[loan]

There's funding circle, fundation, and dealstruck. How do they compare?

[FUNd]

A rep at Funding Circle got canned and sent out an email to every broker disclosing a super low submission to funding ratio there, like 7-10%. I don't know if it's true, but it made me realize why after collecting 3 years of financials and a year of banks, my pockets weren't any fatter.

[AndyYSCISOdept]

OUCH...you know if they have property they could....

[AndyYSCISOdept]

In all seriousness though, I have always wondered what the funding ratio was for you broker type fellas (and ladies) that work with the Funding Circle's of the world was? Someone let me know.

[FUNd]

OUCH...you know if they have property they could....

I will punch you.

[Michael I]

A rep at Funding Circle got canned and sent out an email to every broker disclosing a super low submission to funding ratio there, like 7-10%. I don't know if it's true, but it made me realize why after collecting 3 years of financials and a year of banks, my pockets weren't any fatter.

the best part is they get really pissed at you when they decline . Like you should have known the merchant had tax liens that were fully paid a year ago

definitely low approval rate but it helps to close him on our standard products

[Zach]

After trying Fundingcircle, Fundation, and Dealstruck, I've come to the conclusion that they cover an area of the space that is necessary and frankly underserved. 7-19% APR with monthly payments and longer terms isn't something most cash advance brokerages sell often.

The point is that these companies, however much of a headache they may be, provide a product that simply isn't available elsewhere. Their low funding ratio makes perfect sense to me. Think about it: how many ISO's in our space really pre-underwrite their paper? They probably get inundated with garbage all day, hence the low approval ratios.

[RichardGerard]

Each of these Firms have different files (business models) they like and different ways they want the paper submitted. Making sure your clients balance sheet, debt schedule matches the banks (and tax returns) is a huge key to making sure the paper is not declined. Sending files over without verifying this information will seriously inhibit your chances of approvals.

Know what the use of funds are (cash flow is usually not what they want to hear) and be on the same page with the borrower and how to present themselves and this issue to the lender.

Never submit a file with a negative equity.. Many clients enter data wrong into their Accounting Software and this will nearly always cause a decline.

If your client shows a loss on the prior tax returns always have a reason for it (point to interest expense and depreciation most of the time- where applicable).

Lastly: make sure your client is straight with you about past liens collection accounts and judgments and all of the inquiries on their personal credit.

Even when deploying the safe guards mentioned our success rate is slightly less than 50% per submission with the firms mentioned.. If you've had a file(s) turned down by them, let us know- we have other lender partners that are more aggressive to get the deals done..

Richard 516 510 3855

www.businesscapitalconsultants.com

775 Park Avenue Suite 255
Huntington NY 11743

[bdshaw]

Zach and and Richard are correct about underserved markets and ISO's lacking the education to present these deals as lenders want to see them. To even more complicate things, fyi, in the last 30 days we have had term sheets issued and accepted for three ABL deals.
2.5 million inventory and receivables, 1.0 million receivables from mom and pop debtors and 12 million inventory, WIP, equipment, real estate and receivables. all unconventional collateral, two years mid to high teens.
Bob Shaw
rshaw@advancecredit.com
734-929-3800
721 Cornell Road
Ypsilanti, Michigan 48197

[Kevin Henry-Seacoast]

Wow-Mid to high teens on an ABL deal seems a touch rich.

[golf2014]

Without a doubt Richard is top notch and a huge assett with his partners and knowledge. Once a file is given to him..he works extra extra hard on getting the deal done correctly. I am not one to acknowledge such in firums..but his knowledge is huge.

[KTK]

I agree with the Richard comment. I love giving credit where it's due and the man knows his business. Solid.

Plus - extra bonus points for a guy that chooses his restaurants based on the booze pour size!

[AndyYSCISOdept]

I think its pretty cool that you give credit to the people that have done something above beyond the status quo. Its not as common as it should be.

[Kevin Henry-Seacoast]

Agree: Richard is a solid guy and has a ton of knowledge. I enjoy working on deals with him. He tends to have things pretty buttoned up before the deal lands on my desk. That is refreshing!

[VFG]

Richard you couldn't be more clear and correct! These lenders are looking for debt service coverage ratios, cash conversion cycles, debt to net worth, liquidity ratios and required working capital aside from bank statements, borrower's personal credit scores and all the usual stuff.

This is where a ton of deals fall with these lenders because the client does not meet the required ratios and any non experienced broker/ISO get the deal turned down by the lender and will never understand the reason.

[bdshaw]

Agreed Kevin, but look at the deal sizes. My lender goes down to a few 100K and is willing to take risks that others don't.
But look at the deals. One has debtor's factors won't touch, another inventory that you can put in your pocket and yet another with WIP in seven figures and early stage.
Bob

[Kevin Henry-Seacoast]

Bob,

Your lender? I though you said you were a direct lender? Regardless....A $2.5mil ABL deal in high teens is a bit rich. I just put out a proposal for a $1.5mil ABL Facility this morning for a manufacturing business with some subject debtors. AR & Inventory....all in at 12%.

[FUNd]

Bob,

Your lender? I though you said you were a direct lender?

Whoops...

[Funder Mark]

He probably means his money source, and their risk appetite. Unless he personally is worth many millions, and invests it all himself.

[AndyYSCISOdept]

I didn't read it that way, although I don't know, doesn't everyones money come from somewhere?

[bdshaw]

We only do Factoring deals on a direct basis. Everything else is farmed out.
Kevin, I'll be glad to send you a copy of one of the deals to see what you could have done with it if you wish.
The 2.5 million deal was turned down by several factors including us because the company's principal supplier held a senior lien and has the right to set off monies owed them. The client both purchases and sells back to that supplier. The abl was able to structure around that although very risky, a risk I would not take.
I should mention that all the deals were turned down before I saw them.
Let me know your pleasure.
Bob

[FUNd]

I didn't read it that way, although I don't know, doesn't everyones money come from somewhere?

Agreed. Someone who has a warehouse line or equity source would never refer to it as "my lender".

[Kevin Henry-Seacoast]

Bob,

Happy to look any any factoring or ABL deals that may be challenging. The deal you mentioned before sounds like you wound up doing a hybrid ABL deal....looks like ABL, but really factored. We have done many of those in the past.

Again...the deal I just proposed on had some challenges and was smaller than the one you mentioned, has some subject debtors,financial issues, etc. Still was able to accommodate the client with a very fair deal.

Best,

Kevin

[Funder Mark]

My reading is, instead of having a hedge fund or bank somewhere behind him, he probably has a few very wealthy people investing their money, and they are willing to do these kind of deals. If I have a credit line from TD, I wouldn't call them my lender, but if I have cousin Warren Buffett in my corner, that would be.

[RichardGerard]

As a true 'Bank' Kevin has a cost of funds advantage over the 'direct funders' in this space- even with this weeks bump to discount rate. Once his group wraps around the business process/invoice cycle- they can make things happen quite reasonably.. Clients will be happy- making you a great resource to them.

It is a process however.. Clients need to be prepared and understand that due diligence will be thorough...