[rc23]

I got spanking 4%....I didn't argue even though commission rate was different than what they offered verbally. it was changed after closing but they were actually trying and worked with me to close the deal.
So I submit another deal, 250k 1.36 9 month term, 6 points this time...and another 120k 1.41 12 month 6%

they said they are direct lender but purchase agreements were written from another company.
so I asked about the agreement origination, they said because they were syndicating.
They are not fast but seems to understand core of businesses and they were the only one who listened and believed i had deals and leads.
i was knocking doors of many direct lenders but most of the time I got treated as shopper and ignored also won't even look at the papers unless i sign iso agreement, my intention was only to find direct lender that i can settle in for long term and who can support my Asian market.

Anyways, before I become an assigned ISO/agent I must (I didn't sign ISO/Agent agreement yet) try couple deals before how they actually 'work'.
I think I found direct lender that fits my needs but I am not sure about the middle company and I don't have any contracts with them either. (I only found out about direct lender through their purchase agreement)

* cut out middle man, work with direct lender because all purchase agreements were written from direct lender, never saw single agreement from middle company.
* 120k deal took 3weeks to close but mean while client got numerous MCA marketing calls and some 'other company' actually sent purchase agreement to client directly, they also had client's all info including DDA numbers...
* middle man, company or broker kept mentioning 4% admin fee (is it related to syndicating? why mention about their expense???) even if i sign up for their iso agreement, commission rate won't change from 4p.
* discount or factor rate went up, I am just guessing middle man's add ups from buy rate. (both accounts were 700+ fico, home owners and didn't cap out monthly average CC volume)
* middle company is not providing minimum DC rate that company requires (like @ min rate vs min commission???), purchase amount only came with the final contract.
* after signing iso contract i am afraid that i can't compete with last moment contract written price.

So, If veteran sales or anyone who can advice these two companies' relationship inside out then I think i can move on or start long term relationship.
Maybe I am misunderstanding or this direct lender has big effects on decision making from this middle company... who knows...
I just want to send my accounts to direct lender, I just don't need middle company's forwarding function with disadvantages.

What I want to find out is, even though I already submitted accounts through broker/middle company, will this direct lender accept me as ISO without any conflicts between them?

Please PM me for company info, direct lender was searchable through search section from this forum.

[Funder Mark]

Sure. I cannot imagine ANY direct funder giving you any problems.

[J.Celifarco]

I got spanking 4%....I didn't argue even though commission rate was different than what they offered verbally. it was changed after closing but they were actually trying and worked with me to close the deal.
So I submit another deal, 250k 1.36 9 month term, 6 points this time...and another 120k 1.41 12 month 6%

they said they are direct lender but purchase agreements were written from another company.
so I asked about the agreement origination, they said because they were syndicating.
They are not fast but seems to understand core of businesses and they were the only one who listened and believed i had deals and leads.
i was knocking doors of many direct lenders but most of the time I got treated as shopper and ignored also won't even look at the papers unless i sign iso agreement, my intention was only to find direct lender that i can settle in for long term and who can support my Asian market.

Anyways, before I become an assigned ISO/agent I must (I didn't sign ISO/Agent agreement yet) try couple deals before how they actually 'work'.
I think I found direct lender that fits my needs but I am not sure about the middle company and I don't have any contracts with them either. (I only found out about direct lender through their purchase agreement)

* cut out middle man, work with direct lender because all purchase agreements were written from direct lender, never saw single agreement from middle company.
* 120k deal took 3weeks to close but mean while client got numerous MCA marketing calls and some 'other company' actually sent purchase agreement to client directly, they also had client's all info including DDA numbers...
* middle man, company or broker kept mentioning 4% admin fee (is it related to syndicating? why mention about their expense???) even if i sign up for their iso agreement, commission rate won't change from 4p.
* discount or factor rate went up, I am just guessing middle man's add ups from buy rate. (both accounts were 700+ fico, home owners and didn't cap out monthly average CC volume)
* middle company is not providing minimum DC rate that company requires (like @ min rate vs min commission???), purchase amount only came with the final contract.
* after signing iso contract i am afraid that i can't compete with last moment contract written price.

So, If veteran sales or anyone who can advice these two companies' relationship inside out then I think i can move on or start long term relationship.
Maybe I am misunderstanding or this direct lender has big effects on decision making from this middle company... who knows...
I just want to send my accounts to direct lender, I just don't need middle company's forwarding function with disadvantages.

What I want to find out is, even though I already submitted accounts through broker/middle company, will this direct lender accept me as ISO without any conflicts between them?

Please PM me for company info, direct lender was searchable through search section from this forum.

None of the bigger better A paper banks are going to look at any deals without an ISO agreement signed. Also I dont know why you would send deals that size to anyone without an ISO agreement. If these files take any money in the future you have no protection to make sure you get paid. Be carful with deals that size people are going to screw you over if you dont protect yourself

[SCP]

rc23, Having a bit of trouble following the post, but I'm pretty sure I understand.

No chance that was a direct funder you worked with, as it seems like you now know. Working in collaboration with another ISO is fine when it comes to sourcing the deal, but they just need to be transparent about that relationship ahead of time. Plenty of "direct lenders / funders" in this space which are 100% ISO/broker shop.

Second point I'll make echoing John C is to never engage in any type of business without a contract in hand. It will offer you legal protection. If there's no contract, there's nothing preventing a funder from simply not paying you at all. Words mean nothing. Gotta be careful

We're a direct funder (our paper, our contracts) on a small percentage of our volume (< 15%) but we don't necessarily market that. The rest of what we do is still brokered. I'd imagine that some good direct funders will pop their head in this conversation to aid you in future deal flow. Best of luck! Message me with any Q's. Hope this helps - R

[HDF]

"We're a direct funder (our paper, our contracts) on a small percentage of our volume (< 15%) but we don't necessarily market that."

You just did. To essentially the whole industry.

So a quick question Ryan: So if you guys review files from ISOs and choose a nice chunk to fund in-house, what are the characteristics of those deals that you fund? Are they primo A+, and/or a cherry picked batch of credit worthy and cash flow rich businesses?

More importantly, at what point in the process do you tell the ISO/broker who the actual offer and terms are coming from?

Thanks, this might help some of the confusion going on regarding co-brokering with "direct funders".

[ridextreme]

if your docs are co-branded, that doesn't make anyone a direct lender. Neither does syndication. smh

BTW, what is a direct funder anyway, how can you lend money if you purchase future receivables at a discount?

[SCP]

"We're a direct funder (our paper, our contracts) on a small percentage of our volume (< 15%) but we don't necessarily market that."

You just did. To essentially the whole industry.

So a quick question Ryan: So if you guys review files from ISOs and choose a nice chunk to fund in-house, what are the characteristics of those deals that you fund? Are they primo A+, and/or a cherry picked batch of credit worthy and cash flow rich businesses?

More importantly, at what point in the process do you tell the ISO/broker who the actual offer and terms are coming from?

Thanks, this might help some of the confusion going on regarding co-brokering with "direct funders".

From "market it" - I meant that from a literal interpretation. i.e. You're not going to see any of our ads on the right side of daily funder (yet) or a wide stream message to most of the industry's ISO's saying "send us your deals so we can direct fund them!" Frankly enough, we're a growing firm that doesn't have the capital requirements to do most of our business in house. The last thing we'd want to do is go haywire in telling ISO's "open the floodgates" and then have to apologize after getting $1MM on the street and say we're going strictly brokered channel for the next X weeks until we fulfill ACH debits back into funding account. Hope that makes sense, I'm all about transparency.

As for our criteria and originations in-house, we've stayed away from A+/A paper to date, because those tend to validate longer term lengths, whereas we aim to recoup in 4-6 months. At this point, we also tend to gravitate towards files where the sell rate exceeds a 1.30 since we're in the process of building our fund so-to-speak. In the near future, we'll have a more robust offering to the A paper clientele as well, but for now this is what makes the most sense to us, merely speaking from a business operations and growth standpoint. We're more laxed on credit criteria and believe there's such thing as a good 550 score and bad 550 score (even though they're both obviously bad, lol) but we're going to underwrite differently contingent upon BK's and major recent derogs as we would off of some high balances and poor pay history that's X number of years ago yet rectified. We're much more strict on the cash flow side. ADB, # deposits, predictable seasonality, < 5 NSF/mo are going to be the more critical components for us. In summation, we tend to gravitate towards 1st position B-/C paper at this time.

The ISO's find out who's funding the deal as soon as we receive the offer, and we're even forthcoming in setting up the line of communication between ISO and direct to do future business with that funder because we know they're probably going to try to go direct anyways. That's IF it's brokered. If it's in house, we'll similarly let the ISO know up front that the file meets our criteria and we're in a position to fund it. We even have a selection box on our ISO agreement that reads "Do not send files to the Company's Network" and the "Network" as described in a prefacing section of the agreement, is clearly communicated throughout the agreement.

At the end of the day, we just want to be the best resource possible for any merchant and their referring parties thereof, but know that being a direct funder and trying to be Superman for everybody at this stage of the game is a bit naive. Our broker channel helps us accomplish such a relationship.

Hope this helps, HDF. Give me a shout publicly or privately with any other questions. Open book brother - R

[SCP]

if your docs are co-branded, that doesn't make anyone a direct lender. Neither does syndication. smh

BTW, what is a direct funder anyway, how can you lend money if you purchase future receivables at a discount?

Hey ridextreme, wasn't sure if this response was in response to my prior comment or not?

I completely agree on the first line. You're correct, syndicating does not make anyone a direct lender. Still on their balance sheet. Likewise with co-branded docs. We use our own merchant / purchase & sale agreement for deals we fund direct which has been legally vetted.

MY definition (and there seems to be some different interpretations amongst the industry, lol) is that a "direct funder" negates to say that you're participating in "lending" money like saying "direct lender". However, I work with a great local company as one of our funding partners that offers the same style financing as an MCA, yet they call it a loan through and through. They've yet to receive any flack for it, and their philosophy is "let's call it what it is - it's a loan" so personally at this stage of the game I don't think it matters a bunch what exactly you call it. However, I think the definition - whether internally through best practices or forcefully regulates - will be better defined as the industry grows.

Cheers - R

[Regium]

and their philosophy is "let's call it what it is - it's a loan" so personally at this stage of the game I don't think it matters a bunch what exactly you call it.

It 100% does matter

[anonymous]

what is a direct funder anyway

federal reserve

[HDF]

It 100% does matter

That's a fact. And Ryan, you better get your arms around what you guys are doing very quickly. You may think that you are at the forefront of this business, but in the evolutionary process of this you are an ape.

No offense.

[Chambo]

and their philosophy is "let's call it what it is - it's a loan" so personally at this stage of the game I don't think it matters a bunch what exactly you call it.

The state of California....and the Consumer Finance Protection Bureau, along with the Treasury Department, would disagree with you on this point.

[Sean Cash]

I don't think it matters a bunch what exactly you call it.

Incorrect and taking this approach could open yourself up to prosecution and/or lawsuits in several states.

[bizzcash.com]

". . . and their philosophy is "let's call it what it is - it's a loan" so personally at this stage of the game I don't think it matters a bunch what exactly you call it."

It 100% does matter

IT 1000% DOES MATTER!!