[dpFund]

Hello Folks,

I've been spending a lot of time looking at the clients we fund, the industries they hail from and wondering what other lenders/ISO's think.

I was wondering if it might be helpful to talk about the types of clients we prefer (or not).

You don't have to share any secret sauce (I'm not going to!), but I'm curious as to your preferred industries, and it might help all of us to talk about it together.

While I will fund a client from almost any industry if the financials stack up, I've noticed a preponderance of clients funded from the following industries this year:

Trucking/delivery
Construction (variety including contractors, plumbers, electricians, roofers)
Internet retailers
Consultancies/ Marketing companies

When looking at that list it is interesting to see Truckers in there since a year ago I was very wary of the industry, but am now pretty comfortable ferreting out the good from the not-so-good.

Direct marketing companies (including many Internet retailers) scare the daylights out of some lenders but I understand the industry and love it.

What are your favorites that you found make good clients and come back for more?

And this leads to the obvious follow up question: What would you like to see but don't get enough of?

Looking forward to the discussion!

Dan Page
Direct: (303) 938-8280
dan@fundingstrategypartners.com

[mcaguru]

Outside of used auto / legal /Collection agencies evrey and any SIC Code is fundable at Cresthill Mantis !

* Fastest Offers
* Fewest Stips
* majority of files do not need coj
* Adjustment team to help adjust offers in lightning speed.
* Double Digit Commissions


SIGN-UP TODAY!!

[Michael I]

Outside of used auto / legal /Collection agencies evrey and any SIC Code is fundable at Cresthill Mantis !

* Fastest Offers
* Fewest Stips
* majority of files do not need coj
* Adjustment team to help adjust offers in lightning speed.
* Double Digit Commissions


SIGN-UP TODAY!!

like usual you are useless to any thread and just try to hijack the thread .

[Michael I]

Dan
what i have found is some industry are harder to understand and most lenders that just go by bank deposits wind up having defaults in those industry . for example auto sales and not figuring in the floor plan .This problem i dont think you will have .
next is the industries people are scared of . legal , they can easily sue or fight contract . guns - they wind up on front page of news . collections - they know the default game and so forth .
next is the low margins and cant handle the payments / interest but this also good underwriting and pricing can fix .
lastly they are scared of the easy to close up shop , home based , drop shippers , etc.

[Kevin Henry-Seacoast]

Hello Folks,

I've been spending a lot of time looking at the clients we fund, the industries they hail from and wondering what other lenders/ISO's think.

I was wondering if it might be helpful to talk about the types of clients we prefer (or not).

You don't have to share any secret sauce (I'm not going to!), but I'm curious as to your preferred industries, and it might help all of us to talk about it together.

While I will fund a client from almost any industry if the financials stack up, I've noticed a preponderance of clients funded from the following industries this year:

Trucking/delivery
Construction (variety including contractors, plumbers, electricians, roofers)
Internet retailers
Consultancies/ Marketing companies

When looking at that list it is interesting to see Truckers in there since a year ago I was very wary of the industry, but am now pretty comfortable ferreting out the good from the not-so-good.

Direct marketing companies (including many Internet retailers) scare the daylights out of some lenders but I understand the industry and love it.

What are your favorites that you found make good clients and come back for more?

And this leads to the obvious follow up question: What would you like to see but don't get enough of?

Looking forward to the discussion!

Dan Page
Direct: (303) 938-8280
dan@fundingstrategypartners.com

Hi Dan,

We like to fund industries we know very well and provide solutions where we are adding value to the client.

-We avoid construction because of obvious challenges, but we love building product companies or distributors. The end debtor is key.
-Trucking-We know it, but won't chase it because a majority will not see the value you provide and treat you like a vendor. Specialty delivery and distributors....yes
-We LOVE staffing, tower services, consumer products (especially food and beverage), specialty manufacturers, and specialty distributors.

Again...the key for us is clearly understanding the business, their need, and providing a solution that adds value. Yeah, our cost of capital is ridiculously low and we price factoring facilities and ABL facilities accordingly, but being the cheapest guy in the room may not always win the client.

Best,

Kevin

[dpFund]

like usual you are useless to any thread and just try to hijack the thread .

Thank you. Just trying to initiate a helpful discussion.

[kpeng]

Retail and restaurants are the best.

[dpFund]

Retail and restaurants are the best.

Thanks for the reply. That is what is so fascinating about this industry...retail and restaurants are on the bottom of my list! Glad to know they are on the top of yours.

[LoanFunder]

Dan, is your minimum on all transactions 100k or is that just for consolidations?

[dpFund]

Dan, is your minimum on all transactions 100k or is that just for consolidations?

Thanks for the question. My minimum funding for any deal is $100k, either consolidation or straight up funding.

[dpFund]

Hi Dan,

We like to fund industries we know very well and provide solutions where we are adding value to the client.

-We avoid construction because of obvious challenges, but we love building product companies or distributors. The end debtor is key.
-Trucking-We know it, but won't chase it because a majority will not see the value you provide and treat you like a vendor. Specialty delivery and distributors....yes
-We LOVE staffing, tower services, consumer products (especially food and beverage), specialty manufacturers, and specialty distributors.

Again...the key for us is clearly understanding the business, their need, and providing a solution that adds value. Yeah, our cost of capital is ridiculously low and we price factoring facilities and ABL facilities accordingly, but being the cheapest guy in the room may not always win the client.

Best,

Kevin

Thanks Kevin - I totally agree with your point about needing to understand the industry. While we do fund in a variety of industries, we definitely need to get our hands around the client's industry and business to make the deal work.

[WestCoastFunding]

Dan, if you don't mind me asking, what do you generally look for in consolidations? Specific DSCR?

[dpFund]

Dan, if you don't mind me asking, what do you generally look for in consolidations? Specific DSCR?

My primary driver is net income (taken from the P&L after all expenses, including owner draw). We then compare the true monthly net against what the client's payment would be if we funded him. As a rule of thumb, I want to see $13k of monthly net for every $100k of funding. Secondly, I'm looking to the balance sheet to see if they are solvent.

[Karen37a]

I've found that each lender hates/loves different sectors/algorithms for varied and "sometimes illogical" reasons. What's illogical to one is not to the other. It boils down to that company's previous experience with merchants and the default ratios associated to it.

If its not broke dont fix it mentality

Maybe the underwriter/Lender is "in the know" on certain industries, has the margins, patterns etc down to a science and feel more comfortable in that sector or range to price it and sleep at night.

Underwriters/Lenders learn what sectors they did better in,, and "some" ISOs learn which lenders have the best approval ratios depending on which sector or financial hiccup.

The Brokers on my team all have a different sector that they do well in. I have a woman who loves Truck Drivers for some unknown reason, I have tried in the past to get her out of that sector because I dislike that industry. Another loves automotive, another bars/nightclubs. I personally do well with Restaurants and Business professional types, Construction as well but I try to stay out of the latter for obvious reasons. I also purposefully choose the industries that my lenders prefer or give extended terms . And I think I do well( personal sales, not team) in the industries that I personally believe in and would fund myself, If I was doing the lending.

It based on people's individual personality and their ability to connect to people, build trust, make them feel comfortable. I stopped bugging the lady who loves truckers, I use to say , have at it don't cry when you do not make any money BUT she does well and is happy. I use to think what the hell is she looking for a date . Call millionaires at least lol

Some brokers/lenders are commission focused and just want to slap an advance on them anyway.


In the End . Experience is the teacher of all things...Ceaser

[Vfunding]

I still can't understand seeing restaurants/bars at the top of anyone's target list. I know much of this industry claims to love these deals. To me, restaurants are the original "unbankable" industry for one simple reason: When banks lend they offer 3-10 year loans and the majority of restaurants don't last 3-10 years! Obviously a 6-18 month term reduces lender risk in lending to a high-burn-rate industry. But restaurants have a hidden layer of drama and complication which are hard to account for in underwriting. Ownership in-fighting, husband/wife break ups, employee mutiny (this happens!), sales tax issues, lots of invisible cash. And don't forget about the wildcard: crappy food/service. Restaurants close down all the time just because they aren't good! I don't know default rates industry wide for bars/restaurants but I would say if this industry has figured out how to fund this SIC at an acceptable default rate, it would be just another way this business amazes me.

[HDF]

Vfunding, you may have answered your own question there. Banks don't approve restaurants all that often as compared to other industry selects. Therefore, they are ripe for an alternative.

But as you mention, they are a huge pain in the ass sometimes. But they do rely heavily on equipment and upgrades which is also a major plus to a broker with that arrow in his/her quiver. Talking to them in restaurant speak goes a long way to getting them funded. Get them off the dialer and do it from 8-10 or 2-4 for best results.

[Vfunding]

HDF, I agree with all of your statements.... except the idea of cold calling restaurants (with or without a dialer) no matter what time of day seems like a tough way to spend you day! You would be competing against cc processors, POS companies, Insurance sales, not to mention 250 other MCA companies all calling trying to sell to the owner. I think restaurants are one of the few industries that get more cold calls from non financing related companies than they do from MCA companies! We prefer to target B2B and the B2C deals tend to come in anyway from our marketing. I have no doubt there are groups out there that have managed to make a good living dialing on restaurants... It's just not our thing.

[Kevin Henry-Seacoast]

HDF, I agree with all of your statements.... except the idea of cold calling restaurants (with or without a dialer) no matter what time of day seems like a tough way to spend you day! You would be competing against cc processors, POS companies, Insurance sales, not to mention 250 other MCA companies all calling trying to sell to the owner. I think restaurants are one of the few industries that get more cold calls from non financing related companies than they do from MCA companies! We prefer to target B2B and the B2C deals tend to come in anyway from our marketing. I have no doubt there are groups out there that have managed to make a good living dialing on restaurants... It's just not our thing.

Build a relationship with a major supplier to the restaurant industry in your region. Get friendly with their head of receivables to find out who their good customers are, but tend to be slow payers. If you position the pitch in a way that is helps the supplier, you will get somewhere.....

[Karen37a]

The Restaurants/business that I do well with usually are in business 7 plus years and have their name on the door pride in ownership or flag planted so they are going down with the ship rather than change the business name or go under

Kevin dont give away good tips lol ( half joking )