[Christian]

Can anyone tell me why some companies only seem to half-underwrite before issuing loan agreements? I just had a huge deal with Rapid Advance for which I gave them every conceivable document before docs, that they then declined after signing, right before funding, by giving me a bunch of nonsense reasons that were each provably false. Each time they gave me a reason for the decline, I overcame it, only to meet a new reason. They finally declined it siting a reason that they had the information on from day one (wasting tons of my time). I understand when a funder doesn't want a loan, but why not make that decision before approving it and issuing docs. Why waste everyone's time? Or do we need to now tell borrowers that signing a binding loan agreement only means something if the lender wants it too. Seems like a crappy way to do business. Sorry Rapid, but I can't help myself on this because you made me look unprofessional.

[jotucker1983]

This isn't something that's specific to Rapid, a lot of companies conduct procedures like this to cut underwriting costs.

[KTK]

It's annoying. However some lenders offers are "soft" and some quotes you know you can take to the bank when they come in. I prefer personally to work with people that do most of their due diligence up front. I totally get why some do the opposite, or at least understand the logic, but there is nothing worse than having contracts signed, stips in, and having the deal unfold at the witching hour for some reason that was fully disclosed in the sub package. Embarrassing

[Christian]

It's annoying. However some lenders offers are "soft" and some quotes you know you can take to the bank when they come in. I prefer personally to work with people that do most of their due diligence up front. I totally get why some do the opposite, or at least understand the logic, but there is nothing worse than having contracts signed, stips in, and having the deal unfold at the witching hour for some reason that was fully disclosed in the sub package. Embarrassing

Exactly. Totally unprofessional especially when it was never disclosed that the approval was "soft". What makes this case even worse is that the underwriter at Rapid is unwilling to even speak with the merchant for any additional information. "We've made up our mind, don't bother us with relevant information."

[Michael I]

What you need to do is understand how they work and what can potentially reprice or kill a deal with them .
Now rapid has gotten a lot better then they were 4-5 years ago .
I got declines for industry , we don't fund in that state , all after signed contracts and full underwriting for 2 days .
I know how you feel but I got a better one for you that happened to me last
month with a c-d lender . Signed contracts, they did landlord interview. When they did decision logic they saw that they funded the merchant 2 weeks earlier .
Now how can you mess up that is beyond me .

[funda21]

I'm sorry, this is a terrible way to do business and it's flat out lazy and I refuse to do business with funders who give soft fake approvals due to lazy underwriting and then kill deals at the last minute due to something they have known or should have seen since day one when the file was submitted. Swift is infamous for this stuff and many other funders are right there along with them. This is a terrible way to treat a merchant/customer and makes your ISO partners looks foolish and harms their relationships, all because you are a lazy funder... This is an inexcusable way to do business and it's baffling how so many seem to accept it as an industry norm at this point.

[jotucker1983]

But how can a lender do "everything" upfront?

Some things can only be (or should only be) done during the final verification process which is apart of Closing, which shouldn't start until after the merchant has been quoted, made a decision on an offer and sent back contracts. If not, you would be doing a ton of expensive searches and verification on merchants that haven't even decided to move forward yet.

Sometimes merchants don't disclose information upfront, or lie, or something else comes up during the final verification process that either delays the deal or declines it.

One of the things that can be done is to pre-qual the merchant, understand your Funder's criteria up/down/all around, and continue to submit packages that outline the situation of the merchant upfront. But even with this, you still can be victim to something coming up in the final verification process that kills it.

[funda21]

It's obviously impossible to do everything upfront but many of us are talking about things that should have been easily noticed and that the funder had from the initial submission and just didn't look at because they were lazy and skimmed through the submission and shot out a half assed approval and said "I'll actually look at this file if the merchant signs the first docs we send out"... That's a horrible business practice and I can't think of any other industry that would fly in.

[KTK]

^^ Exactly

[Christian]

If anyone knows an underwriter at Rapid that will just take the time to call the merchant to listen to the information, I'll pay you $2k if you can get them to make the phone call which will likely result in funding. It's signed with all stips in.

[FUNd]

If anyone knows an underwriter at Rapid that will just take the time to call the merchant to listen to the information, I'll pay you $2k if you can get them to make the phone call which will likely result in funding. It's signed with all stips in.

Signed docs with stips in = 60% complete in this industry. Learn.

[ridextreme]

Welcome to the industry. Unlike a mortgage, the approvals are pre-approvals and final underwriting only starts when a signed contract is submitted along with the initial stips which shows the merchant is interested. If they fully undwrote every submission, it would take them weeks to issue an approval.

This industry isn't for everyone.

[Christian]

Welcome to the industry. Unlike a mortgage, the approvals are per-approvals and final underwriting only starts when a signed contract is submitted along with the initial stips which shows the merchant is interested. If they fully undwrote every submission, it would take them weeks to issue an approval.

This industry isn't for everyone.

"Welcome to the industry" Haha. I'm willing to bet I have more experience than you. Based on your comments, any investor that funds in less than "weeks" is funding non- fully underwritten deals. What a great business model! Most funders move in less than a week, ergo, most deals are funded without full underwriting. This is nonsense. Make sure you know more than the person asking a question when responding with useless words. They had over a week to underwrite this one.

[MCNetwork]

Christian, in your first post you wrote "Can anyone tell me why some companies only seem to half-underwrite before issuing loan agreements?"

This obviously shows that you don't know much about the cash advance industry. That's how most of the funders operate.

[ridextreme]

"Welcome to the industry" Haha. I'm willing to bet I have more experience than you. Based on your comments, any investor that funds in less than "weeks" is funding non- fully underwritten deals. What a great business model! Most funders move in less than a week, ergo, most deals are funded without full underwriting. This is nonsense. Make sure you know more than the person asking a question when responding with useless words. They had over a week to underwrite this one.

You have all that experience and you are first learning that contracts need to go into final underwriting before funding? You never lost a deal after submitting a contract? I find that very hard to believe.

Like I said, welcome to the industry.

[Christian]

I have indeed lost deal like this before. But not after this much underwriting. I can't tell you how helpful you have been. You are a great person. Obviously so busy with your own work load that you have to find internet users to anonymously insult. Thank for the welcome, perhaps we can continue this mentorship in the future.

[J.Celifarco]

what everyone doesnt see is that it has nothing to do with lazy underwriting and everything to do with the banks not wanting to waste time on deals that are not going to fund.. With ISO's shotgunning deals to 5 or more banks, they cant afford to underwrite all these deals when they only have a 1 in 5 chance of getting the deal.. You want to see this happen less work with less banks and develop relationships with the people at those banks. If the bank know that there is a high % chance that if they send out a pre-approval that you will be sending back contracts to them, I promise you that you will see the approvals stick and numbers change less. It is just not cost effective for a bank to fully underwrite a file when there is a better chance that the deal gets done somewhere else

[FUNd]

what everyone doesnt see is that it has nothing to do with lazy underwriting and everything to do with the banks not wanting to waste time on deals that are not going to fund.. With ISO's shotgunning deals to 5 or more banks, they cant afford to underwrite all these deals when they only have a 1 in 5 chance of getting the deal.. You want to see this happen less work with less banks and develop relationships with the people at those banks. If the bank know that there is a high % chance that if they send out a pre-approval that you will be sending back contracts to them, I promise you that you will see the approvals stick and numbers change less. It is just not cost effective for a bank to fully underwrite a file when there is a better chance that the deal gets done somewhere else

Well said, lenders also want to see a commitment from the client and make certain the client is OK with the rate and payment structure. Why UW an entire loan package just to find out the broker never sold the payment?

This happens all the time.

[Chambo]

Can anyone tell me why some companies only seem to half-underwrite before issuing loan agreements? I just had a huge deal with Rapid Advance for which I gave them every conceivable document before docs, that they then declined after signing, right before funding, by giving me a bunch of nonsense reasons that were each provably false. Each time they gave me a reason for the decline, I overcame it, only to meet a new reason. They finally declined it siting a reason that they had the information on from day one (wasting tons of my time). I understand when a funder doesn't want a loan, but why not make that decision before approving it and issuing docs. Why waste everyone's time? Or do we need to now tell borrowers that signing a binding loan agreement only means something if the lender wants it too. Seems like a crappy way to do business. Sorry Rapid, but I can't help myself on this because you made me look unprofessional.

With the major funds, most of the REAL UW'ing doesn't start until after contracts come in.

[Zach]

It's interesting that both National Funding and Quickbridge don't do "double underwrites", but they still get offers out in roughly the same time-frame. Maybe we can all learn from them.

[Christian]

The fact that they don't fully underwrite perpetuates the problem that they're trying to mitigate. I must send the file out to five funders because I need a backup plan for when the deal blows up after signing, since apparently only the janitor set eyes on my file before issuing docs. Real offers would cut down on how many places I have to submit. I'm just especially mad at this one because it's big, there is no plan B, and they had all stips for weeks before the janitor handed the file to the varsity underwriting team.

[jotucker1983]

If anyone knows an underwriter at Rapid that will just take the time to call the merchant to listen to the information, I'll pay you $2k if you can get them to make the phone call which will likely result in funding. It's signed with all stips in.

Christian if I take you up on this deal (to just get an underwriter on the telephone), when will I get the $2k ?

But no seriously, some lenders have faster processes but most have a final verification process that comes after the initial quoting period.

- The Quoting Period is all about you submitting the app and statements for quoting. Early credit pulls are done to see scores, liens, etc. Cashflow analysis is done on the bank statements to see NSFs, bank balances and search for other MCA funders. After that's done, if it passes this Early Screen, offers are generated. You negotiate the offers with UW in terms of what your commission will be, the factor rates, payback terms, etc. You present them to the merchant, the merchant wants "Option Two" and you inform UW to type up the Agreement for "Option Two". You get the Agreement, the merchant signs.

- Now we are in the Closing Process or the Final Verification Process. This is where more extensive lien searches are done, landlords are called, mortgages are verified, extensive credit searches are done, UCC searches are done, site surveys are ordered, seasonal merchants have to provide seasonal statements, and tax returns/financials are requested based on the size of the merchant.

- Once the merchant passes Final Verification, then they are scheduled for Funding. The deal can be killed or delayed during the Final Verification process for a myriad of reasons.

[Christian]

Christian if I take you up on this deal (to just get an underwriter on the telephone), when will I get the $2k ?

But no seriously, some lenders have faster processes but most have a final verification process that comes after the initial quoting period.

- The Quoting Period is all about you submitting the app and statements for quoting. Early credit pulls are done to see scores, liens, etc. Cashflow analysis is done on the bank statements to see NSFs, bank balances and search for other MCA funders. After that's done, if it passes this Early Screen, offers are generated. You negotiate the offers with UW in terms of what your commission will be, the factor rates, payback terms, etc. You present them to the merchant, the merchant wants "Option Two" and you inform UW to type up the Agreement for "Option Two". You get the Agreement, the merchant signs.

- Now we are in the Closing Process or the Final Verification Process. This is where more extensive lien searches are done, landlords are called, mortgages are verified, extensive credit searches are done, UCC searches are done, site surveys are ordered, seasonal merchants have to provide seasonal statements, and tax returns/financials are requested based on the size of the merchant.

- Once the merchant passes Final Verification, then they are scheduled for Funding. The deal can be killed or delayed during the Final Verification process for a myriad of reasons.

Lol, the loan has to fund, John. But we would have oh so much better of a chance if the underwriter were willing to just hear the facts.

[J.Celifarco]

Is this the first time you have worked with this bank??? If its not then you should know how they handle their underwriting. If you dont like how they do it find a bank that is a better fit. Unfortunately the only power we as ISO's have is where we decide to send our business if you want things to change at a bank stop sending deals when they ask you why explain the issues and try to get them worked out

[Christian]

Is this the first time you have worked with this bank??? If its not then you should know how they handle their underwriting. If you dont like how they do it find a bank that is a better fit. Unfortunately the only power we as ISO's have is where we decide to send our business if you want things to change at a bank stop sending deals when they ask you why explain the issues and try to get them worked out

I am aware. But sometimes, there is no backup plan leaving us without leverage.