Oh The Games People Play

The Web Lender Portal

… from the desk of the CEO
David Fisher

Paying for financial services after the work is completed, and in the case of acquiring finance specifically residential real estate financing is commonplace, but in the world of business that strategy doesn’t fly. Offering to pay financial services fees after you receive financing is best way to have your financing needs ignored. It is viewed as insulting and in some circles laughable. It clearly indicates that the borrower does not understand how business financing works and how such deals are put together.

Imagine this scenario.

A client approaches a financial services company looking for finance for his business and offers to pay the financial services company their fee after he receives the finance he needs. Generally speaking, the amount of time and work required to complete such a transaction ranges between 30-90 days, and in some cases longer. If at the end of say 90 days an offer is presented but the client doesn’t accept it, for whatever the reason, the financial services company has, in effect, worked for nothing.

That will never happen.

Clients seeking business finance need to understand this if they truly want to be financed. Put another way, nobody can walk into your office and tell you how to conduct your business. So what makes some clients seeking business funding through a financial services company think they can tell the company how to conduct theirs? The answer is actually quite simple.

Clients who question or refuse to pay service fees probably know they are not fundable and, or, they are simply shopping for a deal. Shopping for residential real estate finance or auto finance is fine, but shopping for business finance is the worst thing you can do. Most business funding companies or business investors know each other. When a loan broker sends a funding request to 50 investors or 50 funding sources, at the same time, he has automatically diminished the opportunity to acquire finance for his client. Business funders don’t like shoppers, and they have no time to waste on them.

Picture just five funders, all friends, sitting together at a baseball game. One says, ‘did you receive a funding request from Mr. X?’ and all of the other four reply, ‘yes’. This is a clear indication that Mr. X is a shopper. Result: application denied. The reason funders don’t like shoppers is because they are not willing to play the game of negotiation. They are not interested in competing with another offer that the borrower may present. Prior to the 2008-9 credit crunch, negotiating business finance terms was acceptable, but not today. Today it’s take it or leave it and that’s because if you don’t take it, someone else will.

Funders are not sitting idly at their desks waiting for borrowers. They are looking at hundreds of deals every week and so if one of these deals looks problematic they simply walk away from it. And when a deal doesn’t go the way the borrower wants it to go, how can he blame the funder? The funder has the money to fund so how can he be in the wrong? It is he who is taking the risk not the borrower by taking his money, so negotiating terms on business finance just does’t happen. You can’t walk into a bank and tell them how and under what terms you will accept their money should they offer you a loan, and you can’t negotiate with financial service companies by telling them how you want them to do their job. You can try, but you won’t succeed. In fact the act of trying is just enough to prevent any respectable financial services company from wanting to work with you.

And while all of this may seem harsh, even unbelievable, it’s the brutal honesty of how things are.

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