Moving a declined MCA deal to the right product

A file comes back declined, or with an offer the merchant cannot afford. Read the decline reasons before you resubmit to more advance funders. Sometimes the file is too good for the product: a merchant with years of filed returns and good credit was offered a high factor because nobody showed it to a bank-style lender. Sometimes it is too weak for anything unsecured, and the honest options are narrower: secured financing, a smaller amount, or waiting.

Example: an HVAC company with six years in business, $1.1 million in revenue on its last return and a 710 score asks for $120,000 to buy two vans and cover a slow month. An advance offer came back at a 1.38 factor. Split it instead: equipment financing on the vans, secured by the vans, and a line of credit for the cash gap. It takes longer and needs more paperwork, so say so up front, and the cost in dollars should be far lower.

• Too many positions or too high a holdback: more stacking makes it worse. Look at a consolidation only if it truly lowers the payment, or tell the merchant to wait until a position pays down.
• Low revenue or short time in business: a smaller amount, or equipment financing if they need an asset, can work where unsecured money will not.
• B2B business with slow-paying customers: invoice factoring turns receivables into cash; see factoring.
• Recent defaults, heavy NSFs or negative days every week: often the honest answer is no deal today. Write down what would change it (three clean months, a paid-off position) and set a follow-up.

1. 1Read every decline reason and offer, and list what the lenders saw as the problem.
2. 2Ask the merchant what the money is really for and when it is needed.
3. 3Pick the product that fits the need and the file, using the decision table.
4. 4Collect the extra documents that product needs before you submit, not after.
5. 5Explain the trade-off honestly: lower cost, more paperwork, more time, and no guarantee of approval.
6. 6Submit to lenders that actually do that product, and keep the advance option open only if the merchant understands its cost.

In Ferrylend, decline reasons on each submission show why a file failed, and you can change the deal's Product (for example from MCA to Term loan or Line of credit) and rerun lender matching against the programs of that product. The Application tab and the checklist switch to what the new product needs, and the values already entered are kept. A deal that is not ready can move to Future with a task to follow up. See declines and counter-offers.