[Chambo]

If they give a buy rate at 1.27 and I upsell it at a 1.37 for 10 points. All they gotta do is back door and pay someone 2 points and sell it at a 1.29. And the merchant will def. take it. And that's what happened

Or, you are selling the deal at 1.37...and broker X down the block, who submitted the same deal and got the same offer, sold it at 1.30

first one back with contracts means you no longer have the luxury of upselling the deal all you want. Someone else will come in with the same offer and same fund...and sell the deal for three points less.

[jotucker1983]

Yeah, it just makes no sense to me and I don't see how this is a way to do long term business with brokers. The chaos this creates is amazing, especially knowing how merchants shop online, you might get 4 different brokers who get the same lead from their "online submission forms". You could create the situation of having 4 brokers pitching the same approval to said merchant and receive 4 different contracts back with 4 different factor rates.

Every broker will swear that his contract got in "first", and that you are just playing "favorites" to the other broker whose contract you decided to process. Or, you might have a situation where brokers think you are flat out stealing their deals away, hence, this thread that was created. Now you are all over the Daily Funder or the RipOffReports with brokers saying, "don't do business with XYZ Funding company".

This is bad business, I don't know what else to call this? I'm still trying to find the "logic" in this policy? The points FUNd made have a lot of merit, but can't the Funder get around a broker being lazy or the broker being a bad sales rep, without creating all of this chaos in the marketplace?

[J.Celifarco]

Yeah, it just makes no sense to me and I don't see how this is a way to do long term business with brokers. The chaos this creates is amazing, especially knowing how merchants shop online, you might get 4 different brokers who get the same lead from their "online submission forms". You could create the situation of having 4 brokers pitching the same approval to said merchant and receive 4 different contracts back with 4 different factor rates.

Every broker will swear that his contract got in "first", and that you are just playing "favorites" to the other broker whose contract you decided to process. Or, you might have a situation where brokers think you are flat out stealing their deals away, hence, this thread that was created. Now you are all over the Daily Funder or the RipOffReports with brokers saying, "don't do business with XYZ Funding company".

This is bad business, I don't know what else do you call this? I'm still trying to find the "logic" in this policy? The points FUNd made have a lot of merit, but can't the Funder get around a broker being lazy or a bad sales rep without creating all of this chaos in the marketplace?

if you dont trust the bank is going to be honest with you of whos contract they received first then you are working with the wrong banks. Also it will be pretty clear which contract came in first because the bank will have time stamps on the received email with the contracts. Should be pretty easy to prove. I work with a couple of banks that use this policy and personally I like it. I hate when I submit a deal to ondeck and get the email that it is already in house. At least if I am competing with an iso at the same bank with them then we have access to the same numbers and it will come down to who is the better closer. That is better then me pitching one banks number and someone else blows me out of the water with some crazy offer
As to why a bank uses this policy, it is simple, gives them the best chance to get the deal. With ISO's shotgunning deals to 5 different banks, a banks is spending a lot of money underwriting deals that are not getting funded because the iso funds it at another bank. By opening up a deal to competition it increases the chances that the deal will fund at the bank.

[jotucker1983]

John Celifarco,

I understand the argument about what if the deal is with a broker that's not an efficient sales rep, but my concern is what if that's not the case and you actually have two competent reps on the deal?

We are already seeing profit compression in our space and this situation could turn into profit compression on steroids.

So it could go like this....

- XYZ Funding Company approves Billy's Plumbing for $50,000 with a 1.14 buyrate on a 6 month payback.

- Both John Celifarco and John Tucker have been working with Billy and also have the deal from XYZ Funding Company for Billy's Plumbing, but neither Celifarco or Tucker know about the situation initially.

- Tucker calls Billy and says I can do $50,000 with a 1.20 and a 6 month payback with XYZ Funding Company. Tucker email/faxes him the agreement. Billy says great, he will look over everything tonight and said to call him first thing in the morning to get it moving.

- But when Tucker hangs up, 15 minutes later, Celifarco calls and tells Billy he can do $50,000 with a 1.22 on a 6 month payback with XYZ Funding Company. Billy tells Celifarco that he's been talking to this guy named John Tucker about signing up with XYZ Funding Company as well, with pricing at 1.20 on 6 months, with the $50,000 approval. Billy asks Celifarco if he can beat the pricing? Celifarco says yes and tells Billy he will call him back first thing in the morning and asks Billy to not sign Tucker's Agreement yet.

- Celifarco calls Billy first thing in the morning with the offer now at $50,000 with a 1.18 on a 6 month payback, Billy accepts, Celifarco tells Billy he will call him back within 20 minutes while he gets the Agreement typed up.

- Tucker calls about 10 minutes after they hang up, Billy fills Tucker in on the entire situation of speaking with Celifarco and how the deal is now down to 1.18 and asks Tucker if can he beat Celifarco's offer? Tucker then immediately drains the deal down to a 1.15 for $50,000 on a 6 month payback. Billy says great, he'll do the deal, just get him over the new paperwork. Tucker hangs up with Billy to then go to Underwriting for the new contract.

- Celifarco calls back, Billy tells him that Tucker has taken the deal down to 1.15, and now Celifarco takes the deal down to a 1.14 with hopes that he can get Billy to renew in 3 - 4 months and finally earn revenue off of the relationship.

[Chambo]

Isn't that kind of what we see going on everyday?

[TheShitzuofMCA]

Joe, I think that is a great case as to why funder/broker relationship is so important. Most brokers will get burned by a funding company at some point. I think you need to look out for the brokers that are willing to close on your deals. Prioritize those brokers and even make exceptions for them. Today the competition is worse than ever I could string a merchant along for two weeks every day taking baby steps and lowering rates or lengthening terms with different offers coming in. I can then use that offer as leverage and so on. A big problem is we have a lot of greedy and/or dishonest people in this industry. They have no business etiquette or respect for their fellow ISO's. These guys want to push deals without the merchants or the funding companies best interest and it has lead to all of this. I can say the brokers have most of the leverage in today's market, so take advantage but don't abuse.

[jotucker1983]

Isn't that kind of what we see going on everyday?

I wouldn't say to this extent. In my opinion the problem comes when the reps selling a deal are both operating off of the same "base floor", so what ends up happening most of the time is that the reps just keep cutting closer and closer to the bone.

You see this on the merchant processing side where everybody is operating based on the interchange "floor", thus, agents just walk into a merchant's shop cutting closer and closer to the bone, until eventually there's no more profit left on the merchant account in particular. This is why selling merchant services to mom and pop shops isn't anywhere near as profitable as it was before.

While we have pricing pressures going on, everybody isn't operating on the same base floor/pricing. When your competition (other brokers) know exactly what your base floor is, they can easily undercut your deal by cutting it closer to the bone.

[J.Celifarco]

John Celifarco,

I understand the argument about what if the deal is with a broker that's not an efficient sales rep, but my concern is what if that's not the case and you actually have two competent reps on the deal?

We are already seeing profit compression in our space and this situation could turn into profit compression on steroids.

So it could go like this....

- XYZ Funding Company approves Billy's Plumbing for $50,000 with a 1.14 buyrate on a 6 month payback.

- Both John Celifarco and John Tucker have been working with Billy and also have the deal from XYZ Funding Company for Billy's Plumbing, but neither Celifarco or Tucker know about the situation initially.

- Tucker calls Billy and says I can do $50,000 with a 1.20 and a 6 month payback with XYZ Funding Company. Tucker email/faxes him the agreement. Billy says great, he will look over everything tonight and said to call him first thing in the morning to get it moving.

- But when Tucker hangs up, 15 minutes later, Celifarco calls and tells Billy he can do $50,000 with a 1.22 on a 6 month payback with XYZ Funding Company. Billy tells Celifarco that he's been talking to this guy named John Tucker about signing up with XYZ Funding Company as well, with pricing at 1.20 on 6 months, with the $50,000 approval. Billy asks Celifarco if he can beat the pricing? Celifarco says yes and tells Billy he will call him back first thing in the morning and asks Billy to not sign Tucker's Agreement yet.

- Celifarco calls Billy first thing in the morning with the offer now at $50,000 with a 1.18 on a 6 month payback, Billy accepts, Celifarco tells Billy he will call him back within 20 minutes while he gets the Agreement typed up.

- Tucker calls about 10 minutes after they hang up, Billy fills Tucker in on the entire situation of speaking with Celifarco and how the deal is now down to 1.18 and asks Tucker if can he beat Celifarco's offer? Tucker then immediately drains the deal down to a 1.15 for $50,000 on a 6 month payback. Billy says great, he'll do the deal, just get him over the new paperwork. Tucker hangs up with Billy to then go to Underwriting for the new contract.

- Celifarco calls back, Billy tells him that Tucker has taken the deal down to 1.15, and now Celifarco takes the deal down to a 1.14 with hopes that he can get Billy to renew in 3 - 4 months and finally earn revenue off of the relationship.

Joe that is where selling comes in, you have sell yourself, your company and why they should work with you... What you described here is what we are all dealing with everyday on all our deals.. What difference does it make if you are competing at the same bank or at different banks. The buy rates are not that dramatically different across the board that if you have a A paper merchant if I get an offer from X bank and you go to Y bank the offers will be close. The only difference is at the same bank it is a more even playing field because you are operating on the same buy rates.. At the end of the day it is no different then any other deal you compete on, you either win or you lose. Just be faster and better then the guy you are competing against and you will be fine

[FUNd]

Joe that is where selling comes in, you have sell yourself, your company and why they should work with you... What you described here is what we are all dealing with everyday on all our deals.. What difference does it make if you are competing at the same bank or at different banks. The buy rates are not that dramatically different across the board that if you have a A paper merchant if I get an offer from X bank and you go to Y bank the offers will be close. The only difference is at the same bank it is a more even playing field because you are operating on the same buy rates.. At the end of the day it is no different then any other deal you compete on, you either win or you lose. Just be faster and better then the guy you are competing against and you will be fine

Tend to agree. There's no prize for 2nd place on a deal. You win or lose, just like anything worth doing in life. I should also add that rarely does a deal come down to just pricing. Good rapport has allowed me to sell deals even .10 over a competitors offer for the same term in some scenarios.

[jotucker1983]

You guys might not agree with me right now, but if this becomes common practice across the industry I think you guys might come over to my side eventually, after seeing from a holistic view how bad a policy this is.

Joe that is where selling comes in, you have sell yourself, your company and why they should work with you...

Tend to agree. There's no prize for 2nd place on a deal. You win or lose, just like anything worth doing in life. I should also add that rarely does a deal come down to just pricing. Good rapport has allowed me to sell deals even .10 over a competitors offer for the same term in some scenarios.

Guys, both of these statements are 100% accurate when we are competing with different products from different companies.

- For example, in the example between me and Celifarco with the Plumbing merchant, Celifarco could be pushing a premium product from an MCA, I could be pushing premium product in the form of an Alt. Business Loan.

- These are two totally different products in terms of value points, I could convince the merchant that having a fixed payment, a real business loan and being able to build his business credit is much better so that eventually he could be approved for more traditional lending products.

- Obviously, Celifarco could counter by saying the MCA is better because the merchant wouldn't have fixed payments during his slow season and that the renewal process is more efficient because he wouldn't have to pay "interest on top of interest" during the renewal stage.

- In addition, we can both sell the value points of the Funder or Lender, such as online reporting, better customer service, etc., etc.

But if Tucker and Celifarco are selling the same product from the same company, with the same buyrate, we are competing against ourselves. I'm competing against my own deal lol.

I have to speak up on this because understand something, in this situation the only people that get hurt are the brokers, Tucker and Celifarco. The lender is still getting their 1.14 buyrate, the only entity in this chain that's getting hurt is the broker, as he has to continue to cut his commissions down as he competes against his own damn deal that his "Partner" has given to another broker in the marketplace.

Deal exclusivity is about respect guys. It's a Funder/Lender's way of protecting a broker's commissions after he has invested his time, energy, and creativity to close a merchant. Now, if 5 business days pass and there's no movement on the deal to the point where the deal is "dead", then if another Broker submits that file with it "alive again" then that other Broker should now take over deal exclusivity.

Hell, if you want to put the exclusivity at 3 business days, that's fine. But 0 days is unacceptable and it doesn't protect the broker's time, energy and creativity invested into a deal at all.

Also maybe I need to change my username on here, people seem to think my first name is Joe lol. My name is John Tucker guys

[KTK]

I couldn't agree more with Tucker than I currently do on this. Total and complete chaos will come from this. As much as I absolutely hate to see the words "sorry this deal is in house already" in my inbox - I at the same time respect it, and appreciate the edge it gives me knowing what I am up against and the heads up that my guy is shopping himself.

Also, I would kind of think this encourages unethical behavior from those with access to sensitive client data more than it deters it. Not only could a bad egg get a merchants name to their cousins boyfriend down at Johnny's ISO shop (which is bad enough), but also now with contracts and the ability to fund it right back where the client was stolen from.

I don't want any part of this myself, but hey that's just me.

[FUNd]

John, I respect your point and I don't wholly disagree with you, we all want a level playing field and want to discourage backdoored deals.

I've been very vocal about submitting applications to lenders and knowing my merchants cell phone will blow up with MCA telemarketers the instant I send the application in. How does this happen? The info is stolen by one of the reps or admin at the lender and sent out. It's very easy to track. I could slam a dozen people publicly with proof but I won't. That's not the point. This point is, I gave up and accepted it as part of the game. Now, cell phones, emails are changed on some applications, perhaps to one that I monitor so I can see who's calling or emailing my client after I submit to a single lender. Can't say for sure. , but I'm not dumb, and I know what's going on.

It's up to us to protect our client and have the discussions with them about what will happen when they apply, how it works, and why they don't NEED to apply everywhere. Merchants won't waste time when they know they are duplicating their efforts, you feel me?

The lenders want their spread and however the deal gets closed, makes no difference to them. Expect lenders to do what is in their best interest at all times despite all the fluffy feel good talk about caring about their ISOs. Unless you are funding a couple million a month, you're a flea, and very expendable.

[KTK]

^ Wholeheartedly agree with every word spoken. Also, I too have adapted the same practice recently with the emails and cell #'s. However, I still, fully knowing and understanding "the game", will not send deals into a lender when I feel their internal policies will turn that game even more unfairly against my odds.

[Zach]

The policy is detrimental to brokers and profitable for funders. Structurally it is a more intelligent and sound way to build your fund. Funders issue the policy, create the agreements, and put all rules in place to increase their own profitability. Why wouldn't you create policies that intrinsically increase the value of your organization?

I am sad to say, but being a broker during these times is going to become increasingly more difficult. With CPA rising at a rapid pace and average commissions being dwindled by competition who only knows how to sell rate... The only escape from the rat race is syndication.

By participating 50% in every loan/advance you place you would sell deals with 2-4 points in them all day. The points cover CPA and now you have a consistent revenue stream from your portfolio, rather than the haphazard commission stream brokers tend to make (imagine the deposit frequency... Lmao).

In the end, pure brokers will always struggle and be broke, while the players with money on the streets will succeed. It isn't 2011 anymore where you can average 13 points per deal.

[fma123]

I agree with Zach...brokers in this game need to put their money on the street otherwise you are going out soon things are changing in this business...

[FUNd]

Good point Zach. Syndication is interesting, however takes the arm's length perspective on the business away that brokers seem to enjoy. Being a middle man is the comfort zone and the forte for many, including myself. I excel at bringing people together, not at underwriting, and it would be difficult to put my money where my mouth is so to speak on some of this higher risk paper. I see why someone with very deep pockets doesn't mind rolling the dice on a guy with a 535 Fico and 4 tax liens, but putting $25K of my cash out there and losing it would create a far mode significant hit to my portfolio than some investors in this biz. To each his own I suppose.

[fma123]

FUNd...that 25k, don't put it in one deal, you put it into 8-10 deals, diversify...I know hybrid shops who would let you syndicate on deals with as low as 1k...BUT SYNDICATE! SYNDICATE! SYNDICATE!!! that's the true key way to get rich and create wealth in this industry....reinvest those commissions Into deals...no shame in starting small

[Zach]

I definitely can agree with you there, Fund... Id be terrified to put money into some of these transactions. I guess where I was going with my tirade was that with the current trend of things I feel that brokers are getting the short end of the stick. One way to potentially combat that is to syndicate... Other ways could be to creatively lower your CPA or increase margins, which in my opinion is tough right now.

[FUNd]

This is true. I don't envy anyone starting an ISO right now that doesn't have a serious command of the mechanics of advanced sales ability, organizational leadership, team building, marketing strategies, business management, and most of all, plenty of capital. I work 6-7 days a week, and when I'm not in the office, I'm jotting down ideas and thinking about how to get an edge. Sometimes in the middle of the night I'll have to write an idea down. Call it an obsession, but I know just how many other people want the same clientele I want, and if I'm not better, sharper, smarter, and more confident than the other 20 or 30 salespeople this month calling my merchant, I lose, and I don't like to lose.

I can't tell you enough about the wannabes I've dealt with in this business, that want to make the money, have approached me for help, and don't know the first thing about how to get started. Many have picked my brain, and felt they filled up on enough knowledge to get by, then are banging on my door a month later, thirsty for more. Luckily, I have the jokers out of the deck now, and am doing fantastically - partnered up with someone who really knows the business and has given me the tools to succeed.

[CLucas]

In my 7 plus years experience in this field there seems to be a respect for ISO specfically to getting paid. Underwriting may not always listen to your argument as to why your client deserves funding, and many will experience numerous declines. That said when is comes to getting paid for a successful file. You will paid! If a file was funded by a different company it may have more to with your client shopping than the company you submitted it to.

[FundedBROTHA]

What if I told you that after you got contracts and stips back to underwriting "they" terminate your iso agreement for "ONE 10k deal defaulting!" How would anyone feel about this Happening on a 100k deal ?! And Oh yeah the best part .... You find out they fund the Deal 14 days later ??? Would you still send deals to this lender ???

OF COURSE YOU WOULD ! "WHERE'S THE PROOF"

[NoBigDeal]

What if I told you that after you got contracts and stips back to underwriting "they" terminate your iso agreement for "ONE 10k deal defaulting!" How would anyone feel about this Happening on a 100k deal ?! And Oh yeah the best part .... You find out they fund the Deal 14 days later ??? Would you still send deals to this lender ???

OF COURSE YOU WOULD ! "WHERE'S THE PROOF"

Why would you still send files to a funder that terminates your ISO agreement?

[FundedBROTHA]

They terminated the iso agreement after receiving contracts and Stips.

[FCF Fund]

What if I told you that after you got contracts and stips back to underwriting "they" terminate your iso agreement for "ONE 10k deal defaulting!" How would anyone feel about this Happening on a 100k deal ?! And Oh yeah the best part .... You find out they fund the Deal 14 days later ??? Would you still send deals to this lender ???

OF COURSE YOU WOULD ! "WHERE'S THE PROOF"

Did you provide your perspective as to the default rate? If it was only 1, 10k deal than I could imagine its because you haven't funded much with them thereby pushing your default rate very high. Obviously that would make the default rate very skewed.

I would contact Lewis Carness in this instance if it was truly 1 defaulted deal and you have funded more since then.

[NoBigDeal]

They terminated the iso agreement after receiving contracts and Stips.

I understand that's what they did, but your question was, "would you still send deals to this lender?", so I was wondering why you'd still send after they terminate