The alternative lending industry may be relatively new, but it already has many layers, branches and specialties to provide additional cash flow to businesses that don’t qualify for traditional bank loans. Here is a behind the scenes breakdown of the divisions of the funding industry and general overview of how an application becomes a deal. Keep in mind that every company is structured differently and may not use all of the divisions in this path.
The merchant is the business owner and the person in charge of major company decisions, especially those concerning the bank account. The merchant knows the company’s expenses, how much extra working capital would be needed for growth, and every intricacy of how the business operates in its industry.
Of all the divisions of the funding industry, this one is called by the most names. A salesperson will either reach out to a merchant or be contacted by the merchant themselves and then act as a middle man between the funder and the business owner. The Broker/ISO/Salesperson shops for the best deal for the merchant, who already has too much going on to be contacting and bargaining with funders.
ISO Rep/Funder –
Depending on how the funding company is structured, the funder could be in two places. A funding company could have an ISO Rep or ISO relations team that communicates with the ISO/Broker who has a merchant in need of funding. If the company is small, the ISO would contact the funder directly. It all depends on how the company is structured.
For other companies, the money would likely come from a syndicate desk of outside funders providing the merchant with money and backing the deal. The funder with the ISO Relations team may also use their own funds to finance the deal.
If you’re looking to work with FundKite, please refer to the partners page.