How To Speed Up Your Funding And Avoid The Dreaded Killed Deal
Posted by SCOTT GRIEST
26 February, 2018
As the world of small business financing continues to mature, we are seeing that the price of a product is becoming less of differentiator. Instead, the service and speed of funding contracts is quickly becoming the factor for funding companies. At Rapid Capital Funding, we've taken significant steps by investing in systems and people to address this issue. Over the past few months we have improved our speed of funding contracts significantly, by two business days, with most contracts funding in under four days.
Even given all of the improvements, Rapid Capital Funding does not control all the aspects of a deal. Both our clients and sales partners can greatly influence the speed of funding, and ensure that an approval doesn't get killed in the due diligence process. To help, both can follow these two simple steps to improve the success rate.
1. Don't Hide The Bad & The Ugly - So many times we see business owners and/or their sales agents trying to brush over some negative information about the business such as recent tax liens, being consistently two weeks late on rent, or some other issue. With all the technology and tools funding companies use, such as site surveys, legal/public database aggregates, background checks, reverse phone look ups, and even simple Google searches, we find out about the issue eventually.
Our best sales agents (coincidentally the ones with the highest compensation) present the good, the bad and even the ugly on clients’ current situations. This allows us to properly structure and price a contract correctly, upfront, that doesn't put the client in a financial hardship. We can also better structure to meet his or her needs, fit the funding company’s risk appetite, and yield enough margin to make sense for all parties. Often an inexperienced sales agent selling on price is also unaware of the ugly. Top agents who are true finance consultants will educate their clients to give them the whole story, that way they can present the entire situation in the best light in order to maximize approvals.
Nothing frustrates clients more than having to change terms or require payoffs for past due rent at the 11th hour, just prior to funding. Worse yet, when a company's due diligence staff discovers the undisclosed bad or ugly, they start worrying about all aspects of the deal and client. The last thing the client or the sales agent wants to do is to turn a verification process into a Sherlock Holmes investigation adding days to the process, and even resulting in the dreaded “denied” stamp.
2. Have/Set Realistic Expectations - So often at Rapid Capital Funding we receive contracts back and immediately reach out to the client with a welcome Call to confirm contract terms and payment method, and to inform them of the due diligence process. They are often shocked that it’s going to take an additional day or two to get their $50,000. It blows me away that intelligent business owners think that a simple one-page application and a few bank statements that they fax or email in a day ago, will suffice for a company to wire them tens of thousands of dollars.
Unfortunately landlords are not always available, and can take a day or two to call or fax back. Setting up the collection method with a new credit card processor and ensuring that the withholding split is in place takes a couple of days usually as well (if there's a point of sale system that needs to be reprogrammed it could take a week or more).
More often than not it’s the sales partner, who has promised funding the next day in order to get the deal, creating the issue. Sales agents have to take the 30 seconds to explain the process and set a realistic explanation that funding will be in two or three days, and the repayment method must be in place (so download your terminals asap). This way the client isn't blowing up the agent’s phone every hour, has a great experience, and is happy to refer more clients because this simple set of expectations has delighted them rather than frustrated them.
By following the two easy steps above, both clients and sales agents will see a dramatic increase in their funding success rate, with minimal frustration.