[JayBallentine]

I had an experience with a funder where they quoted us some "fantasy" rates. A funder. Not an ISO masked as a funder. These guys have been around quite some time (at least the people on the team).

They sat down with us in person, we discussed things. Their original "buy rate" schedule was generally acceptable - par for the course. Wouldn't have taken a meeting if it were not.

Unsolicited, we get an adjustment to the buy rate schedule about a week later. Everything dropped by 10 points. All buy rates.

Instantly smelled a rat... Essentially they showed us the lowest rates in MCA (easy to do because they were clearly fantasy) So clearly we'll be staying far away from them. If these rates were true, they wouldn't be a player in MCA - they would be the only player in MCA.

I am struggling to figure out what was on their mind when they "crafted" this strategy. What was the rationale or logic behind trying to "dupe us" into submitting to them? Did they think we were blithering idiots? Even if we completely fell for the trick, what was their plan when after X number of submissions we figured the buy rates weren't worth the ink they were printed on? Were they really willing to pre-emptively blow up an entire potentially long term relationship just to get a few submissions right now?

ISO's you guys getting "fantasy" rates? Funders you marketing "fantasy" rates to lure in ISO's?

What's going on here???

[MCNetwork]

Which fantasy rates were you quoted? Do you have some examples?

[JayBallentine]

Which fantasy rates were you quoted? Do you have some examples?

1.17 "fantasy" base buy rate. "Max upsell" of 10 points to 1.27 on 3 months approvals.

1.22 "fantasy" base buy rate. "Max upsell" of 10 points to 1.32 on 6 month approvals.

500 FICO gets you those rates.

They didn't lead in with these though. They edited the word doc a week later (did one "exec") by simply changing digits around; "look what we made for you!"

If those rates had been real we'd take $0 on initial fundings to make money on renewals. When we expressed that - things got weird, lol.

[MCNetwork]

ARF has buy rates of 1.18 (10 months) and 1.23 (12 months) and you can upsell 12 points commission. These rates are for the lower tier merchants (601-650 FICO) and the top tier merchants get better rates. The rates you're seeing may very well be legit.

[Chambo]

1.17 on a three month deal is not fantasy, nor is 1.22 on a 6 month....

[SuperFunds]

The buy rates themselves are not fantasy, I think the only questionable aspect is that they would have these available when presented with a 500 fico. But for those same lengths of terms funders like OnDeck will allow buy rates as low as 1.13 and 1.15 respectively on 3 and 6 months if the business qualifies.

[MCNetwork]

On Deck's buy rates are super low but you need much better than 500 FICO

[JayBallentine]

500 FICO was a flag. I've seen guys go low on 601+ Never seen a guy with up to 3 NSFs (max) and a 510 FICO get a 1.17 rate.

Dropping the rates 10 points threw me off as well.

Sending me an editable contract (in word format) was equally alarming.

These amongst other things appeared strange to me. 500 FICO = 1.17. 10 points lower (490) = 1.42, according to them.

[JayBallentine]

500 FICO was a flag. I've seen guys go low on 601+ Never seen a guy with up to 3 NSFs (max) and a 510 FICO get a 1.17 rate.

Dropping the rates 10 points threw me off as well.

Sending me an editable contract (in word format) was equally alarming.

These amongst other things appeared strange to me. 500 FICO = 1.17. 10 points lower (490) = 1.42, according to them.

EDIT: By the way - they clearly understood that all "premo" paper would go directly to Kabbage. Absolutely zero point in us "working" deals for guys with great credit and a strong depository profile. We wanted to lock in various options for stuff that Kabbage couldn't fund.

[rld]

Not every merchant knows about Kabbage.. I have funded a couple "primo" deals lately with FICO's over 700 (one for $250k and another for $425k). On those deals I ended up getting 6 points on a 1.32 factor over 9 months and another one got me 5 points on a 1.31 over 6 months. If you are working with a direct funder those rates are definitely doable.. but the 500 FICO would worry me as well. I haven't seen anything under 600 going for less than 1.4 personally.

[Ryan Shiroky]

lol ill give you a 3/mo 1.18 buy rate on a merch with a 550 fico... i'll do that deal all day... twice on mondays... and your max is 12 points (as long as total payback doesn't violate our gross margin rule)

[Ryan Shiroky]

loans only for that deal

[Ryan Shiroky]

hell primo paper... i'll give you a 1.20 buy rate on 6/mo deals... 12 points upsell...

rshiroky@amerimerchant.com

[Ryan Shiroky]

our pricing for ISO's that like buy rates is actually pretty aggressive... im not IOU, but i fund deals...

[Eddie.deangelis]

Rid, you funded the $250k and $425k deals with cabbage ?

[rld]

Rid, you funded the $250k and $425k deals with cabbage ?

Kabbage only pays a $100 referral bonus.. I wouldn't be in this industry long if I sent those kind of deals to them.

[JayBallentine]

Kabbage only pays a $100 referral bonus.. I wouldn't be in this industry long if I sent those kind of deals to them.

They pay 2 points to approved affiliates.

[rld]

Kabbage's website says they max at 100k anyway.. most of my deals are too big for them.