[skideeppow]

Anyone compete with amex, 1 year 6%, two years 12%?

Just wondering.

[MCNetwork]

Don't know anyone who would do that type of deal besides a bank. A lender could make more money investing in a stock index fund with much less headache.

[freeroll888]

Fico ?

[ridextreme]

anyone can compete with AMEX if they're maxed out with them and need more money.

Fico ?

what does this have to do with anything? You can do better than a 1.06 with high FICO's?

[Jason Sterling]

Amex has the best pricing in the business, I've lost to them several times over the years. Saw $100,000@1.03 a few weeks ago. The merchant had low 600 Equifax.

[WestCoastFunding]

Anyone seen Marcus? Should have been here pitching Mantis by now.

[J.Celifarco]

all you can do when you run into amex is hope they can't get them enough money and you can supplement the funding they are receiving with an MCA.. Most companies in our space dont consider it an MCA and it doesn't need to be paid off. You are not going to beat them so this is the only thing that has worked for me the times I have come up against them

[nrh1lp]

I actually (kinda) beat an amex recently, it was with Credibly, the rate was higher by quite a bit but amex only offered a 12 mo term and credibly came in with 15 months so it ended up reducing the payment by about 300-400/mo

[Eagle Funding]

I actually (kinda) beat an amex recently, it was with Credibly, the rate was higher by quite a bit but amex only offered a 12 mo term and credibly came in with 15 months so it ended up reducing the payment by about 300-400/mo

He asked about pricing not daily payments, the credibly deal was probably in the 1.30s-1.40s, you will not beat amex with an advance product, but you can offer them more money at a much more expensive cost.

[jotucker1983]

Anyone compete with amex, 1 year 6%, two years 12%?

Just wondering.

If the client qualifies for this type of program, there's no way they are going to take an MCA product over this one.

I'm just waiting for all of the people who argued me down about having "superior sales abilities", to chime in on how they would "close" a merchant to take an MCA over the AMX product lol.

As was mentioned prior, the only thing you can do is an add-on. AMX might approve them for a very small amount, so your "add-on" can help get them closer to the amount of financing they need at the moment. Most MCA industry related funders/lenders won't see programs like AMX, SBA, nor Marketplace Lending programs as "competitors".

But I'm sure the "superior sales ability" crowd will chime in about how they can still "close" the merchant on taking out an MCA over the AMX loan lol.

[MCNetwork]

Since I assume that I'm one of the people you would lump in the "superior sales ability" crowd (sarcasm voice followed by your trademark "lol"), I'll take a stab at showing how I could persuade a merchant to take an MCA over the AMEX product.

First of all, it depends on the type of client and what the funds will be used for.

Example:

Client is a contractor specializing in asbestos removal/mold remediation. He just landed a $250,000 contract to remove asbestos at a large office building. He quickly needs $40,000 in order to purchase supplies and hire some workers to begin the job in 2 weeks. Contractor bills his clients on net 30 terms. He really just needs the funds for 30-45 days until the client pays for the first set of invoices.

He has the following offers:

1) $40,000 AMEX loan at 6% over 12 months.
2) $40,000 cash advance over 9 months at 1.25 factor

Here is what I would tell the merchant:

"Okay so you have two offers and obviously the AMEX loan has a much lower interest rate. Normally I would advise you to take that loan but in your particular circumstance, I believe that the cash advance is the best option for you. Your main issue is that you have a short term receivables gap that needs to be filled until your client pays you. You only need the funds for 30 to 60 days at the most. If you take the AMEX loan, you will be saddled with a 12 month loan and will be unable to renew with them for quite a while.

Now this is what I can do for you. Since you only need funds for about two months to bridge your receivables gap, I will include an early pre-payment discount option with the cash advance so that if you can pay it off in 60 days, you'll only be paying 8%. You've told me that you have a 30% profit margin, so this is really a small price to pay as an operational expense to grow your business. I'm basically factoring your receivables and you get to keep your invoices.

The beauty of this is that you'll be able to take another $40,000 in 60 days to cover any new projects you may undertake. You'll be able to rinse and repeat the process. Over a 12 month period, you can take up to $240,000 in working capital to finance your jobs ($40,000 every 2 months) whereas with AMEX, you'll be capped at $40,000 over 12 months. With me, you'll essentially have a revolving line of credit for a much greater amount. You'll be able to leverage my money to grow at a much faster pace than if you took the AMEX loan. And not only that, as we continue to build a relationship together, the terms will only improve over time. We're looking to build a solid foundation together so we'll be able to fuel your expansion goals quickly and efficiently. So that is why the MCA through my company is much better for your business needs and future goals than the AMEX loan."

A good salesman knows that having the lowest rate over 12 months isn't the only consideration. Use of funds is the number one factor in deciding the best program for a merchant. And yes, there are funders out there that give early pre-payment discounts.

[skideeppow]

Since I assume that I'm one of the people you would lump in the "superior sales ability" crowd (sarcasm voice followed by your trademark "lol"), I'll take a stab at showing how I could persuade a merchant to take an MCA over the AMEX product.

First of all, it depends on the type of client and what the funds will be used for.

Example:

Client is a contractor specializing in asbestos removal/mold remediation. He just landed a $250,000 contract to remove asbestos at a large office building. He quickly needs $40,000 in order to purchase supplies and hire some workers to begin the job in 2 weeks. Contractor bills his clients on net 30 terms. He really just needs the funds for 30-45 days until the client pays for the first set of invoices.

He has the following offers:

1) $40,000 AMEX loan at 6% over 12 months.
2) $40,000 cash advance over 9 months at 1.25 factor

Here is what I would tell the merchant:

"Okay so you have two offers and obviously the AMEX loan has a much lower interest rate. Normally I would advise you to take that loan but in your particular circumstance, I believe that the cash advance is the best option for you. Your main issue is that you have a short term receivables gap that needs to be filled until your client pays you. You only need the funds for 30 to 60 days at the most. If you take the AMEX loan, you will be saddled with a 12 month loan and will be unable to renew with them for quite a while.

Now this is what I can do for you. Since you only need funds for about two months to bridge your receivables gap, I will include an early pre-payment discount option with the cash advance so that if you can pay it off in 60 days, you'll only be paying 8%. You've told me that you have a 30% profit margin, so this is really a small price to pay as an operational expense to grow your business. I'm basically factoring your receivables and don't need to hold on to any invoices.

The beauty of this is that you'll be able to take another $40,000 in 60 days to cover any new projects you may undertake. You'll be able to rinse and repeat the process. Over a 12 month period, you can take up to $240,000 in working capital to finance your jobs ($40,000 every 2 months) whereas with AMEX, you'll be capped at $40,000 over 12 months. With me, you'll have a revolving line of credit for a much greater amount. You'll be able to leverage my money to grow at a much faster pace than if you took the AMEX loan. And not only that, as we continue to build a relationship together, the terms will only improve over time. We're looking to build a solid foundation together so we'll be able to fuel your expansion goals quickly and efficiently. So that is why the MCA through my company is much better for your business needs and future goals than the AMEX loan."

A good salesman knows that having the lowest rate over 12 months isn't the only consideration. Use of funds is the number one factor in deciding the best program for a merchant. And yes, there are funders out there that give early pre-payment discounts.

Good pitch. Love it.

[MCAVeteran]

AMEX is getting revenue from the merchant on their amex processing. the loan is just a way to acquire more customers and retain more customers for them. They lost a contract with Costco and had an article come out financing was going to be a big part of their push. Some funders, or most, will work alongside AMEX so its not so much about competing as you will get killed most of the time on rates, but, seeing how much AMEX gave them and if their capital needs were met or if they may need addtl if it makes sense.

[WestCoastFunding]

Since I assume that I'm one of the people you would lump in the "superior sales ability" crowd (sarcasm voice followed by your trademark "lol"), I'll take a stab at showing how I could persuade a merchant to take an MCA over the AMEX product.

First of all, it depends on the type of client and what the funds will be used for.

Example:

Client is a contractor specializing in asbestos removal/mold remediation. He just landed a $250,000 contract to remove asbestos at a large office building. He quickly needs $40,000 in order to purchase supplies and hire some workers to begin the job in 2 weeks. Contractor bills his clients on net 30 terms. He really just needs the funds for 30-45 days until the client pays for the first set of invoices.

He has the following offers:

1) $40,000 AMEX loan at 6% over 12 months.
2) $40,000 cash advance over 9 months at 1.25 factor

Here is what I would tell the merchant:

"Okay so you have two offers and obviously the AMEX loan has a much lower interest rate. Normally I would advise you to take that loan but in your particular circumstance, I believe that the cash advance is the best option for you. Your main issue is that you have a short term receivables gap that needs to be filled until your client pays you. You only need the funds for 30 to 60 days at the most. If you take the AMEX loan, you will be saddled with a 12 month loan and will be unable to renew with them for quite a while.

Now this is what I can do for you. Since you only need funds for about two months to bridge your receivables gap, I will include an early pre-payment discount option with the cash advance so that if you can pay it off in 60 days, you'll only be paying 6%. I'm basically factoring your receivables and don't need to hold on to any invoices. The beauty of this is that you'll be able to take another $40,000 in 60 days to cover any new projects you may undertake. You'll be able to rinse and repeat the process. Over a 12 month period, you can take up to $240,000 in working capital to finance your jobs ($40,000 every 2 months) whereas with AMEX, you'll be capped at $40,000 over 12 months. With me, you'll have a revolving line of credit for a much greater amount. You'll be able to leverage my money to grow at a much faster pace than if you took the AMEX loan. And not only that, as we continue to build a relationship together, the terms will only improve over time. We're looking to build a solid foundation together so we'll be able to fuel your expansion goals quickly and efficiently. So that is why the MCA through my company is much better for your business needs and future goals than the AMEX loan."

A good salesman knows that having the lowest rate over 12 months isn't the only consideration. Use of funds is the number one factor in deciding the best program for a merchant.

I'm not that familiar with the Amex product, but is there some sort of massive prepayment penalty associated? If not, why wouldn't they simply pay-off the AmEx loan after 60 days?

[nrh1lp]

I'm not that familiar with the Amex product, but is there some sort of massive prepayment penalty associated? If not, why wouldn't they simply pay-off the AmEx loan after 60 days?

I believe with AmEx their is not a discount if you pay early

[MCNetwork]

I understand there is a penalty (not sure how much). Yes they can pay off the loan early, but AMEX won't immediately issue another loan if it's requested. I know a merchant that tried something similar for 15K and they were denied.

[WestCoastFunding]

I believe with AmEx their is not a discount if you pay early

Fine. But how is it structured? Is it an APR product? If so, using it in the same way you'd use an advance would be cheaper.

[MCNetwork]

AMEX loans are great for CapEx but for merchants that need multiple cash infusions throughout the year to cover inventory, invoices, and other OpEx, the cash advances can be more beneficial.

[WestCoastFunding]

I understand there is a penalty (not sure how much). Yes they can pay off the loan early, but AMEX won't immediately issue another loan if it's requested. I know a merchant that tried something similar for 15K and they were denied.

Then the merchant's best bet would be to use it once, pay-it-off, and then try the cash advance option. That would be the most affordable way to do it using this situation above under the worst-case scenario.

[MCNetwork]

True. But since AMEX doesn't pay me that's not the option I would pitch...

[nrh1lp]

Fine. But how is it structured? Is it an APR product? If so, using it in the same way you'd use an advance would be cheaper.

I believe AmEx structures the deal as an advance but the rates are so low they can legally display it as an APR

[WestCoastFunding]

I believe AmEx structures the deal as an advance but the rates are so low they can legally display it as an APR

I see. But when you factor in banking fees associated with the cash advance, the effective rate also increases. So that 6% on the cash advance won't really be 6%.

[nrh1lp]

That is true, I am not sure if AmEx has any other fees associated with it so there 6% might actually be 6%

[jotucker1983]

Client is a contractor specializing in asbestos removal/mold remediation. He just landed a $250,000 contract to remove asbestos at a large office building. He quickly needs $40,000 in order to purchase supplies and hire some workers to begin the job in 2 weeks. Contractor bills his clients on net 30 terms. He really just needs the funds for 30-45 days until the client pays for the first set of invoices.

Okay.

He has the following offers:

1) $40,000 AMEX loan at 6% over 12 months.
2) $40,000 cash advance over 9 months at 1.25 factor

Okay.

Here is what I would tell the merchant:

"Okay so you have two offers and obviously the AMEX loan has a much lower interest rate. Normally I would advise you to take that loan but in your particular circumstance, I believe that the cash advance is the best option for you. Your main issue is that you have a short term receivables gap that needs to be filled until your client pays you. You only need the funds for 30 to 60 days at the most..........

Since you only need funds for about two months to bridge your receivables gap, I will include an early pre-payment discount option with the cash advance so that if you can pay it off in 60 days, you'll only be paying 8%. You've told me that you have a 30% profit margin, so this is really a small price to pay as an operational expense to grow your business. I'm basically factoring your receivables and you get to keep your invoices.

Okay and this is what John Tucker would do:

- Number one, I'm not beating the AMX program so it makes no business sense to even "compare" my product to the AMX product. For your information, this is the program here: https://merchantfinancing.americanex...cing/index.htm

- The offer that you just made to the client with the MCA on a 2 month turn, can be done with the AMX program as well, read the link I just posted.

- Not sure why you would even offer the MCA the way you did? Why not just offer a premium MCA with a 2 or 3 month turn? It would be much simpler.

- Now, I don't see the AMX program as a direct competitor, again, all of my A/B Paper funders/lenders can fund on the side of AMX, as well as, Marketplace Lending products. The very low rates are on par with bank rates and the MCA product complements the Bank, by providing the merchant with additional capital for additional projects and cashflow needs.

- The merchant in the example bills using Net D often, so getting an infusion of cash on a good consistent basis would be a great "complement" to the other "bank-like" programs that he has available/is using. Thus, I would offer my MCA (or alternative loan) product showing an example of my "add-on" process for the next 12 months. But even this might not work, depending on how often he can get cash from AMX as they have a similar program in terms of cash infusion.

True. But since AMEX doesn't pay me that's not the option I would pitch...

Lol, which is why in some cases you just have to walk away. But I know you and Karen are the world's greatest sales folks

[MCNetwork]

Okay.



Okay.



Okay and this is what John Tucker would do:

Not sure why you would offer the MCA the way you did? Why not just offer a premium MCA with a 2 or 3 month turn? It would be much simpler.

Because a merchant who is only approved for a 40K 9 month cash advance would NOT be approved for a 40K 2-3 month advance. His revenue is not high enough. Besides his daily payment will be astronomical which doesn't help him at all. And even if there was a 3 month premium turn (which I have not seen among my 15 lenders), the factor rate would still be higher than a discounted early payoff rate. It's better to stretch the advance and keep the daily payments low and then sell the early payoff option. This is basic stuff John!