Originally Posted by
Finance
Hey all,
I see both sides of the coin here, I think we should all keep in mind the fact that anything acquired without effort and without cost is generally unappreciated, often discredited. Due to the unregulated, "if you know you know", clandestine nature of the MCA Industry that we're all in, it's not hard for a lender to put their name out there and start generating business. The second your entity's name is in a few merchants bank statements and you fund a few deals, a viral effect occurs where notoriety quickly becomes established and before you know it you're getting a heavy influx of ISO's trying to sign up with you. Look at ironwood for example, they were arguably the fastest lender in the game for a few months before EVERYONE found out about them.. because every one is looking for the next best new lender while simultaneously broker shops have an existential journey ahead of them if they want to develop even a quarter of the notoriety in general let alone doing it in the timeframe that a new lender can incoherently do it in. So my point in saying all of this is yes, renewal game is key.. However, in the minds of most brokers, they're ALWAYS in competition with other lenders approvals in the clients ears, other brokers hammering the clients phone number trying to bad mouth the guy that they're currently working with and work with them instead. As we can all understand, this promotes a caged lion mentality where if they don't behave the way they do in some circumstances, they'll get burned. Hence where PSF's / greed, clawback periods come into play. Because no matter who it is lending, if they know what they're doing, their bottom lines are always in the green and that's with an industry wide 10%+ default rate, that's why we're in this business in the first place because yes we're helping people but at the same time we're making money, this statement is axiomatic. If there's any vitriol to that statement, keep in mind that if the motives weren't 90% self fulfilling for some of these platforms, we wouldn't see 1.50 factor rates for the high risk clients, we'd see declines.. plain and simple. We need to keep in mind that the entirety of this thread is congenial, so of course these ideas of infinite time framed clawbacks if the client goes bad, waiting till it's fully paid off to pay the ISO commission, renewal game, etc., will be gratified by everyone here because it serves the party at hand. We have to visualize that the industry is the way it is after 10+ years for a reason. If we had a really nice car but filled the gas tank with acid it would corrode the internals and now we can't drive at all, hence why it's filled with the fluid that makes it move.. gas. If everyone starts changing the very criteria that has a direct correlation with their main source of business (ISO'S), this causes a direct negative impact to their main source of business (ISO'S), which eventually will cause an incoherent negative result for them as well. Yes, you'll make a little more money in the short term by saving a few defaults, saving some commission that would've been paid, but a pernicious effect will be underlying and lurking in your platform. Before you know it, 50% of your ISO's are gone, the other 50% aren't performing nearly as well due to the lack of incentive, and now because of the criteria changes that you put in place because you thought it was the right move, your platform has quickly become dilapidated along with the ISO partners that utilized you for their business. In conclusion, although some of these points are valid to the utmost degree, they're not realistically viable to put in place in the space that we're in.
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