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Helping ISOs plan ahead to bring the future to the present

Darrin Ginsberg is the founder and Chief Executive Officer of Super G Capital LLC, a business-to- business lender that specializes in providing growth and acquisition capital to ISOs in the payment processing industry. Capital is needed by these ISOs to help them increase their merchant base. “On average, most ISOs today are barely growing by 10 percent per year or writing just enough new business to offset the merchant attrition that they are experiencing,” Ginsberg said. “So, if you want to really grow your business, the fastest and most effective way is to obtain funding from Super G Capital and purchase a portfolio. You have several choices when buying a portfolio. You can buy a static portfolio, which is a book of business that contains a specific list of merchants; you can buy a portfolio in addition to an ISO’s forward going business; or you can buy back residuals from your own agents and subagents. ”

Ginsberg noted that Super G has been providing quite a bit of capital the last two years to ISOs who are buying back their own agents’ residuals because this is a very easy transaction to close that doesn’t take much due diligence and can typically be bought for a much lower multiple than that of a third-party portfolio.

“By financing the buyback of your own agents’ residuals, you can now make more money every month without doing any more work than you are doing today and even have positive cash flow along the way,” he said. “This is my definition of working smarter, not harder. ”

Super G Capital was formed in 2008 and has grown to become one of the market leaders in the residual lending space today. The company has provided over $100 million in funding to approximately 200 ISOs throughout the United States. Super G is growing its business by lending into other vertical markets, and in March of 2017, it acquired Novus Capital Group to help increase its market share in the software and technology venture debt space. Super G Capital provides loans ranging from $100,000 to $5 million, and since inception has funded over $200 million in loans to all types of industries, Ginsberg stated.

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Funding solutions tailored to help ISOs plan ahead

Super G Capital LLC is a provider of financ- ing solutions designed to foster growth in businesses that are either constrained by or lack access to traditional commercial lending institutions. Super G has extensive expertise in delivering residual loans to payments industry ISOs, in particular, as well as to independent ATM deployers, insurance bro- kers and software-as-a service providers. “On the average, ISOS grow a business organically at 10 percent or 15 percent a year,” said Darrin Ginsberg the company’s founder and Chief Executive Officer. “If you want to double in size, you can obtain funding from Super G Capital to buy an existing portfolio or another company that comes with sales reps. Better yet, you can buy back residuals from your own existing agent base and grow your business without doing any more than what you are doing today. ” Ginsberg added that ISOs know their agents’ portfolios better than anybody because the ISOs are doing the processing and “can buy an agent’s residuals typically on a cheaper multiple than from a much larger entity. It’s a smart way of doing business. ” Super G was founded in 2008 and prides itself on having become a large market leader in the residual lending space. The company expanded in March 2017 by merging with Novus Capital Group LLC to help expand its operations. Super G provides loans ranging from $100,000 to $5 million and, to date, has issued $200 million in total loans. Increasing competition Having previously run an ISO, Ginsberg knows how competitive the payments sphere can be, particularly now with tech companies entering the space. “I call it the Silicon Valley effect on payments,” he said. “PayPal, Stripe and Square have made payment processing more commonplace and more well-known. . . . They have spent tens of millions of dollars in advertising. I don’t know of any ISOs in our space that have spent that kind of money. I think the industry needs to watch out for that and fight back with similar pricing methodologies. ” Approval process ISOs can obtain funding from Super G with a minimum of $5,000 in monthly residuals.

The approval process takes only three to five business days, Ginsberg noted. “Underwriting is very simple at Super G,” he said. “What we are looking at is the quality of the accounts that are in the books, and as long as they are diversified, we are OK with it. ” Loans range from one to four years and are secured by an ISO’s portfolio residuals. After loans are paid off, ISOs retain 100 percent of their residuals. “When ISOs receive their residuals, they can still make our payment and end up with positive cash flow after the fact,” Ginsberg said. “They are able to afford it during the process because I structure the payments so that they are lower than the residuals. . . . It is all positive cash flow to the business. ” Competitive pricing Super G provides competitive pricing to keep rates low. “We have lower rates and are competitive with the likes of a Goldman Sachs, Comerica and the other big lenders in the space,” Ginsberg said. “We have the ability to do larger deals and competitively priced deals in the marketplace. ” Ginsberg sees nothing but growth ahead for the payments industry. “I think there is only good news ahead in the space,” he said. “What might change is who is the lead sales agent in the front of the queue, but I think that the payment industry is doing nothing but growing in all forms such as credit cards and ACH. ” He noted that the number of electronic transactions is up, and the number of industries that are taking cards is up. “The advice I would give for people interested in the payments industry is to try picking a vertical or two and specializing in it,” he said.

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Navigating Market Dynamics with Residual Loans: A Case Study

  1. Business Challenge Super G Capital, a pioneer and market leader in residual loans to the merchant services industry, faced several challenges in a rapidly changing market environment. These included:
    • Increasing competition from new entrants and established players
    • Evolving customer demands for seamless payment experiences and advanced technology solutions
    • Regulatory complexities and compliance requirements impacting operational efficiency and profitability
  2. Solution: Leveraging Residual Loans Recognizing the need for strategic investments to address these challenges and capitalize on growth opportunities, Super G Capital partnered with a residual loan provider to secure financing. By leveraging their residual income streams as collateral, Super G Capital accessed the capital needed to:
    • Upgrade their technology infrastructure to enhance security, reliability, and functionality
    • Expand their product offerings to meet evolving customer needs and market demands
    • Invest in sales and marketing initiatives to drive customer acquisition and retention
  3. Results and Benefits
    • Accelerated Growth: With access to flexible financing, Super G Capital accelerated their growth trajectory, capturing market share and expanding their client base.
    • Enhanced Competitiveness: By investing in technology upgrades and innovative solutions, Super G Capital strengthened their competitive position and differentiated themselves in the marketplace.
    • Improved Financial Performance: Residual loans enabled Super G Capital to optimize their operational efficiency, increase revenue, and improve profitability despite market challenges.

Conclusion: The success story of Super G Capital highlights the transformative impact of residual loans in navigating market dynamics, driving growth, and fostering innovation. By embracing strategic financing solutions and leveraging their residual income streams, businesses can overcome challenges, seize opportunities, and thrive in today’s dynamic merchant services industry.

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The Advantages of Partnering with a Residual Loan Provider

  1. Tailored Financing Solutions Residual loan providers specialize in offering customized financing solutions designed specifically for the merchant services industry. Unlike traditional lenders, residual loan providers have deep industry expertise and understand the unique revenue dynamics and challenges faced by merchant services providers. This enables them to offer flexible funding options that align with businesses’ operational and growth objectives.
  2. Access to Capital Partnering with a residual loan provider gives merchant services providers access to capital based on their projected future earnings. Instead of relying solely on existing cash reserves or traditional bank loans, businesses can leverage their residual income streams to secure financing for expansion, technology investments, working capital, and other strategic initiatives.
  3. Strategic Guidance and Support Residual loan providers often serve as strategic partners, offering valuable insights, guidance, and support beyond just financing. They understand the complexities of the merchant services industry and can provide expert advice on growth strategies, market trends, risk management, and compliance issues. This collaborative approach fosters long-term relationships built on trust and mutual success.

Conclusion: Partnering with a residual loan provider offers merchant services providers a strategic advantage in today’s dynamic business environment. By leveraging tailored financing solutions, accessing capital based on projected earnings, and benefiting from strategic guidance and support, businesses can unlock their growth potential and thrive in the competitive marketplace.

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Understanding Residual Loans in the Merchant Services Industry

  1. What are Residual Loans? Residual loans are a specialized form of financing tailored for merchant services providers. Unlike traditional loans, which are based on fixed repayment terms, residual loans leverage the residual income generated by a merchant services provider’s credit card processing activities as collateral. This unique financing structure allows businesses to access capital based on their projected future earnings.
  2. Importance of Residual Loans Residual loans offer several advantages for merchant services providers, including:
    • Flexible Financing: Residual loans provide flexible funding options that align with the cyclical nature of the merchant services industry.
    • Growth Opportunities: By accessing capital based on projected future earnings, businesses can invest in growth initiatives such as expanding their client base, upgrading technology infrastructure, or launching new product offerings.
    • Risk Mitigation: Residual loans help mitigate risk by providing a stable source of funding tied to ongoing revenue streams, reducing reliance on traditional lending sources with stringent qualification criteria.
  3. How Residual Loans Work
    • Collateralization: Residual loans are collateralized by the future residual income generated from credit card processing activities. Lenders assess the merchant services provider’s historical transaction volume, processing fees, and other relevant metrics to determine loan eligibility and terms.
    • Repayment Structure: Repayment terms for residual loans are typically structured as a percentage of future credit card processing revenue. This arrangement allows businesses to repay the loan in line with their cash flow, without the burden of fixed monthly payments.

Conclusion: Residual loans represent a valuable financial tool for merchant services providers, offering flexible funding solutions tailored to the unique needs of this industry. By understanding the mechanics and benefits of residual loans, businesses can leverage this financing option to fuel growth and navigate market dynamics effectively.

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