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Related Headlines
| 06/28/2023 | CA: ALL brokers to require license? |
| 02/15/2023 | In UK, biz loan brokers loaned £45bn |
| 07/29/2022 | For the record on unlicensed brokers |
| 11/12/2021 | Brokers still relevant to mortgage lending |
| 10/05/2021 | IntroLend brings LOS to mortgage brokers |
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Stories
10 Commandments of ACH Processing For Brokers
May 18, 2023deBanked recently spoke with Zalman Notik, the Operations Manager of MCA Track & GoACH. Notik offered up so much advice about ACH processing that it’s been codified into a helpful list! Below are his 10 Commandments of ACH Processing.
1. Always disclose your fee. Merchants are generally okay with paying something they agreed to pay if it is disclosed.
2. Make sure that everything agreed to is in writing and plainly stated. e.g. “We’re going to debit your account for $1,000 when we get you approved for a loan.” There’s a difference between the short, long way and the long, short way. To avoid lengthy disputes, negative Google reviews, and claims of undisclosed fees, opt for the straightforward method rather than the convoluted one.
3. Remind the merchant (in writing and by phone) that you will be debiting their account on X date. As a courtesy reminder it’s probably a good idea to give that merchant a phone call saying, “Hi, John, congratulations, I got you the $100,000, we’re so excited that it worked out well and I’d like to remind you that for our agreement we’re going to debit your account tomorrow.” This can avoid a broker’s payment getting returned if in fact that merchant planned to transfer all their funds elsewhere.
4. Any change to the amount that was agreed to should come with new signed paperwork. If a broker has a piece of paper stating that they’re allowed to debit somebody’s account $10,000 and then debit them $4,000, $5,000, or $8,000, that merchant could dispute it, and they will win because they never agreed in writing to $8,000, they agreed to 10.
5. Collect a copy of the merchant’s ID and a voided check with the business name on it. Be sure that everything matches.
6. Confirm with the merchant that they own the account – Not a spouse, cousin, or friend etc. When checking state records and the business is owned by a spouse, that spouse should be signing the agreement. For example, if a couple owns Joey’s pizzeria and one of them signs the paperwork there could be a possibility that broker will receive a dispute two months later. Turns out that the other spouse is the legal signer on the bank account and now that broker is out of money. A good way to verify is through IDs or a voided check with the business name on it.
7. Communicate with your ACH provider – e.g., “The merchant said the payment will not clear etc.” No one likes surprises. Communication with the ACH provider makes them feel comfortable about working with that broker again in the future.
8. Store paperwork in a secure location so that if there is a dispute you can provide everything to the ACH processor in a timely fashion. NACHA Operating Rules & Guidelines are enforced by the government for every ACH payment. If a broker debits an account, and that merchant disputes the transaction over a period, that broker will need to provide paperwork to prove those disputes. Keep those files in a Dropbox or Google Drive account or somewhere safe and accessible.
9. Keep funds in your bank account to cover fees and returns. Having $0 in your account is a bad fit so be disciplined in keeping money in one’s account.
10. Don’t be an A*$%#%$ – if you treat your merchants well and communicate with them, you won’t find yourself fending off disputes etc. Despite what someone may sign, if the merchant feels they have been mistreated throughout the process it’s not going to stick, potentially leaving that broker with problems.
How Many Funders and Brokers Are There?
May 17, 2023
According to the State of Virginia, there are only 115 total sales-based financing providers lawfully registered to transact with merchants in the state. That includes all funders and brokers combined. The figure seems… low, although there are potential exceptions to the rule.
All MCA funders AND BROKERS were required to register with the state in accordance with the law before November 1, 2022. The initial registration fee is $1,000 and the annual fee is $500, but more importantly applicants must disclose any judgment, Memorandums of Understanding, cease & desist orders, or convictions resulting from a crime or an act of fraud, breach of trust, or money laundering “with respect to that person or any officer, director, manager, operator, or individual who otherwise controls the operations of such provider or broker.”
An automatically updated live list of registered providers can be viewed here.
Working With Multiple Brokers for a Business Loan? Here’s What to Talk About With Them
March 15, 2023
If you decide to engage with multiple brokers at once to try and secure the best possible business loan terms, here are some tips to ensure that happens:
1. Request a clear breakdown of loan terms and fees: You should ask each broker to provide a comprehensive breakdown of the loan terms, including interest rates, repayment schedules, and any associated fees (such as origination fees, late payment fees, or prepayment penalties).
2. Emphasize the importance of transparency: You should stress that you value transparency in the lending process and expect full disclosure of all fees, terms, and conditions. This will help you make a well-informed decision and avoid any hidden costs or unfavorable terms.
3. Ask about their lender network: You should inquire about the range of lenders they work with and their expertise in securing loans for small businesses in you specific industry. This will give you a better understanding of their ability to find the most suitable lender for you needs.
4. Mention that you are considering multiple brokers: By telling each broker that you are speaking with other brokers, you are creating a competitive environment. This may encourage them to offer more favorable loan terms in order to secure you business.
5. Discuss you business strengths: You should highlight you business’s strong points, such as a solid credit history, steady cash flow, or a well-developed business plan. This will help demonstrate to the brokers that you are a low-risk borrower, which could potentially lead to better loan terms.
6. Ask for references or testimonials: You should request references or testimonials from other small business owners who have worked with the broker in the past. This will give you an idea of their level of customer satisfaction and the quality of loan terms they have been able to secure for other clients.
Brokers, Funders Find Their Footing and It’s Back to Business
April 12, 2022
For Mike Brooks, CEO of Best Connect Capital, the deal making never stops. A former boxing trainer turned funder said that there are no days off. “I’m always funding, I am always, always funding,” he said.
Recently, Brooks has taken an interest in text message marketing. “I’ve had trouble finding somebody in text marketing,” he said. I was going on the internet and using word of mouth, and I wasn’t really able to connect with anybody. I hooked up with this company [in Miami], and it worked out really well. I already funded a couple of deals.”
Around the industry, brokers and funders have found their footing after Covid. A recent mass gathering in Miami definitely helped push things along. “The second I got off the plane in Miami this year, I saw an old friend, a business associate,” said Brooks. “That was a great connect right there.”
Nicholas Saccone, Senior Funding Advisor at Proto Financial had a similar experience. “Having the opportunity to meet up with some of our partners face-to-face [is] a really cool experience,” said Saccone. “Sometimes it is hard to find time to build relationships with all of our schedules. [Through networking] I’m able to get different perspectives on where the industry is headed and where we are now.”
“Small business lending is on the up and up,” said Frankie DiAntonio, CEO of Lexington Capital, who also ventured down to Miami with his team from Long Island. “With inflation going up, we’re finding that small businesses are outsourcing their need of funding outside the government, and there are companies like us that can come in and take care of them.”
DiAntonio spoke about how important it is to sell legitimacy to both his lenders and staff. “We’re the new kids on the block, we’re a newer company,” he said. Despite the head start his competitors may have, DiAntonio said that old school sales mentalities combined with modern marketing strategies have recently helped his company consistently fund deals and build a book of business.
“We bring in a lot of Google click ads which brings us a lot of leads, but obviously our guys just make phone calls throughout the day, as much as humanly possible,” DiAntonio said. “My guys know what they’re doing, they know the industry, they’re really good on the phones, and they know how to take care of customers.”
Meet The Aspiring Brokers Who Competed on Camera
March 10, 2022
The full cast of Equipping The Dream, the first b2b sales reality show, will reunite at deBanked CONNECT Miami on March 24th.
RJ Rochelle, Juan Carlos Marcano, Thomas Long, and Angela Thompson (above in order), all participated in a week long sales training last November that was captured on camera. They competed for a grand prize that was won in the season finale that aired just recently on March 3rd. Equipping The Dream is the defining b2b sales reality show. Now you can meet the brokers and the trainers that helped them in person!
Only a limited number of tickets to deBanked CONNECT Miami are left and sponsorships have already sold out. This will be deBanked’s 4th event in Miami since 2018.
All six episodes of Equipping the Dream are available on deBanked TV FREE.
Brokers who Utilize Fintech are Here to Stay
December 23, 2021
“I don’t think the industry would really be the same if we didn’t have brokers anymore.”
Dave Stewart, who was recently promoted to Sales and Partnerships Manager at Idea Financial, spoke to deBanked about the role brokers will play in the future of business financing. With so many different kinds of innovation being offered in the financial world through technology, Stewart shared his thoughts on how brokers, funders, and merchants can get the most out of a technology-infused lending environment.
“We think about the whole fintech thing, everything getting technology based, and that there’s a missed opportunity for the human touch,” said Stewart, when asked how technology will influence the way merchants apply for capital. “There’s a lot of clients out there that can go online and fill out an application, but they don’t understand the in’s and out’s.”
“When [the merchant] doesn’t understand how everything actually works, they usually fall back and seek a broker at some point in time.”
Stewart highlighted how from the lender’s perspective, the value of brokers is in being the face to the experience of purchasing a financial product. He described it as someone who can guide the merchant to the right type of financing and then through that specific funding approval process.
“I think there is value in the experience,” said Stewart. “I don’t go to a restaurant to cook my own meal. I go to a restaurant because the service is going to be great, the food is going to be great, and hopefully I have a great experience, and I think that’s a great example of what the broker does.”
Despite believing that the broker’s role in financing is invincible to fintech’s innovation in lending, Stewart didn’t dismiss the value of understanding and leveraging different types of technology in order to be competitive.
“There’s an art to being a good broker,” said Stewart. “There are a lot of people who are not tech savvy and are just monster brokers or monster sales people, but they definitely need or rely on somebody else to explain the technical aspects.”
Mortgage Fintech CEO says Brokers are Still Relevant to Lending Process
November 12, 2021
At Money 20/20 last month, deBanked spoke with Jason Harris, CEO of Button Finance, about his company’s initiative to give access to home equity loans to borrowers that would have never been able to do so. Through this conversation, Harris also shared his thoughts on how brokers across the finance world are still relevant, and the ones who are embracing tech are the ones who are closing deals.
Button Finance is a fintech company that brings together venture and hedge fund capital with borrowers seeking lines of home equity credit. After moving into second-lien mortgages, Button Finance is looking to open up a practice which according to Harris, is mostly an exclusive borrowing process for high net worth clients who borrow from large institutions.
“The reason we like this product is because if you’re an individual, you have to go somewhere like LendingClub or to your credit card to borrow money. And those are interest rates at 20%, as high as 30%, even if you have great credit, it can be over 10%. So we want to give people a much lower cost for access to credit.”
Harris also has a desire to make the process as quick and efficient as technology allows. He is embracing not only expanding the access to capital, but making the process to obtain it simple.
“We want to make it so you can borrow money sitting on the toilet on your phone,” Harris said.
When speaking about brokers in his industry, Harris touched on how the ones who are innovating are taking advantage of such a unique time, where the amount individuals innovating are relatively low, and the opportunities given by the innovation have never been higher.
While some companies offer a completely broker-less buying process, Harris thinks the role of a broker is necessary for a borrower of any loan to be comfortable and informed during the borrowing process.
“Now with regards to the need for brokers, this is something that now happens very often,” said Harris. “When people make large purchases, they like the comfort of speaking to someone and having someone advise them. Sometimes a broker can offer you some educational knowledge. We’re in the finance world; if you’re not a finance person at all, before you borrow $500,000, you might want someone advising you along the way.”
“Different brokers have different ways of brokering,” said Harris. “Some brokers spend money and build out great technology platforms themselves, and they’re able to scale and do ten times as many mortgages as a broker who is doing high touch [business]. Other brokers will use relationship based lending and have high touch [business]. I think it’s definitely going more towards the technology route.”
While embracing the value tech has, Harris realizes that with all this technology comes a responsibility to educate borrowers on all the different processes that are changing when it comes to data transfer, verification, and approval processes. “Like every other tech company, we want to try to bring technology to this as much as possible. We want to be able to advise a borrower on the best possible product just using technology.”
While speaking specifically about the innovation the financial world is experiencing, Harris thinks that a drastic change to the finance world will be take place over a long period of time.
“Like everything, things move slowly,” said Harris. “Don’t think this will happen overnight.”
Mississippi Fintech is Innovating Small Business Lending with Brokers in Mind
November 3, 2021
Vergent, a loan management software, is creating a space where brokers and lenders alike can manage all aspects of a deal in one place. Based in Ridgefield, Mississippi, Vergent is trying to innovate the industry with brokers in mind, pairing the small town values of interpersonal engagement and getting to know your customer with the big city ideas of fintech and automation.
“Really what we provide is the technology infrastructure for lenders to reach their end user,” said Bradley Tompkins, Chief Information Officer at Vergent. “Whether that be a small business looking for a loan, we facilitate that acquisition, the origination of that loan, and the servicing of that loan. That could mean recurring payment setups, based upon the lender’s requirements, communication with that customer via email, text, however that is facilitated, and all the different payment options.”
Tompkins talked about how his software is one of the few that brokers in his area are already utilizing to start making deals smoother. With access to all aspects of the deal, Vergent provides an all-in-one suite of options that can turn the process of analyzing a deal or checking out a deal post-funding into a couple of clicks.
“We actually have brokers who use our software to accept applications, originate loans, and then we can either transfer that to a separate portfolio that the lender then manages for servicing, or sometimes we have brokers that service the loans themselves,” Tompkins said. “So there are really a lot of options on how to set that up in the platform, so the lender can have a separate site where they accept applications from multiple brokers, or really any combination of those things.”
The value of a direct relationship with the customer is top-tier according to Tompkins, as he spoke about the next great innovations in fintech not being how to weed the human interaction out, but finding its role that will find the balance between human touch and AI power. “Once you know your customer, you can give them the option to pay you back in the easiest way possible. Understanding how they get paid, their pay cycles, when they have money and being flexible to accept that money when they have it, and giving them those repayment options is the next great innovation.”
When talking about the ability to market his product to a wide audience, Tompkins acknowledged the difficulty due to the size of the industry itself, but touched on the value of networking events like Money 20/20, where Tompkins was pitching Vergent to an international audience.
“We’ve been pleasantly surprised by the amount of lenders we’ve seen, and the amount of opportunities that have come our way from [Money 20/20]. We came here pretty open minded, maybe talk to some payment processors and other vendors that may be able to integrate to us and kind of help expand our network, but really it’s just getting our name out, seeing a little bit of a different segment than what we normally see, and looking at other market opportunities.”
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See Post... brokers out there to get quality leads and help them funded deals. , and about your point to work with a direct funder and be a broker, it's not actually about being good or bad , it's just not the business model we are looking at this moment as we are providing our service from outside of usa.so, it's technically not possible to become a iso or broker and we will never send any kind of unfunded/dnq and difficult to work with merchants. we use ucc and targeted data also.we purchase the data and set the campaign according to client's demand and requirements .... |
See Post... brokers face and try to avoid such issues(poor communication, deals being killed for miniscule reasons, etc). i took an interest in underwriting and deal structures which ended up in me getting into underwriting and underwriting for some of the most reputable companies in the space either as servicer(including for some of the companies on your list) or directly, and have made a name for myself amongst underwriters and investors in this industry due... |
