for the decline is in their notes. So if the notes are wrong, then what can I say. I only know what you tell me. Why not try the truth???
9) The underwriters weren’t even willing to speak with the client to hear answers to their shotgunned decision reasons (smokescreen).

Either there was a massive breakdown in communication between underwriting and account rep, or there was not enough integrity to simply say we don’t want the file. No need to string people along or lie with made up reasons for decline. I could have handled a “NO” on day one.

[Zach]

/\ This is simply not correct and I have screenshots out of the Rapid submission portal to prove this. I can accept a deal going south, but I just hate there being lies spread regarding the decline. This industry doesn’t have to live up to its bad reputation. Note:
1) I informed the rep that the apparent 3-4% was not all charge-backs. Since the merchant offers a 3 day refund period on his product (this is a courtesy and not required by law), most of those are voluntary refunds and not charge-backs.
2) The tax lien was disclosed day one and is even referenced in your portal notes on 8/17.
3) When dealing with as many of clients as this merchant deals with, there will be BBB complaints (see Bank of America with 5,000+ or Expedia with 3,000+ complaints). 13 complaints in 12 months when doing $1,000,000 per month in sales is absolutely nothing. They don't even have bad rating at "B".
4) The financial statements were complete, including 2 years tax returns.
5) There were not 7 legal entities. Rapid underwriting actually confused the Registered Agent with the business owner, even when they had K-1s to make it crystal clear. There were 2 entities, with one being owned by the other. Bank statements provided on both. The Registered Agent for these companies was also the agent for unrelated companies; because that’s her job!
6) The lawsuits were against the other businesses.
7) Large pay-off? The client was netting about 80% after the payoff. And you knew about it from day one.
8) All of this information was provided up front. And to make matters worse, in my Rapid Portal notes they give three reasons for decline on 8/17 and then email me that they are all “okay” and then on 9/15 kill the deal after signing citing the same reasons that were okayed on day 1.
9) The underwriters weren’t even willing to speak with the client to hear answers to their shotgunned decision reasons (smokescreen).

Either there was a massive breakdown in communication between underwriting and account rep, or there was not enough integrity to simply say we don’t want the file. No need to string people along or lie with made up reasons for decline. I could have handled a “NO” on day one.

I feel like any file that needs 9 separate "explanations" is probably a lost cause.

[ridextreme]

Stop your whining already dude.

The only reason they have to give you is:

"After further underwriting review, we have decided to pass on this deal".

What do you want them to do come visit you with a crying apology?

Get over it already. **** happens! By this time you should have had many more deals funding rather than worrying about a deal that got killed a month ago.

[Christian]

Stop your whining already dude.

The only reason they have to give you is:

"After further underwriting review, we have decided to pass on this deal".

What do you want them to do come visit you with a crying apology?

Get over it already. **** happens! By this time you should have had many more deals funding rather than worrying about a deal that got killed a month ago.

You basically repeated my last line.

[Christian]

I feel like any file that needs 9 separate "explanations" is probably a lost cause.

Zach, I like to call 'em rebuttals If I gave up easily, then I would indeed be in another industry.

[Christian]

..

[Zach]

Zach, I like to call 'em rebuttals If I gave up easily, then I would indeed be in another industry.

We need more salespeople like you! Haha.. Sorry to hear about your deal man.

[MCNetwork]

To further complicate the underwriting process, a lot of the large dollar deals have to go to a "credit committee" which is comprised of several syndicating partners (some of which are other funders) who participate in the deal to help mitigate risk. These parties have their own underwriting standards as well and the original underwriter has to essentially resell the deal to the committee. That's why a large deal can pass the lead funder's set of criteria but then get shot down during credit committee review and the deal may get resized or at worst, declined. I'm not saying that this happened to Christian's deal but it's possible.

[Christian]

To further complicate the underwriting process, a lot of the large dollar deals have to go to a "credit committee" which comprises of several syndicating partners (some of which are other funders) who participate in the deal to help mitigate risk. These parties have their own underwriting standards as well and the original underwriter has to essentially resell the deal to the committee. That's why a large deal can pass the lead funder's set of criteria but then get shot down during credit committee review and the deal may get resized or at worst, declined. I'm not saying that this happened to Christian's deal but it's possible.

Great info! And I do think this was the case, as it was declined after committee.

[MCNetwork]

Great info! And I do think this was the case, as it was declined after committee.

Yeah that sucks and has happened to me many times. Now you understand the risks associated with big dollar deals. When they go through you feel like you won the jackpot, and when they die you feel like you were kicked in the nuts. But we always go back for more

[Christian]

Yup. I'm still working it. The client knows I'm committed to his success.