The narrator shares an MCA funding hack to help loan brokers understand if a deal can fund based on repayment affordability. Many brokers don't calculate this, instead just gambling if a deal will work.
The formula is: loan repayment must be 16-18% of the business's monthly gross revenue, including existing loans. For a $100K loan at 46% interest over 8 months, the monthly payment is $18,250. If the business grosses $100K/month, this falls within the 18% affordability range so they may qualify for a $100K loan.
But the broker must also consider other existing loans and their payments, as these factor into the 16-18% maximum lenders allow. Up to 50% of a new loan can pay off old loans to improve position, but the rest must be used to grow the business.
The broker should fully analyze bank statements to verify revenue deposits vs loans, spot fraud, and accurately assess risk, affordability and credibility. This expertise separates professional brokers from those struggling to fund deals.
Here is a condensed summary of the main points from the video in HTML format:
The narrator shares the exact sales script he used to generate over $500,000 in merchant cash advance revenue. He goes through the key questions to ask potential clients, including how much funding they need, their monthly revenue, and what they will use the funding for. He explains why these questions help qualify leads. He emphasizes getting the client's information quickly and passing it to the funder rapidly, playing "hot potato" to move fast. He demonstrates closing the call by summarizing they likely qualify, requesting the application and bank statements, providing his contact information, and setting expectations to receive the documents back shortly.
The narrator says by asking specific questions he can determine if a lead is serious, if they have an urgent funding need, if they will likely get approved based on revenue and time in business, and uncover any issues like bankruptcies that may prevent funding.
He states speed is important - get the lead's information rapidly, pass to the funder rapidly, get documents back rapidly. The narrator demonstrates closing by summarizing the likelihood of approval, requesting necessary documents, providing contact details, and setting quick expectations for receiving back.
The narrator shares 5 common objections merchants give when cold called for a merchant cash advance and how to overcome them:
1. "I don't need money/not interested" - Ask if they could put $50k or $100k to work if given to them for free, to get them imagining the possibilities.
2. "The timing is not right" - Ask how much they could use if you got them money right now.
3. "It's too little money" - Explain it's what you can offer now to start a relationship, and more can come later.
4. Price/daily payment - Ask what daily rate would work or just fund what you can today.
5. Competing brokers - Ask for documents to review and try to beat the other offer, or call their bluff if the deal sounds too good to be true.
The narrator makes several phone calls to business owners who have previously inquired about merchant cash advances. He asks questions to understand their financing needs, such as how much capital they could put to use and what problems they want to solve in their business.
When one business owner says he already got funded, the narrator asks who he knows that could also use financing. After not getting referrals, the narrator emphasizes the importance of persistence and asking tough questions.
Speaking with another business owner already working with an SBA lender, the narrator explains his company offers longer repayment terms and can provide additional capital. He requests the owner's credit score and recent bank statements to assess options.
The narrator highlights building personal relationships with prospects and not giving up after initial rejections. He aims to position his merchant cash advance as an additional financing option alongside owners' existing lending relationships.
The narrator introduces merchant cash advances (MCAs), a type of business loan that does not require financial statements or tax returns. MCAs are attached to a business's credit card processing machine and allow the business to borrow up to 2 times their monthly credit card sales.
MCAs have a factoring rate, which is the cost of the money, not an interest rate. For example, a company approved for a $50,000 MCA with a 20% factoring rate would owe $60,000 total. The lender takes a percent of the company's daily credit card sales to pay back the advance until it is fully repaid. There is no set repayment term.
MCA approvals state the amount approved, the daily percent that will be taken from credit card sales, and the factoring rate. The narrator states that MCAs are a "cutting product" for businesses.