[Red Dragon]

ACH Broker Community.
I've been operating as a Referral Agent in the Daily/ACH niche for about a year. I've been submitting deal qualified applications to 2 separate existing ISO's and have had approximately 50-75% of those deals funded.
I'm eager to learn more and 'step up' and establish myself as a sole-prop ISO
Can the 'community' explain the differences/benefits of operating as an ISO as compared to a Referral Agent?
What basic rules should I be looking for?
Your insights and guidance are greatly appreciated.
J

[Christian]

Where are you located?

[Lender Of Gold]

First of all, 50-75% of files funded is way above anyone's average so right off the bat your ISOs are doing an excellent job. Are you closing the deals yourself or just handing off packages to the ISO'S and having them do the rest? Also, what are you getting paid on your files? Feel free to discuss over PM for privacy reasons.

If your main strength is originating volume, you want to keep expenses minimal, it may be more beneficial to remain a Referral Agent. The burden of admin and processing work is very underestimated when opening an individual ISO.

[Red Dragon]

New York City
Just looking for a bit of mentorship from experienced agents that have made the move from Referral Rep to ISO

[MCNetwork]

50-75% of your submissions have been funded? Either the ISOs are awesome closers or you're really good at pre-qualifying or it's a combination of both. Why don't you try to work with one of the ISOs and learn the ropes before striking out on your own?

[LJH365]

depending on your payout with your current ISOs it may be worth it to stay right where you are. As a referral agent you have the freedom to focus solely on bringing in new deals. Once you add the processing to that mix you will be surprised just how much of your time it will eat into. There is also quite a bit to learn about where to send deals to. Think about if your current income level is at an acceptable amount. If it is, why risk changing that. If it isn't, perhaps you can negotiate for higher payouts or then revisit the ISO idea.

[John Galt]

You must have some amazing leads, I'm lucky to get 25% approved.

[Red Dragon]

Thanks for your interest.
I'm happy working with the ISO's that I have.
I'll take your advice and keep learning the ropes; especially as the industry keeps changing

[Red Dragon]

I use several lead sources; it's just a matter of who I focus on; I'm selective with my target industries and only try to work with capital intensive businesses in established industry sectors

[TheShitzuofMCA]

Depends on you, if your not ready to run the full cycle on your own then stay as a referral rep. As a rep you have the opportunity to learn without the mistakes costing you, you can also start building relationships and get to know what certain funding companies look for or decline. If you have a way to secure good leads and if you can close them at half or a quarter of the rate your doing now, then I think your ISO earning potential is greater. If you have a good thing going be patient as stated above, its a rough MCA world for new ISO.

[Red Dragon]

Thanks for your insight. I appreciate the honest facts from establish agents and managers. I already have a good knowledge of Direct Funders, and so for me its more of getting to know how to navigate Buy Rates and Factor rates etc

[MCNetwork]

If you're an experienced salesperson, then becoming an ISO is a natural progression. Learning buy rates and factors is pretty easy and if you sign up with the large funders, they can provide some support to get you started. If you're not really a good salesperson, then stick to your core competency (whatever that is) and let your ISO partners do all the heavy lifting for you and just cash in the checks. It all depends on where your interests and aspirations lie.

[Karen37a]

Red,

I am the brutally honest one on this forum. Since I do not now 100% of the info and cant quantify it, do not take this as 100% gospel ( but it will be close to it).

The percentages that you said they are closing are fantastic. That means you must be good at Pre Qualifying a lead. Ive hired so many people who said those numbers before and when they came into my company..and still come into my company , they cant handle simple objections over the phone so all of their numbers and past experience was either a lie or made up in their own mind.

There is a stage of sales called unconscious incompetence. This is where the sales person doesn't know how bad they are . I hope the numbers you said are correct. Most of the brokers cant close 3 sales a month, but they act like they can "faking the front".

If they are closing that amount and actually paying you for them, that's great. The question is "how much are you being paid for them and is it fair? "

I have referral agents who send me deals...maybe an accountant etc who tell someone to call me for help . Ive determined what I think/know is fair for a referral fee

Appointment setters/ lead generators are the next category.

Then "jr Brokers" who try to gather the clients documents, or get the client to send it in or take the second phone call.

Closers who take it from the beginning to the end stages and close.


People think its easy to get these merchants to send their documents in. Its easy once they trust you and made the decision to take the money and do business with you. 95% of salespeople cant do it. Because they cant do it they over exaggerate ( or flat out lie) about the product they are offering . Then blame someone else when they cant close.

So. What % of the money are you getting per file? If you were an Iso can you close and do pre pre pre underwriting? Will you send the right file to the right lender or just waste everyone's time by blasting out the same application to all the lenders then have someone backdoor your sale?
Taking on the drama and the cost of pre pre processing your files, cost of leads, time involved with closing the files, managing the clients files etc. Rent? Electricity? Cable? ( unless you are working out of the basement of your house ).

How much is that all worth?

I do not think you are closing 50-75% of the leads you send over with out having underwriting experience and really cherry picking the leads or files.

I get aggravated when people come onto these sites and downplay what we do. Its hard. Most cant do it. I am a trained salesperson ex boiler room sales killer who can out close almost anyone ( without lying ).

Your numbers are not plausible or sustainable and if you were doing that you would have been on your own a long time ago...If those numbers are real ask for more money, without insulting them.(You have 2 of them so what if the other person never speaks to you again .. jk) if you were making someone so much money, and you were valuable to them, why cant you just say ...Hey. I think I want more money for these, then wait for their answer. What are they going to do fire someone who is sending leads? Unless they are paying you hourly I doubt it. Then if they are , factor that $$$ into the equation and the cost of doing business.

When I was sitting in a chair just smiling and dialing, I would get 2-10 leads a day , all saying yes yes yes yes ( narrowing it down to the serious ones ).... then the drama began. Tracking these people down like a blood hound to close the file, getting the documents in and the endless stips the person I worked for woudl ask for ( he thought Id lose the sale and he could clean it up behind me , good luck with that, i closed anyway)

This is a business of Follow up , Follow up untill they buy or cry/die. The closer is the most important and hardest part of this business.

not the person who gets someone to say yes ( i can get 20 people a day to say yes to money ) , and not the person who puts the file in numbered order.

Figure out where you Really are on the pecking order. Was it just a soft yes or a serious one.

What is the true value of that referral or lead.

If you want to talk to someone briefly , PM me. I will help you make the determination if you are getting paid what you are worth.

[biggr]

well done Karen - think you put total reality out there /

[jotucker1983]

ACH Broker Community.
I've been operating as a Referral Agent in the Daily/ACH niche for about a year. I've been submitting deal qualified applications to 2 separate existing ISO's and have had approximately 50-75% of those deals funded.
I'm eager to learn more and 'step up' and establish myself as a sole-prop ISO
Can the 'community' explain the differences/benefits of operating as an ISO as compared to a Referral Agent?
What basic rules should I be looking for?
Your insights and guidance are greatly appreciated.
J

If you have been generating the new apps on your own without much help from the ISOs you work with, then you need to form your own broker office immediately (literally, today).

I believe 95% of this business is being able to consistently generate new leads, if you have a system or a way of doing that, you are doing 95% of the work.

The other 5% is basic/elementary administrative "stuff" such as setting up funding networks, learning their criteria, pre-qualifying merchants, sending them to the funding networks that fit the merchant's situation, and sending emails back and forth.

Setting up your own broker house gives you full new deal commission and allows you to build up a portfolio of renewal merchants to where you can eventually "sit back", and "eat" off that renewal portfolio.

[Lender Of Gold]

With all due respect to John, that "5%" isn't just a blip on the radar. When you're doing the necessary volume to make it as an independent in the MCA space (20-40 files a month minimum) the processing and admin work adds up tremendously. Excluding the veterans on here,* it's hard to understand as a small ISO until you're knee deep.

If you don't have a system of admins/UW in place to streamline that, you end using a lot of time spent on tedious but mandatory work that doesn't directly make money, whereas that time could be better spent generating leads, originating business which does make you money.

Like the 80/20 rule goes, "80% of your money comes from the most effective 20% work you do."

[Red Dragon]

thanks to everyone in the 'community' for their honest feedback. It's been a pleasure reading everyone's individual 'take' on my question; which I interpret as a commentary on the market.
It seems that no one is whole heartedly recommending a move from Referral Rep to ISO.

I'll keep watching and learning as much as I can from my small corner of the industry
I'm taking the steady as she goes approach for now

[jotucker1983]

With all due respect to John, that "5%" isn't just a blip on the radar. When you're doing the necessary volume to make it as an independent in the MCA space (20-40 files a month minimum) the processing and admin work adds up tremendously. Excluding the veterans on here,* it's hard to understand as a small ISO until you're knee deep.

Buddy I understand what you're saying lol, but it's just if I'm a guy that's doing 95% of the work of our sales cycle (which is the production of a qualified lead, of whom is a merchant currently in the market for alternative financing and who fits the generic qualification for underwriting) there's no way I'm about to give up at least 50% - 80% of my new deal commissions as well as potentially get paid nothing on renewals, just to work with "some guy" who is supposedly "the closer". The sale is made at the beginning of the process when the lead is generated, there's nothing to "close".

For example:

- During my lead generation process, I generate a merchant looking for $75k for a piece of equipment, he does $2 million a year in sales, low to no NSFs, 650 FICO, no liens, no bankruptcies, no landlord issues, and he's a restaurant. He's willing to do a 6 - 12 month term with a no higher than a 1.28 factor. That's the SALE, all I have to do is get one of my Funders to setup this deal and it's over.

- My Funder Networks should be already setup per estimated Paper Grade, and I should already know their UW criteria along with their pricing matrix.

- All I have to do is have the merchant fill out an app, grab 3 months of statements, email that to me, and then I email that to my Funder. The Funder spits out the offers, I present them to the merchant, the merchant takes option 2, then I continue the emailing back and forth with the merchant along with the Funder during the closing process.

Also you don't need 20 - 40 files a month unless you are dealing with very small deals.

But to each their own lol, guys can do whatever they want. But with margins pressed, cost of living going up, etc., why a guy wouldn't want to get paid as much as he can on new deals AND get paid all on his renewal deals, I have no idea.

[Karen37a]

Red,

Did you see what i spent time typing??? >>>It isnt commentary and you are like some of the guys who sit in a chair in my office that do make it not make it two weeks because I cant take it. And they are 1099. I told one of them. Do you realize I am firing a volunteer, because you do not get paid if you do not close? If your wife doesn't want you in the house go sit in the library.

Get your head out of the sand,read what i wrote, study it. Repeat back to me what it means.

As i stated..most sales people are unconsciously incompetent.
Some brokers just want a business card to go to a club or bar and impress everyone including themselves .

Now i know your leads are not worth anything. with out you speaking or pming me. and I withdraw my offer for free advice.

I am off to close my 30 files in my pipeline, while not having a stroke.

Yelling>> do you realize the cost of flood insurance and the cost of the property management team .....I'm going to turn into Mcaguru soon. : )

( i have to laugh so I do not cry ) << thats going to be my new tagline

[Lender Of Gold]

Buddy I understand what you're saying lol, but it's just if I'm a guy that's doing 95% of the work of our sales cycle (which is the production of a qualified lead, of whom is a merchant currently in the market for alternative financing and who fits the generic qualification for underwriting) there's no way I'm about to give up at least 50% - 80% of my new deal commissions as well as potentially get paid nothing on renewals, just to work with "some guy" who is supposedly "the closer". The sale is made at the beginning of the process when the lead is generated, there's nothing to "close".

Just to add to this: to any guys currently working at any shop or sending to a lender where their renewals aren't paid. pick up your balls and leave to go find other outlets that do. That's like an unalienable right and you deserve better (assuming you did your diligence on any signed agreements)

thanks to everyone in the 'community' for their honest feedback. It's been a pleasure reading everyone's individual 'take' on my question; which I interpret as a commentary on the market.
It seems that no one is whole heartedly recommending a move from Referral Rep to ISO.

I'll keep watching and learning as much as I can from my small corner of the industry
I'm taking the steady as she goes approach for now

Good luck sir. The payoff indeed is huge but the amount of risk to undertake being an individual ISO is just as high if not higher. It really comes down to the family/life situation of the salesman as well. Got a guy with 3 kids. Excellent closer and prospector, years in the business. But to handle all the work of setting up and maintaining the infrastructure of an efficient shop would leave him almost no time to enjoy the finer things in life, or his family. Contrast this to the single, early-20s sales prodigies with no family and minimal personal overhead who can take the leap with not much to lose (and add about 5 spam emails from gmail addresses to my inbox every day)

[Red Dragon]

Thanks for your input Karen. Your knowledge of the industry is clear and you clearly know what you are doing. It's good to know that there are some honest and straightforward seasoned vetrans in the industry. Your response was invaluable.
I've gained a lot of valuable insights from my post; the majority of which seem to be saying that it's best to 'sit tight' as many have warned me of the burden of backoffice perwork and the life-family balance.
For now I'm going to keep submitting my applications and prescreening the merchants in order to craft the best possible apps.

[Red Dragon]

Thanks for your input MCNetwork. I have 20 years of. B2B sales experience but only a year in MCA. I'm sticking with my core skill set which is closing qualified leads. I still have a lot to learn on the Buy Side and learning how the Direct Funders operate - but I'll get there!