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06-29-2016, 02:24 PM #51Anthony Diamond
Underwriter
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06-29-2016, 02:25 PM #52
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06-29-2016, 02:25 PM #53
To add on to this and i'm sure most around here use it, but if someone says or thinks they qualify for a bank product you have to be willing to cut them loose. I usually say, great go talk to your bank, and let me know what rate they give you.
I've gotten quite a few "So uhhh about that MCA product we talked about..." phone calls after cutting them loose.
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06-29-2016, 02:33 PM #54
It also has to do with selling and closing.. A UCC is easy to close once you find someone who is interested.. Closing a new merchant who knows nothing about the industry is a much harder close, and takes a much different skill set.. If you gave new first position files, people who have never taken the product before to any of these ISO's that just hammer UCC's all day, they would have a very hard time closing that deal. They wouldn't know how to sell it
John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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06-29-2016, 02:38 PM #55
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True, to some degree. The first timers are usually cost sensitive. But it all boils down to their level of urgency and the options they have (or lack thereof). Closing a first timer with 550 credit and a few judgements is pretty simple.
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06-29-2016, 02:43 PM #56
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Anthony,
I am not sure how you sell the MCA product to a bankable customer unless it's based on pure speed. For the bankable client that a lot of assets (AR, Inventory, and M&E), but a small line...the sell is swapping rate for availability and how does it help the business over the next twelve months. I have closed several deals where a Company has a small LOC and lots of assets, but because of dynamics of the business the bank is not willing to increase the line. In most cases a factoring or ABL struture offers a covenant light structure with more availability. You have to work with the client to see if the added availability helps achieve the goals and is it worth the added cost to get there and then flip back to a traditional LOC.Kevin Henry
VP-Business Development
Seacoast Business Funding, a division of Seacoast Bank
561-850-9346
Kevin.Henry@SeacoastBF.com
1880 N Congress Ave., Suite 404
Boynton Beach, FL 33426
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06-29-2016, 02:43 PM #57John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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06-29-2016, 02:52 PM #58
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Best question pertaining to the action that can be taken now- how do we market to bank worthy clients? Let's reverse this. Are bank worthy clients applying for bank worthy products? Are they even putting themselves our there to be "marketed" to? With the issues consumers are having with the undeveloped process we offer- I seriously wouldn't be captivated by any marketing attempts that are out there (not only because the fitting of our product for what they are expecting) - but we are marketing an alternative bank product like we are stock/mortgage brokers without "service".
The major factor is the changes we need to make internally and combine those changes to create a known standard to the consumer. When this happens- marketing attempts and the way they are done will be completely different than what people are doing or thinking about doing now.Last edited by WhoisKingsley; 06-29-2016 at 02:57 PM.
Amanda Kingsley
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06-29-2016, 03:02 PM #59
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The MCA product is and always will be about speed. If you remove yourself from the trenches of daily business for a second (sometimes it can be hard) and really think about it, the ability to offer a business owner $20k, 50k, 250k of cash wired into their bank account within a few hours is an INCREDIBLE thing. God bless American ingenuity! The product is pricey because it's risky. It's risky because underwriting is light. Underwriting is light because it HAS to be in order to maintain speed to funding which is where this product holds its biggest competitive edge. Banks have the ability to offer cheaper products for many reasons, but partially because they get a MUCH deeper look into a business, get more documents and data points to review, and take a much longer time to make credit decisions. This allows them to make more calculated decisions. There is a place for cheap products that require grueling review processes. But there is also a place for a (still) revolutionary product that allows a business owner to pay a premium for not getting a financial colonoscopy, several site visits, financial reviews, lengthy interviews, requirements for collateral, etc.
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06-29-2016, 03:11 PM #60
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06-29-2016, 03:21 PM #61
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Kevin Henry
VP-Business Development
Seacoast Business Funding, a division of Seacoast Bank
561-850-9346
Kevin.Henry@SeacoastBF.com
1880 N Congress Ave., Suite 404
Boynton Beach, FL 33426
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06-29-2016, 03:22 PM #62John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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06-29-2016, 03:22 PM #63
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There was a brief opportunity last fall when the banks had to suspend guaranteed loans because of excess demand versus the allotted amount the government budgeted. That left business owners in the loan process floating out there.
Last edited by HDF; 06-29-2016 at 03:25 PM.
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06-29-2016, 03:31 PM #64
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Agree with you on the fact that the product was and still is about speed- but the biggest notion in that is the selling point and holding on to that "speed" reputation. It was easier to offer that speed when it was just an "MCA" based on credit cards and light underwriting because you were able to hold down the Merchants CC account. With the advancement of having an ACH payment and going off of other factors and of course, future receivables, the underwriting really isn't so light anymore. I actually do not know of any underwriting for under $100k that doesn't request further financials/documents. We offer something but request until the last hour at times. In no way does this pertain to you VFunding, but you get it. Whether its a "Broker" relaying info or in-house, the back and forth kills it sometimes.
I think there is still a lot left to uncover and "fix" to make the "speed" be a more valuable marketing factor. Right now, our marketing factors are... uh.
Speedier than a bank product, sometimes.
More expensive than a Bank- but you don't have to borrow from Uncle Bob and deal with that
There is 10001 online/people to apply- there definitely ain't no shortage in that department
Your credit is not a factor? That isn't really true... but it is?
What are we selling again? lolAmanda Kingsley
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Always Live and Lead with Integrity.
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06-29-2016, 03:32 PM #65
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Marcus Clapman | Business Development | Cresthill Capital
(High Commissions Payout Group)
——————————————————————————
Tel: 917-521-6528 | Fax: 212.671.1473
Email: bizdev@cresthillcapital.com
http://www.cresthillcapital.com
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06-29-2016, 03:34 PM #66
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I wouldn't say more or less difficult, it's just a different approach. When I was a kid I sold Cutco knives. It was awesome and humiliating at the same time, but a great learning experience. In trying to convince someone to pay $250 for a knife, I had a decision to make: Either try to go after the list of people who have bought these expensive knives in the past to try and sell them 2 or 3 more (a UCC lead), or I could try and get a fresh client, get them comfortable with spending $1200 on a new full set of knives (not easy), and take home a nice commission and a new client. The path of least resistance might have less... well... resistance. But going down a more difficult path can work out too.
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06-29-2016, 03:53 PM #67
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So did I! Cutting that rope or the bread with ease was the "ooooh" part. The price was the "eek" part, but knowing you had the service and ability to never have to look, research, buy another product again helped make that price for that knife a lot better than chicago cutlery at times.
MCA has a niche. Those who sell it need to understand it, have a passion for what it CAN do, and service it, and contribute to it. Right now the mentality seems to be "I get the gist of it, it's a numbers game, once I am over my clawback period I don't have to worry and maybe I'll set a reminder for a renewal, who knows what's going to happen so oh, well!"Amanda Kingsley
DailyFunder: WhoisKingsley
This is me. https://www.facebook.com/whoiskingsley
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Always Live and Lead with Integrity.
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06-29-2016, 03:56 PM #68
Oddly enough, this has been one of the more consistent posts on here (no hijacking even with Yulia G being banned) That said, much of the angst in this industry at this moment is pretty evident. I must agree with those saying that the industry needs the shakeout for the long term betterment. To use the mortgage industry as a comparative analysis, very much of the same took place in that industry as well. For those who stayed and saw through the storm, licensing, regulation, shakeout, etc...are doing quiet well these days. Small and medium sized businesses will not cease to exist, need for capital will not cease to exist, banks not lending to many of these clients will not change(for the most part) so the need is there.
I think companies will need to become creative and start offering a menu of financing options based on qualifications (especially those with deep pockets and access to trusted investor funds) This model will also allow for an opportunity to cross sell.
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06-29-2016, 04:07 PM #69jotucker1983Guest
I believe it's because we are dealing with a reality that our "prime customer" is still the unsophisticated merchant who "just so happens" (randomly) to have a need for working capital at this very moment. Yes, there's about 20 million small businesses in the country that generically qualify for our product, but that doesn't mean we have 20 million potential customers, so the vast majority of the "mass marketing" being spent is just wasted dollars.
Again, the average credit score (considered "fair") in the country is 690, 720 is considered "good credit", less than 670 is considered "poor credit", and under 580 being "piss poor" credit. Of the merchants I get:
- 15% of them fall under 500
- 50% of them are between 520 - 575
- 30% of them are between 600 - 680
- 5% of them are over 690
This means 95% of the merchants who entertain our product have either poor or piss poor credit. On top of this, they usually have a hard time finding all of their bank statements, tax return pages, etc. They are unsophisticated with poor or piss poor credit and it "just so happens" (randomly) that they were in need of working capital when I called them.
A lot of people still call on UCCs because they do not have the resources to find our industry's "customer" in other ways. But the UCC is worn out and tired, you might as well go work at Taco Bell through the drive-thru than to rely on UCCs, you more than likely will make more money.
Of course, it doesn't matter that there are 20 million small businesses in the country who generically qualify with more than likely over 90% of which are MCA virgins, doesn't mean anything. If their credit isn't poor or piss poor, they usually can get financing from the traditional system. All of the talk of "speed" is one thing, but most small business owners are sophisticated enough to foresee needing capital well ahead of time and can go through the longer process in the traditional system.
You market "bank-like" products to bank-worthy prospects (like P2P loans or SBA loans), and you market the MCA along with other alternative products to "non-bank worthy" clients. You don't have just one product, you have several that you could place with a client depending upon their current risk profile.
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06-29-2016, 04:17 PM #70
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"You market "bank-like" products to bank-worthy prospects (like P2P loans or SBA loans), and you market the MCA along with other alternative products to "non-bank worthy" clients. You don't have just one product, you have several that you could place with a client depending upon their current risk profile." John Tucker
Good stuff John. What do you say to a potential client who tells you on the phone that they are already in the process with a bank?Last edited by HDF; 06-29-2016 at 04:18 PM. Reason: sloppy
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06-29-2016, 04:32 PM #71
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Take what Tucker said in regards to what "credit" profiling our products are fit for an then think of how to Market. In that regard, how many people (Business Owner or otherwise) openly and verbally admit that they need help or don't understand something? We aren't selling - we are psychologically breaking this down for a second.
You have these people who know their credit is bad and have been excluded or placed in a category in society that makes them feel "unworthy". We have Alternative Financing that promises to not look at those attributes as a qualifying factor. Those who have tried thus far have had some bad experiences. Whether it was a decline, false expectation, or the unthinkable- word travels and google is a powerful tool. User experience is the key to all.
It's like- trying to sell something to someone who is broke. They like it, they feel they want it or need it, but don't continue because they know there are more important things but when the time comes- they will get it. If you have 50 people trying to sell you something because they saw you decline the other person and you are haunted everyday- you start to not want to be bothered. You understand that you are broke, but the reminder everyday that you are isn't making you want to go out and buy.
One thing to consider is if you are trying to market a high risk product to a high risk person/business - the sensitivity. Sensitivity to the label society created for them for their credit worthiness, risky as in having a small business/entrepreneur, and the fact that people don't want victimize themselves by showing they may not understand. The "shark" phone tactics and versed sales media pitches are a little played to me.Amanda Kingsley
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This is me. https://www.facebook.com/whoiskingsley
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Always Live and Lead with Integrity.
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06-29-2016, 04:40 PM #72jotucker1983Guest
I just see how far along they are, if there have been any approvals made and if they are currently in the closing process. I still complete my risk profile survey by asking a series of questions to see what "state" they are in currently and what they could potentially qualify for.
If they tell me their credit, for example, is 550, their bank application more than likely won't get approved and I'll provide that upfront education to them. Once it comes back that I was "correct" with them being declined by their bank (without their loan officer providing such education upfront) I then build a lot of trust and rapport with the client in terms of them trusting me to place them with the product most suitable for their current situation.
I can tell you, most financing reps (on the traditional side or alternative side) do not take the time to ask a series of questions. I don't get how people could start "pitching" products to merchants without asking questions to see what state they are in to know what to even "recommend" in the first place.
For example, what if you are pitching an MCA to a client that's more suitable for an Invoice Factoring deal?
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06-29-2016, 04:44 PM #73
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True that. But what do you tell an "over qualified" prospect who is dealing with a bank already (and all that goes into the process) that you have on the phone and their attention is all yours? Do you say good luck - or do you pitch them? Ask questions?
(And please don't tell me that you ask them to save you number or call you after they are done with the bank) Any ideas? Who gets after these folks?Last edited by HDF; 06-29-2016 at 04:47 PM.
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06-29-2016, 04:56 PM #74
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"You should keep dealing with your bank. If you have the patience and organization to meet all their requests, you should stick with it. Be prepared for several in person interviews, 2-3 years of personal and business financials, and start thinking about collateral you could pledge because they might ask for it later on. Hopefully when all is said and done in 2 months from now you will come out the other side with a nice 8.99% 5 year terms. Or, you can send me a few pages of info, I will have an answer for you within a few hours, and wire you money some time within a day or 2 after that. It will cost you more than a bank, but it will save you alot of time and be much more convenient. It will also be shorter term debt so you won't still be paying for 2016 upgrades in 2021"
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06-29-2016, 04:59 PM #75
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